National Engineering Industries Ltd. Vs Commissioner of CGST (CESTAT Delhi)
The case concerns the admissibility of Cenvat credit on various input services availed by the appellant, a manufacturer of ball bearings and axle boxes. The dispute arose when the department objected to the availment of Cenvat credit on services such as insurance, professional/consultancy fees, airfare, and travel-related expenses for the period from August 2014 to April 2015. A show cause notice proposed disallowance of credit amounting to ₹38,19,851. During adjudication, part of the demand relating to professional/consultancy fees was dropped, while the remaining amount was confirmed. The matter went through multiple rounds of litigation, including remand by the Tribunal and partial relief at the appellate stage.
In the subsequent proceedings, certain credits were allowed, including those relating to taxi and airfare expenses and part of the consultancy fees. However, credit related to insurance services and other components continued to be disallowed, along with interest and penalty. The appellant challenged these findings before the Tribunal.
The appellant argued that insurance services were essential for safeguarding capital goods, raw materials, and finished goods, and were therefore indispensable to business operations. It was submitted that such services, though indirectly related, qualify as input services under Rule 2(l) of the Cenvat Credit Rules, 2004. The appellant also clarified that service tax on such insurance policies was paid by them and did not relate to personal or unrelated usage.
