2018 (10) TMI 563 – CESTAT CHENNAI – TMI – CENVAT Credit – input services – insurance services (errors and omission policy taken by the appellant for indemnifying the errors / omissions or defects in the software products supplied by them) – It appeared to the department that general insurance / insurance auxiliary services are not covered within the definition of input service and therefore the appellants are not eligible for the credit – Held that:- In the case of M/s. Rane brake Lining Ltd. Vs. Commissioner of Central Excise [2018 (7) TMI 611 – CESTAT CHENNAI], the Tribunal has allowed credit on product liability insurance – The very same analogy can be applied for the software products which are supplied by the appellant.
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Further on analyzing the definition of input services, it can be seen that only those type of insurance services which fall under the category of life insurance, health insurance etc. which are availed for personal consumption are excluded from the ambit of
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ndakumar, AC (AR) ORDER Brief facts are that the appellants are engaged in providing various taxable services namely telecommunication service, online information and data processing retrieval services, internet café services, franchisee services, information technology software services etc. On verification of records, it was noticed that they had availed input service credit on insurance services for an amount of ₹ 7,73,832/- for the period from April 2014 to March 2015. It appeared to the department that general insurance / insurance auxiliary services are not covered within the definition of input service and therefore the appellants are not eligible for the credit. Show cause notice dated 19.4.2016 was issued proposing to disallow the credit and recover the same along with interest and for imposing penalties. After due process of law, the original authority confirmed the demand of ₹ 7,73,832/- by disallowing the credit and ordered for recovery of the same along
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it. She relied upon the decision in the case of M/s. Rane brake Lining Ltd. Vs. Commissioner of Central Excise – 2018 (7) TMI 611 and Granules India Ltd. Vs. Commissioner of Central Excise – 2017 (5) TMI 1079. 2. The other issue is with regard to the disallowance of credit on transit insurance policy to the tune of ₹ 3,57,232/-. She submitted that the said insurance services were availed for moving of goods for installation. The appellant provides telecommunication services and for such services the erection and commissioning services of various parts required for the output services are to be moved from their factory premises to the customer premises and the insurance policy was availed for transit of such goods. The department has denied the services alleging that the appellant has not proved the nexus for providing the output service as well as for the reason that insurance service are excluded from the definition of input service. She argued that only those insurance services
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ng the definition of input services, it can be seen that only those type of insurance services which fall under the category of life insurance, health insurance etc. which are availed for personal consumption are excluded from the ambit of the definition. These policies which are for covering the product liability in case of defect to the products supplied would definitely come within the inclusive part of the definition. The conclusion arrived by the authorities below that these are post-manufacturing activities cannot be agreed. Even on analysis of the definition, the inclusive part specifically mentions the services which can be availed upto the place of removal. The storage services are eligible only upto place of removal. So also outward transportation service is eligible only upto the place of removal. The inclusive part of the definition does not qualify the list of services mentioned therein except storage and outward transportation with the words upto the place of removal . Ne
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