Karnataka High Court
Commissioner Of Central Excise, ... vs Metlife India Insurance Company Ltd on 6 July, 2022
Author: P.S. Dinesh Kumar
Bench: P.S. Dinesh Kumar
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 6TH DAY OF JULY, 2022
PRESENT
THE HON'BLE MR. JUSTICE P.S. DINESH KUMAR
AND
THE HON'BLE MR. JUSTICE C.M. POONACHA
C.E.A NO.49 OF 2021
BETWEEN:
COMMISSIONER OF CENTRAL EXCISE
BANGALORE - II
COMMISSIONERATE
CENTRAL REVENUE BUILDING
BANGALORE - 560 001.
PRESENT OFFICE:
PRINCIPAL COMMISSIONER
OF CENTRAL TAX
BENGALURU NORTH COMMISSIONERATE
NO.59, HMT BHAVAN
GROUND FLOOR, BELLARY ROAD
BANGALORE - 560 032
KARNATAKA ....APPELLANT
(BY SMT. VANITHA K.R., ADVOCATE)
AND:
METLIFE INDIA INSURANCE
COMPANY Ltd
BRIGADE SESHAMAHAL
5 VANI VILAS ROAD
BASAVANAGUDI
BANGALORE - 560 004 ...RESPONDENT
(BY SHRI. P.B. HARISH, ADVOCATE)
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THIS CEA IS FILED UNDER SECTION 35G OF THE
CENTRAL EXCISE ACT, PRAYING TO SET ASIDE THE CESTAT
FINAL ORDER NO.20467/2020 DATED 18/08/2020 VIDE
ANNEXURE - A AND DECIDE THE QUESTION OF LAW FRAMED
IN THE ABOVE APPEAL BY ALLOWING THE APPEAL IN THE
INTEREST OF JUSTICE AND EQUITY AND ETC.
THIS CEA COMING ON FOR ADMISSION, THIS DAY,
P.S.DINESH KUMAR J., DELIVERED THE FOLLOWING:
JUDGMENT
The Revenue has filed this appeal raising following questions for consideration:
a) Whether the CESTAT was right in setting aside the OIO and allowing assessee's appeal with consequential relief by holding 'since no exempt service has been provided by the appellant, there is no application of Rule 6 of the Credit Rules in the instant case to deny the credit', when non-taxable investment portion was duly mentioned in the policy document itself?
b) Whether the CESTAT was right in placing reliance on the Principal bench CESTAT-Delhi Order No.A/50608-
50609/2018 dated 08.02.2018 in the case of Max New York Life Insurance Company Lt. Vs. CCE & ST (LTU) 2018 (363) ELT 1145 (Tri-Del)
c) Whether the CESTAT was right in setting aside the Order and allowing their appeal?
2. Heard Smt.K.R.Vanitha, learned advocate for the appellant and Shri P.B.Harish, learned advocate for the respondent.
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3. Brief facts of the case are, assessee is the Insurance Company. It offers Life Insurance policies (Term Insurance, Endowment Insurance and Unit Linked Life Insurance). In the case of unit linked insurance policies, where both risk and investment elements are involved, the premium payable on the risk coverage is taxable and premium collected on investment portion is not taxable. The appellant was availing CENVAT credit of service tax paid on the commission paid to it's agents to whom policies have been booked. Service Tax on the said commission was being paid by the appellant under the category "Insurance auxiliary Service" under Reverse Charge Mechanism. A show cause notice dated October 8, 2020 was issued to the assessee and upon adjudication, Order-in-Original dated April 9, 2010 was passed by the Commissioner of Central Excise, Bangalore, confirming the demand. The commissioner held that the service tax was not paid on the investment portion of the policy since the same was exempted/not taxable during the relevant period and concluded that CENVAT credit on insurance auxiliary service received by the assessee could not be availed as it was 4 exclusively used in exempted services. Reversing the said finding, CESTAT, South Zonal Bench, Bengaluru, held that since no exempt service has been provided by the assessee, there was no application of Rule 6 of the CENVAT Credit Rules, 2004 in the instant case. Feeling aggrieved, the Revenue has filed this appeal.
4. Smt K.R.Vanitha, learned advocate for the Revenue submitted that similar issues are pending consideration in Bombay High Court. She further submitted that the Commissioner of Central Excise, Bengaluru, has rightly analysed the case and imposed tax, interest and penalty on the ground that service tax was wrongly availed by the assessee.
5. Shri P.B.Harish, learned advocate for the assessee submitted that Sub-rule 5 of Rule 6 of the CENVAT Credit Rules has been omitted with effect from 16.05.2008, as per Notification F No.354/9/2011-TRU issued by the Ministry of Finance, Department of Revenue and full credit will be available for services specified in Rule 6(5) of the Rules including Sub Clause (zy) of Section 65(105) of the Finance Act, 5 1994, namely, Insurance Auxiliary Services for the period till 31.03.2011. Admittedly, the period in question is 01.04.2005 to 15.05.2008.
6. We have carefully considered rival submissions and perused the records.
7. Omitted Sub Rule 5 of Rule 6 of CENVAT Credit 2000 Rules reads as follows:
" CENVAT CREDIT RULES, 2004 Rule 6 - Obligation of manufacturer of dutiable and exempted goods and provider of taxable and exempted services (1)....
(5) Notwithstanding anything contained in sub-
rules (1), (2) and (3), credit of the whole of service tax paid on taxable service as specified in sub-clause (g), (p), (q), (r),
(v), (w), (za), (zm), (zp), (zy), (zzd), (zzg), (zzh), (zzi), (zzk), (zzq) and (zzr) or clause (105) of section 65 of the Finance Act shall be allowed unless such service is used exclusively in or in relation to the manufacture of exempted goods or providing exempted services. "
8. Above provision starts with a non-obstante clause and makes it clear that credit of whole of service 6 tax paid on services specified in Sub-Clauses mentioned therein and particularly Sub Clause (zy) which is relevant in the instant case shall be allowed unless such service is used exclusively in relation to manufacture of exempted goods or providing exempted services. It is not in dispute that Rule has been omitted with effect from 16.05.2008. The period for consideration is prior to omission of such Rule.
9. Sub-Clause (zy) of Section 65(105) of the Finance Act, 1994 reads as follows:
"Section 65. Definitions (1) (2) xxxxx (105) "taxable service"
(a)
(b) xxxxx (zy) to a policy holder or any person or insurer, including re-insurer by an actuary, or intermediary or insurance intermediary or insurance agent, in relation to insurance auxiliary services concerning life insurance business."
10. It is not in dispute that services provided by the assessee is insurance auxiliary services concerning 7 life insurance. Any service under this category is covered by Sub-rule (5) of Rule 6 of CENVAT Rules. CESTAT has rightly analysed the position and following the decision of CESTAT of Delhi in Max New York Life Insurance Co.Ltd. Vs. CCE & ST (LTU)1 has held that since no exempt service has been provided by the assessee, it is entitled for the CENVAT credit. In view of the undisputed facts and position of law recorded hereinabove, we find no error in the order passed by the CESTAT.
11. Resultantly, this appeal fails and it is accordingly dismissed.
No costs.
Sd/-
JUDGE Sd/-
JUDGE YN 1 2018 (363) ELT 1145 (Tri-Del)