Admissibility of cenvat credit on Insurance service and Pest Control service.

PJ/Case Law /2016-17/3385

Case:- SUNDARAM FASTENERS LTD. Versus COMMISSIONER OF C. EX., CHENNAI-II
Citation:- 2016 (43) S.T.R. 454 (Tri. - Chennai)
Appellant’s contention:- Learned counsel submits that the insurance premium having been paid for the health insurance of the employees of the factory, the service tax paid to avail such service is to be allowed to the appellant. Similarly, Pest Control Service availed was to protect the property of the company, for which, the service tax paid to avail such service also makes the appellant eligible to Cenvat credit thereof. Learned counsel also fairly states that the recent amendment to law with effect from 1-4-2011 has prescribed disallowance of Cenvat credit availed on insurance service in certain circumstances.

Respondent’s contention:- Revenue on the other hand says that the service tax paid on insurance service availed shall not entitle the appellant to Cenvat credit in view of the amendment to Rule 2(l) of Cenvat Credit Rules, 2004 with effect from 1-4-2014 bringing certain contingencies to the fold of law. So far as the pest control service is concerned, that has no connection to the business. Therefore no Cenvat credit of service tax paid thereon can be claimed.

Reasoning of judgment:- So far as the Cenvat credit on insurance service is claimed, the exclusion of such service in certain events has been incorporated into the law with effect from 1-4-2011. That is only in respect of the insurance coverage given to employees during journey availing leave travel concession. But that had not taken away welfare of workers under the Factories Act, from its fold if insurance service is availed to overcome difficulties under Workmen’s Compensation Act, in case of hazard. Accordingly, appellant’s claim of Cenvat credit on the service tax paid to avail insurance service for employees employed in factory is permissible.
Pest Control to maintain property of the assessee being integral to the protection of the business, appellant is also entitled to credit thereon.
In the result appeal is allowed.

Decision:-Appeal allowed.

Comment:- The analogy of the case is that insurance is paid for the health insurance of the employees of the factory, the service tax paid to avail such service is to be allowed to the appellant. Similarly, Pest Control Service availed was to protect the property of the company and also integral to business protection, for which, the service tax paid to avail such service also makes the appellant eligible to Cenvat credit.
Prepared by:- Monika Tak

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PJ/Case Law /2016-17/3385

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