Custom, Excise & Service Tax Tribunal
M/S. Titan Industries Ltd vs Commissioner Of Central Excise, ... on 13 February, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
E/649/2010
(Arising out of Order-in-Appeal No. 84/2010 (M III) dated 9.7.2010 passed by the Commissioner of Central Excise (Appeals), Chennai)
M/s. Titan Industries Ltd. Appellant
Vs.
Commissioner of Central Excise, Chennai III Respondent
Appearance Ms. Radhika Chandrasekar, Advocate for the Appellant Shri K.P. Muralidharan, AC (AR) for the Respondent CORAM Honble Ms. Sulekha Beevi C.S., Member (Judicial) Honble Shri Madhu Mohan Damodhar, Member (Technical) Date of Hearing / Decision: 13.02.2018 Final Order No. 40389 / 2018 Per Bench The appellants are manufacturers of Quartz Analog Watches and are registered with the Central Excise Department. They are availing CENVAT credit on inputs, capital goods and input services. During the course of verification, it was noticed that they had availed CENVAT credit of service tax on insurance service (health insurance policy and the group mediclaim insurance policy of the company staff and employees). Department was of the view that such services are not used directly or indirectly or used in or in relation to manufacture of final products or providing of output services and therefore is not eligible for availing credit. Show cause notice was issued proposing to deny the credit for the period 2006 07 and 2007 -08 and also for recovery of the credit along with interest and for imposing penalties. After due process of law, the original authority confirmed the demand, interest and imposed penalty. In appeal, Commissioner (Appeals) upheld the same. Hence this appeal.
2. On behalf of the appellant, ld. counsel Ms. Radhika Chandrasekar submitted that the period involved is prior to 1.4.2011 when the definition of input services had a wide ambit as it included words activities relating to business. However, she submitted that it is not clear from the reply to the show cause notice whether the appellant had availed credit of service tax paid on the premium pertaining to the dependents of the employees. It is argued by her that insurance services were availed as part of statutory requirement, as under the Industrial Disputes Act, it is incumbent upon the appellant to obtain such insurance policies on behalf of the employees / staff. With regard to the nature of the policy as well as whether service tax paid in respect of premium paid on the dependents of the employees is eligible for credit, the ld. counsel submitted that the matter requires verification and the appeal may be remanded for this purpose.
3. The ld. AR Shri K.P. Muralidharan reiterated the findings in the impugned order.
4. Heard both sides.
5. In the reply to the show cause notice, it is submitted by the appellant that the insurance services for health / mediclaim policy was availed for the companys staff and employees and their family members. The payment of premium as well as the service tax paid on such premium pertaining to the dependents / family members of the employees cannot be considered to be activities directly or indirectly in relation to the manufacture. Whether the policy covers the entire family with the single premium or whether separate premium has been paid for each dependent has to be verified. The ld. counsel has not been able to produce any document in this regard. We therefore deem it fit to remand the matter to the adjudicating authority to analyse the issue afresh after verification of the documents produced by the appellant. The adjudicating authority shall also take into consideration the case laws in respect of the said issue.
6. In the result, the impugned order is set aside and the appeal is allowed by way of remand to the adjudicating authority.
(Operative portion of the order was
pronounced in open court)
(Madhu Mohan Damodhar) (Sulekha Beevi C.S.)
Member (Technical) Member (Judicial)
Rex
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