Avail 50% discount on all subjects for Nov batch(access till Nov 20th). Use coupon code Nov14.

×

Please Wait ..

Sign-in to your account


Username:
Password:

Remember Me

Forgot your password?

Sign-up now



Join CAclubindia.com and Share your Knowledge. Registered members get a chance to interact at Forum, Ask Query, Comment etc.


Discussion > Excise >

Cenvat credit on insurance premium of vehicles

    Post New Topic
Pages : 1





Article - CA Final


[ Scorecard : 37]
Posted On 11 December 2012 at 16:48 Report Abuse

As per rule 2 l of the cenvat credit rules, input services specifically exculde insurance services obtained for motors vehicles subject to a few exceptional service providers. (Ignore the exceptions)

Following is a recent decision by the tribunal. Please refer the same and comment on whether service tax on insurance premium paid for motor vehicles shall be avaiable as cenvat credit?

 

The definition of ‘input service’ provided under rule 2(l) of CENVAT Credit Rules, 2004 covers a gamut of activities relating to the business undertaken by the manufacturer or the service provider. In the case under consideration the appellant has used the vehicles owned by them either for transportation of their employees or for transportation of goods which is an integral part of the business of appellant-firm. Therefore, the service tax paid on the insurance premium of such vehicles is an ‘input service’ as defined under Rule 2(l). Further, this Tribunal in the case of H.E.G. Ltd. (cited supra) also came to the conclusion that insurance of vehicle is in relation to the maintenance of the vehicles and is eligible for credit as ‘input service’.

CESTAT, MUMBAI BENCH

Manikgarh Cement

v.

Commissioner of Central Excise & Customs, Nagpur

ORDER NO. S/92/2012/SMB/C-IV

AND A/40/2012/SMB/C-IV

APPLICATION NO. E/STAY-2025/2010

APPEAL NO. E/1898/2010

MARCH 21, 2012

ORDER


1. The appeal and stay application are directed against Order-in-Appeal No.: SR/240/ NGP/2010 dated 30/07/2010 passed by the Commissioner of Customs & Central Excise (Appeals), Nagpur.

2. The issue relates to availment of CENVAT credit on service tax paid on insurance in respect of the vehicles owned and used by the appellant. Since the amount involved is Rs. 37,009/-, which is less than Rs. 50,000/- application for admission has been made Since CENVAT credit is a recurring issue, the application for admission is allowed even though the amount is less than Rs. 50,000/-.

3. The issue for decision in this case is whether the service tax paid on insurance premium on the vehicles owned and employed by the appellant M/s. Manikgarh Cement, is eligible for CENVAT credit as ‘input service’ under Rule 2(1) of the CENVAT Credit Rules, 2004 or not? The department’s view is that since maintaining and running of vehicles has nothing to do with the manufacturing activity and hence the same is not admissible. Accordingly CENVAT credit was denied by both the adjudicating and appellate authorities. Therefore, the appellant is before me.

4. Shri J.C. Patel, learned advocate, made the following submissions, on behalf of the appellant.

4.1 As per Rule 2(l) of the CENVAT Credit Rules, 2004 ‘input service’ means:-

“(i)  used by a provider of taxable service for providing an output service, or

(ii)  used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearances of final products from the place of removal,

and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal”.

4.2 As per this definition maintenance of vehicles, which are used for transporting employees of the company or for transportation of raw materials or finished products of the company are in relation to the business activities of the company and is covered by the definition of ‘input service’ as defined in the said Rule. Accordingly, they are rightly entitled for the CENVAT credit of the service tax paid on such ‘input services’.

4.3 He also relies on the judgments of this Tribunal in the case of Commissioner of Customs & Central Excise v. H.E.G. Ltd. [Final Order No. 682/2010 SM (BR), dated 23-6-2010] and Surya Roshni Ltd. v. CCE [Stay Order No. 422/2009-SM (BR) (PB), dated 3-8-2009] wherein it was decided that service tax paid on car insurance/vehicle insurance is an eligible input service and the ratio of these decisions will apply squarely to the facts of the present case.

5. The learned Dy. Commissioner (AR) appearing for the Revenue reiterates the findings of the lower adjudicating and appellate authorities.

6. I have carefully considered the rival submissions. After hearing both the sides, I am of the view that the appeal itself can be disposed of at this stage. Therefore, after grant of stay against recovery of dues adjudged, I take up the appeal for consideration and disposal.

7. The definition of ‘input service’ provided under rule 2(l) of CENVAT Credit Rules, 2004 covers a gamut of activities relating to the business undertaken by the manufacturer or the service provider. In the case under consideration the appellant has used the vehicles owned by them either for transportation of their employees or for transportation of goods which is an integral part of the business of appellant-firm. Therefore, the service tax paid on the insurance premium of such vehicles is an ‘input service’ as defined under Rule 2(l). Further, this Tribunal in the case of H.E.G. Ltd. (cited supra) also came to the conclusion that insurance of vehicle is in relation to the maintenance of the vehicles and is eligible for credit as ‘input service’.

8. Following the ration of the above decision, I allow this appeal with consequential relief, if any.


Online classes for CA CS CMA



nayan
article assistant


[ Scorecard : 450]
Posted On 11 December 2012 at 17:14

when the vechile is used entirely for the main object of the manufacturing concern or a service provider, then cenvat credit shall be available




Arun Iyer
Article - CA Final


[ Scorecard : 37]
Posted On 11 December 2012 at 18:22

And what about the defination of Input services under cenvat rules - which excludes Insurance on Motors vechiles from the defination of Input services itself. So how do you justify availabilty of the credit?



There are 2 Replies to this message






Related Files








Related Threads


Post your reply for Cenvat credit on insurance premium of vehicles



Your are not logged in . Please login to post replies

Click here to login


Not a member yet ?? Click here to signup

Message







    

  • Use thank button to convey your appreciation.
  • Maintain professionalism while posting and replying to topics.
  • Try to add value with your each post.



Forum Home | Forum Portal | Member Control Center | Who is Where | Popular Threads | Today's Topic | Recent Posts | Today's Posts | Post New Topic | Thread With Files | Top Threads This Month | Forum Stats | Unreplied Threads

back to the top