CENVAT credit — The insurance policy taken with regard to compensation to be given to workmen taken for workers involved in the manufacturing process of final products — Assessee was entitled to claim input service credit.

The Revenue filed an appeal against the order wherein the input service credit on insurance policy for workmen’s compensation was allowed by the first Appellate Authority. The Revenue appealed on the ground that insurance policy taken for workmen’s compensation was no way related to manufacturing activity and hence sought for denial of input service tax credit. According to the assessee insurance policy for workmen’s compensation was taken for the workers who were involved in the manufacturing process and to cover the risk of those workers and hence it was directly related to the manufacturing process as per the CENVAT Credit Rules, 2004.

Held:

Appeal of the Revenue was rejected on the grounds that insurance policy for workmen’s compensation was taken by the respondent to cover the risk of the of the workers who were involved in the manufacturing process of the final product and hence entitled for Input Service Credit as per Cenvat Credit Rules.