2019 (3) TMI 345 – CESTAT CHENNAI – TMI – CENVAT Credit – input services – insurance services – period from April 2016 to June 2017 – denial on account of nexus – Held that:- The first policy is in the nature of errors and omission insurance policy. It is a form of insurance policy which covers the risk on failure to perform on the part of financial loss caused or shortage in the service provided or the products sold – the disallowance of credit on errors and omission insurance policies is unjustified and requires to be set aside.
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The second type of insurance policy is the transit insurance policy. The appellant has explained that such insurance policy is taken to cover the risk of accident or damage of the goods such as computers, routers etc. which are transported to the premises of the customer – the appellant herein is not a manufacturer but an output service provider and the definition of input service would not be applicable to output service provider. Any input service us
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ndent ORDER Brief facts are that the appellants are engaged in providing various taxable services in the nature of telecommunication service, franchise service, business auxiliary service etc. They were earlier functioning under Large Taxpayer Unit having centralized registration. On verification of records, it was noticed that they had availed input service credit on insurance services during the period from April 2016 to June 2017. According to department, general insurance / insurance auxiliary service are not covered under the definition of input service used for providing output service as they had no nexus with the provision of output service and therefore became ineligible for input service credit. Show cause notices were issued proposing to demand an amount of ₹ 1,74,869/- along with interest and also for imposing penalties. After due process of law, the original authority confirmed the demand, interest and also imposed penalty. In appeal, Commissioner (Appeals) upheld th
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portation. The appellant is to transport the finished goods as well as input such as routers, computers etc. It is highly necessary to cover the risk of any accident or damage during the transit of these goods. 2.2 The third insurance policy is umbrella fixed asset policy. This insurance policy intends to cover the asset / property and to provide insurance against loss of the risk due to fire, theft and weather damages. These insurance policies are not in regard to the benefit of employees and are not covered under the exclusion definition of input services. It is also submitted by him that for the earlier period, in the appellant s own case, the Commissioner (Appeals) vide Order-in-Appeal No. 534/2017 dated 29.12.2017 had allowed the credit in respect of transit insurance as well as umbrella fixed asset policy. He also relied on the decision of the Tribunal rendered in their own case reported in 2018 (10) TMI 563 – CESTAT Chennai wherein the Tribunal has allowed the credit in respect
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s unjustified and requires to be set aside, which I hereby do. 5.1 The second type of insurance policy is the transit insurance policy. The appellant has explained that such insurance policy is taken to cover the risk of accident or damage of the goods such as computers, routers etc. which are transported to the premises of the customer. The ld. AR has argued that place of removal being the appellant s premises, the said credit is not eligible. However, the appellant herein is not a manufacturer but an output service provider and the definition of input service would not be applicable to output service provider. Any input service used for providing output service is eligible for credit in the case of an output service provider. Hence disallowance of credit on this policy is unjustified and requires to be set aside, which I hereby do. 5.2 The third type of insurance policy is umbrella fixed asset policy. The appellant has taken this insurance policy to cover the risk such as fire, theft
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