CESTAT: Service Tax Paid on Insurance of Plant, Machinery for Manufacture is Admissible as Cenvat Credit

CESTAT: Service Tax Paid on Insurance of Plant, Machinery for Manufacture is Admissible as Cenvat Credit

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Mumbai, by its single member Anil G. Shakkarwar (Technical Member) has ruled that the service tax paid on the insurance of plant, machinery, and equipment required for manufacture is admissible as CENVAT Credit.

In the present case, the appellant/assessee- M/s Bhaurao Chavan SSK Ltd. is a manufacturer of sugar and molasses. They availed of CENVAT Credit of Service Tax paid on insurance of vehicles of the manufacturing unit, consultancy services engaged for receiving consultancy in relation to the co-generation plant, insurance availed for plant, machinery, equipment, and stock of the goods, insurance on gratuities for the employees, and subscription fee paid.

According to the department, CENVAT credit was not admissible to the appellant. Therefore, the appellant was issued a show-cause notice proposing deny CENVAT credit.

The appellant submitted that insurance of the vehicles belonging to the manufacturing unit is an integral part of the business activity. Therefore, the service tax paid on the insurance of vehicles is admissible as CENVAT credit because vehicles are used in relation to their manufacture.

The department contended that the co-generation plant was not installed during the period of dispute, and therefore, the service tax paid on the consultancy service is not admissible.

The CESTAT noted that the co-generation plant though was not installed during the relevant period, consultancy was received during the relevant period and Service Tax paid on consultancy was claimed as CENVAT Credit and the same is admissible. Manufacturing is not possible without plants, machinery, and equipment in order.

Accordingly, the CESTAT held that the service tax paid on insurance of plant, machinery and equipment required for manufacture is admissible as CENVAT Credit and allowed the appeal of the assessee and allowed the CENVAT credit of Rs. 1,56,584.