The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Ahmedabad bench has held that cenvat credit is allowable on the insurance services incurred for the employees in compliance with the relevant statutes.
The appellants, M/s Milestone Preservatives Pvt. Limited claimed CENVAT credit in respect of Input Services namely construction services, fee for architectural structural works for factory plant building, group Medi-claim Insurance, Group personal accident insurance, insurance, motor car/vehicle insurance, labour charges for installation, testing & commissioning of components of VRV System (Centrally AC system) in the office building etc.
However, the department rejected the claim observing that such services are not eligible for canvat credit.
Mr. Ramesh Nair, Judicial Member has observed that these are the services as mandated as per the factory Act for the safety of employees.
“Therefore, this cannot be said that the services were used for personal use. Every industry under statutory norms required to take group Medi-claim Insurance, Group personal accident insurance, insurance, motor car/vehicle insurance etc. from the insurance companies for which the payment of premium is paid by the assessee and the same is accounted in their books of accounts as expenditure. Therefore, all these services are in or in relation to manufacture of final products and under the business activities of the assessee.”
Relying on a catena of decisions, the Tribunal observed that Cenvat credit is allowed on Insurance Services.
“As per my above observation and findings, I am of the view that appellant is entitled for the Cenvat credit on such services. However, the appellant have admittedly paid an amount of Rs. 2,29,752/- which stands upheld.”
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