Custom, Excise & Service Tax Tribunal
M/S. Transformers And Electricals ... vs The Commissioner Of Central Excise, ... on 27 November, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeals (s) Involved: ST/20753/2016 [Arising out of Order-in-Appeal No.COC-EXCUS-000-APP-338-15-16 dated 18.2.2016 passed by the Commissioner of Central Excise, Customs and Service Tax (Appeals), Cochin.] M/s. Transformers and Electricals Kerala Ltd. Appellant(s) Versus The Commissioner of Central Excise, Customs & Service Tax C.R. Building, I.S. Press Road Cochin 682 018. Respondent(s)
Appearance:
Mr. Abraham Markos, Advocate For the Appellant Mr. N. Jagadish, AR For the Respondent Date of Hearing: 21.09.2017 Date of Decision: 27.11.2017 CORAM:
HON'BLE SHRI S.S. GARG, JUDICIAL MEMBER Final Order No. 22917 / 2017 Per : S.S. GARG The present appeal is directed against the impugned order dated 18.2.2016 passed by the Commissioner (A) whereby the Commissioner (A) has rejected the appeal of the appellant.
2. Briefly the facts of the case are that the appellants are engaged in the manufacture of electrical transformers and allied products falling under Chapter 85 of the Central Excise Tariff Act, 1985 and are holders of Service Tax registration for the taxable services provided by them under various categories of service. On verification of the records of the appellant, the department noticed that they had availed ineligible CENVAT credit of service tax paid to various insurance companies for Group Insurance Scheme of employees, Accident insurance, Group Mediclaim and Vehicle Insurance, etc. The department after due process of law concluded that the insurance of employees is only a welfare measure and has no relation to the manufacture of their final product and cannot be treated as an input service and confirmed the demand. Aggrieved by the Order-in-Original, the appellant filed appeal before the Commissioner (A), who upheld the Order-in-Original and rejected the appeal of the appellant; hence, the present appeal.
3. Heard both the parties and perused the records.
4. Learned counsel for the appellant submitted that the impugned order is not sustainable in law and the same has been passed without considering the documentary evidence on record and without considering the binding judicial precedent. He further submitted that the CENVAT credit has been denied on the services of life insurance, health insurance, travel benefits, which otherwise fall in the definition of input service. He further submitted that the Commissioner (A) has not considered the fact that the service tax on the insurance premium paid to the insurance company for various welfare schemes of the employees of the company and the same form part of the manufacturing cost. He further submitted that the definition of input service was amended w.e.f. 1.4.2011 and for group mediclaim insurance taken by the appellant was taken prior to 1.4.2011 and the premium was paid on 29.3.2011 i.e., prior to amendment and the receipt for the payment of premium has also been enclosed with the appeal papers. He further submitted that the Commissioner (A) has observed that in the appellants own case, for the prior period, she has allowed the CENVAT credit on these input services but vide the amendment to the definition of input service w.e.f. 1.4.2011, she has observed that these services have been excluded from the definition of input service.
5. On the other hand, the learned AR reiterated the findings of the impugned order.
6. After considering the submissions of both the parties and perusal of the material on record, I find that even after the amendment to the definition of input service w.e.f 1.4.2011, these services on which CENVAT credit has been denied fall in the definition of input service because they are not primarily for the personal use which has been excluded from the definition. Further, I find that the service charge and the service tax on insurance of plant and machinery, goods in transit, cash in transit and insurance on vehicles and laptops and also group insurance of all employees against sickness being an integral part of the manufacturing business and the same form part of the manufacturing cost of the final product and used in or in relation to the manufacture of final product as held by the CESTAT in Hindustan Zinc Ltd. vs. CCE: 2015 (37) STR 608; CCE vs. Endurance Systems India Pvt. Ltd.: 2009 (237) ELT 204; CCE vs. CCL Products (India) Ltd.: 2009 (16) STR 305 (Tri.-Bang.) and by the Honble High Court of Karnataka in the case of CCE vs. Micro Labs Ltd.: 2011 (24) STR 272 (Kar.). Further, I also find that service tax was paid to insurance company for various insurance policies prior to 1.4.2011 as per the receipt produced on record. Therefore, in my considered view, the amendment in the input service definition w.e.f. 1.4.2011 will not be applicable in the present case. Therefore, the denial of CENVAT credit by both the authorities is not sustainable in law and the same is set aside by allowing the appeal of the appellant.
(Order was pronounced in open court on 27.11.2017.) S.S. GARG JUDICIAL MEMBER rv 5 1