CESTAT, NEW DELHI BENCH
Commissioner of Central Excise, Lucknow
FINAL ORDER NO. 279/2012-SM (BR)(PB)
Stay Order No. S-258/2012/-SM (BR)(PB)
Application No. E/Stay/3376/2011-SM (BR)
Appeal No. E/2595/2011-SM (BR)
MARCH 23, 2012
1. Shri Kamra, learned Counsel says that insurance that has been paid for the following services, availed have suffered service tax :
1. Company-owned vehicles;
2. Insurance of finished goods inventory lying in the godowns located inside as well outside the factory;
3. Transit insurance covering insurance of finished goods under transportation from factory premises to the company’s depot (place of removal) maintained outside factory;
4. Insurance of cash in box, cash in transit, cash at various counters, personal insurance of cashier.
2. All the services pertain to either manufacture or in relation to manufacture or in relation to business. Revenue has not brought out its case to disintegrate these services to prove that those are not attributable to manufacture or business. Therefore, not only pre-deposit may be waived but also appeal may be allowed.
3. Learned Representative for Revenue says that how these jeep and other vehicles were used was not brought on record. Similarly the appellant failed to establish the nexus of input with the output.
4. Heard both sides and perused the record.
5. The dispute being on very narrow compass, appeal itself is taken up for disposal waiving requirement of pre-deposit.
6. All the claims of the appellant relate to risk insurance service availed. Learned appellate authority dealt the issue relating to claim of service tax paid on the insurance on vehicle, finished goods, cash in transit and insurance on cash box. Nowhere he could notice that those were incurred not in relation to the business activity of the appellant. He totally remained silent, relying on the finding of the adjudicating authority without interpreting Rule 2(l) of the Cenvat Credit Rules, 2004 defining input service. While enacting rule, listing the services that shall enjoy Cenvat credit, legislature has not only provided an exhaustive category but also an inclusive category prescribed in that Rule. In the exhaustive category, legislature has confined certain services to enjoy Cenvat credit using the term “means” and by “inclusive” part of the definition, various aspects of services are listed to enjoy the status of input service. In the inclusive part there is not only coverage of setting up of the factory, but also even certain administrative activities that require input services to perform are prescribed by the Rule.
7. Looking to the legislative intent it is not possible to say that the risk covered by insurance service received shall not enjoy Cenvat credit of service tax paid on such service. No doubt, the insurance service may be indirectly connected to the manufacturing or other activity but that may be in relation to manufacture or various other business activities enumerated in Rule 2(l) of Cenvat Credit Rules, 2004. This establishes the dependability of input to the output. Unless the vehicle is used otherwise than serving the purpose of manufacture or providing of service, the insurance paid to cover risk should not go out of consideration to grant Cenvat credit. Therefore, considering inevitability of insurance to make the assessee risk free for carrying out its manufacturing operation and other activities related thereto or to the services relating to inclusive aspects under Rule 2(l), the appellant has a case to succeed. Accordingly, appeal is allowed. So also stay application disposed.