M/s. Sundram Fasteners Limited Versus Commissioner of GST & Central Excise
Central Excise
2018 (7) TMI 914 – CESTAT CHENNAI – TMI
CESTAT CHENNAI – AT
Dated:- 12-7-2018
E/40341, 40342, 40344, 40345, 40346/2018 – Final Order Nos. 41995-42000 / 2018
Central Excise
Hon'ble Ms. Sulekha Beevi C.S., Member (Judicial)
Shri M. Kannan, Advocate for the Appellant
Shri S.Govindarajan, AC (AR) for the Respondent
ORDER
The issue involved in all these appeals being the same, they were heard together and are disposed by this common order.
2. Brief facts are that the appellants were issued show cause notice proposing to disallow credit on various input services and for recovery of the same along with interest and for imposing penalties. After due process of law, the original authority disallowed credit on certain input services which was partly upheld by the Commissioner (Appeals). Aggrieved by the disallowance of credit on various input services, the appellant is now before t
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eriod involved in Appeal No.E/40341/018 and E/40346/2018 are both prior to 1.4.2011. In respect of group health insurance services, ld. counsel argued that in respect of demand in Appeal No.E/40341/2018, all the invoices except one is prior to 1.4.2011. That in any case, the said issue whether group health insurance service is eligible for credit has been held in favour of the appellant in their own case reported in 2016 (43) STR 454 (Tri. Chennai). The ld. counsel argued that the exclusion clause in definition of input service excludes insurance coverage given to employees during the journey availing leave travel allowance. The group health insurance in the present case was availed for covering the risk of employees and not for any leave travel allowance. That therefore the credit is eligible. It is also submitted that it is mandatory for the appellant to take insurance benefit for the employees as there are more than 600 employees under the assessee.
3.2 With regard to convention se
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appeals which are stated above, the said services were availed prior to 1.4.2011. With regard to other four appeals, the construction services were availed only for repair and maintenance, modernization and renovation of the premises. The authorities below have rejected stating that those have no nexus with the manufacturing activity and that they are not eligible for credit. He submitted that the appellants would be able to produce documents showing that construction services were availed by the appellant after 1.4.2011 for repair and modernization and therefore requested to remand this issue to the adjudicating authority.
3.4 With respect to rent-a-cab service, the ld. counsel was fair enough to submit that the services were not utilized for manufacture and therefore the appellant is not pressing with regard to the demand raised on this service.
3.5 Coating service (job work) was availed by the appellant for the purpose of processing of the intermediate products which were returned
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ligible for credit since they are not related to the manufacturing activity of the appellant. He relied upon the decision of the Tribunal in the case of Hindustan Petroleum Corporation Vs. Commissioner of Central Excise, Mumbai- 2018 (12) GSTL 305 (Tri. Mum.) and argued that in the said case, the medical insurance premium paid for employees of security agency (CISF) was disallowed by the Tribunal. He also relied upon the decision in the case of Maruti Suzuki India Ltd. Vs. Commissioner of Central Excise – 2017 (5) GSTL 18 (P&H) to argue that only when the input services have nexus with the manufacturing activity, credit is eligible. The decision in the case of Commissioner of Central Excise Vs. Gujarat Heavy Chemicals Ltd. – 2011 922) STR 610 (Guj.) was relied by the ld. AR to argue that the credit in respect of security service provided in residential quarters was disallowed. He submitted that the authorities below have rightly disallowed the credit on va
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ices were availed for taking insurance coverage for the employees. Since the appellant has more than 600 employees, it is mandatory for them to take insurance coverage for their employees. The exclusion clause in the definition of input service excludes such kind of insurance which is taken for an employee during the leave travel allowance and it does not blanketly exclude all insurance service. Though the Tribunal in the case of Hindustan Petroleum Corporation (supra) has taken a view that medical insurance service is not eligible for credit, the said decision is not applicable to the facts of the present case for the reason that in the said case the insurance was taken for security agency i.e. CISF, who is not a direct employee of the assessee. In the appellant's own case, for the period after 1.4.2011, as reported in 2016 (43) STR 454, the Bench has allowed the credit. The relevant portion is reproduced as under:-
“4. So far as the Cenvat credit on insurance service is claimed, th
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el has submitted that commercial construction service were availed n Appeal Nos. E/40342/2018, E/40343/2018, E/40344/2018 and E/40345/2018 for the purposes of modernization and renovation of the factory and office premises. He submitted that the appellant would be able to furnish documents to establish the same. I therefore deem it fit to remand the matter on this issue to the adjudicating authority, which I hereby do.
6.4 With regard to commercial construction services which have been availed prior to 1.4.2011 as reflected in Appeal No.E/40341/2018 and E/40346/2014, I am of the view that the credit is eligible.
6.5 The authorities below have disallowed credit on coating service (job work). The appellant has submitted that the goods were sent for processing of the job work and during the disputed period, the job worker was not liable to pay service tax for the reason that the processing work did not amount to manufacture. Later Notification No.25/2012 dated 20.6.2012 came into force
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For these reasons, I hold that disallowance of credit on air-conditioner maintenance service is unjustified and requires to be set aside, which I hereby do.
7. From the above discussions, I hold that:-
(a) Group health insurance service, coating service (job work), commercial construction service prior to 1.4.2011 are eligible for credit.
(b) The issue with regard to commercial construction service after 1.4.2011 and convention service prior to 1.4.2011 are remanded to the adjudicating authority for reconsideration of the issue, who shall grant an opportunity of hearing.
(c) The air-conditioner maintenance service is allowed.
(d) Rent-a-cab service is disallowed and the demand along with interest and penalty in respect of the same are upheld.
8. The impugned orders are modified to the above extent.
The appeals are partly allowed and partly remanded in the above terms, with consequential relief, if any.
( Dictated and pronounced in open court )
Case laws, Decisions, Jud
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