The Chennai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the appellant/assessee was eligible for input credit on Service Tax paid on insurance premium for mediclaim insurance services.
The bench of M. Ajit Kumar (Technical Member) observed that Service Tax paid on insurance premium for personal insurance services was not excluded from the definition of ‘input service’ till 01/04/2011, from which date it was specifically excluded as per Notification No. 3/2011-CE(NT), when used primarily for personal use or consumption of any employee.
Background
The appellant/assessee is a manufacturer of cast articles of iron and aluminium, principally for use in motor vehicles falling under Chapter Headings 73 and 76 of the CETA, 1985. During the period from 2007 – 08 to 2010 – 11 (upto February 2011) they have availed CENVAT credit on various input services. It appeared to revenue that the services were not covered in the inclusive definition of input services and were ineligible in terms of Rule 2(l) of CENVAT Credit Rules, 2004.Â
After due process of law, the Adjudicating Authority confirmed recovery of an amount wrongly availed as credit of service tax and cess on GTA, Mediclaim premium and fuel charges and dropped the other demands made in the Show Cause Notice dated 8.3.2012.
Aggrieved by the portion of order confirming demand on the GTA (outward freight charges), fuel charges and Mediclaim premium, the appellant preferred an appeal before Commissioner (Appeals), who upheld the order passed by the Adjudicating Authority in toto. They are however not contesting the demand on fuel charges. Hence the appeal is confined only to GTA service and Mediclaim insurance.
Arguments
The assessee contended that GTA service, the sale took place at customer’s place as the contract of sale were on FOR destination basis; no freight charges are separately included in the invoice and the property in the excisable goods remains with the appellant till it is transferred to their customers at their (customers) premises. They are hence entitled to credit on GTA services for outward transportation.
The assessee contended that as regards Mediclaim Insurance Service, the Larger Bench of the Tribunal in the case of Reliance Industries Ltd. Vs. CCE, Mumbai reported in 2022 (38) ELT 457 (Tri. LB) held that credit has been allowed as input service.
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Conclusion
The tribunal has held that the invoice is on FOR destination basis and no separate freight charges are included in the invoice. In the circumstances stated the GTA services form a part of the cost of the goods and are activities relating to business which would make it an eligible input under the definition of ‘input services’ during the relevant time.
The CESTAT held that Service Tax paid on insurance premium for personal insurance services was not excluded from the definition of ‘input service’ till 01/04/2011, from which date it was specifically excluded as per Notification No. 3/2011-CE(NT), when used primarily for personal use or consumption of any employee.
The tribunal found that the appellant was eligible for input credit on Service Tax paid for GTA and on insurance premium for personal insurance services, during the relevant time and the credit disallowed and demanded on the said services in the impugned order needs to be set aside along with the interest involved on the same and the penalty imposed and is so ordered.
FAQs
Is input credit on Service Tax paid on insurance premium for mediclaim insurance services available?
Case Details
Case Title: Ashok Leyland Ltd. Versus Commissioner of GST & Central Excise
Case No.: Excise Appeal No.40227 of 2021
Date: 01.10.2024
Counsel For Appellant: M. Kannan
Counsel For Respondent: N. Satyanarayanan
