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Cenvat credit of Service tax paid on group insurance policy taken for employees, CHA service, rent-a-cab service, general insurance service relating to export goods — Credit eligible — Appeal allowed.
Facts:
(a) The appellants contended that credit of Service tax paid on group insurance policy for employees who are not covered by ESI cannot be disallowed on the ground that it is not connected with the business activity, as company is required to pay compensation to employees who are not covered by ESI, in the event of accident.
(b) The appellants had availed CHA service for supply of goods for export on FOB basis, which implies that ownership of goods lies with the appellants till the delivery of goods on board the ship. The Department had challenged the availment of credit on CHA service. Reference was made to Board’s Circular dated 23-8-2007, which made it apparent that in case where sale is on FOB basis, place of removal shall be the load port only. Therefore, any service availed up to the place of removal shall be treated as input service and accordingly, credit shall be availed of Service tax paid on such input service.
(c) With respect to rent-a-cab service, appeal was filed by the Department against order of Commissioner (Appeals) allowing credit of Service tax paid on the said service. The Department had contended that rent-a-cab service was utilised for transporting vendors and clients from guest-house to factory and vice versa which is not related to business activities. Thus, credit shall not be admissible.
(d) With respect to general insurance service for export of goods, appeal was filed by the Department against order of the Commissioner (Appeals) allowing credit of Service tax paid on the said service. The Department had contended that the activity had no nexus with the manufacture or clearance of export of goods.
Held:
(a) Taking a group insurance is clearly in course of business activities and hence, is an eligible input service for claiming Cenvat credit.
(b) CHA service availed up to the load port shall be considered as an input service and Cenvat credit shall be allowed on the same.
(c) The activity of transportation of vendors and clients was indirectly related to business activity as vendors were the suppliers of raw materials required for final products and clients were the ultimate consumer of final products. Therefore, credit cannot be denied.
(d) Since the export of goods was on FOB basis, credit of Service tax paid on general insurance service was allowed.
