By TIOL News Service

MUMBAI, FEB 09, 2016: THE appellant is in the business of general insurance and were availing benefit of CENVAT credit of service tax paid on the various input services as also on capital goods and inputs.

During the period 2006-07, 2008-09 they availed CENVAT credit of CE duty paid on Furniture and Fittings and also on the service tax paid by the canteen contractor.

Revenue denied the CENVAT credit availed on Furniture and Fittings on the ground that they were not capital goods & in respect of "Outdoor Catering Services" credit was denied as being not related to the taxable services rendered by appellant. The amount involved is Rs.3,41,17,361/-.

We reported the stay order as 2013-TIOL-83-CESTAT-MUM.

The appeal was heard recently. Before the CESTAT, the appellant submitted that Furniture and Fittings are required for rendering the services of general insurance; that the said goods may not classify as capital goods but are definitely inputs. Reliance is placed on the decision in Agarwal Foundries - 2015-TIOL-1122-CESTAT-BANG as well as CBEC Circular no. 943/04/2011-CX dated 29.04.2011, Point no. 3. As for credit on Outdoor catering services, the appellant relies upon the Bombay High Court decision in Ultratech Cement - 2010-TIOL-745-HC-Mum in support.

The AR justified the stand of the Revenue that the Furniture and Fittings do not classify as capital goods by deriving support from the decision in Bharti Airtel Ltd. - 2012-TIOL-209-CESTAT-Mum. On catering services, the AR reiterated the findings of the adjudicating authority.

The Division Bench observed -

6.1 As regards the CENVAT credit of the service tax paid on catering services, the law is fairly settled by a judgment of Hon'ble High Court of Bombay in the case of Ultratech Cement (supra). The Hon'ble High Court has categorically stated that CENVAT credit can be availed on the service tax paid on the portion which is being paid by the canteen contractor. The Hon'ble High Court has also held that service tax paid on contribution or value of the canteen services enjoyed by the employees will not be available as CENVAT credit. In view of this, we hold that appellant is eligible to avail CENVAT credit to the extent of service tax paid by the canteen contractor and is not eligible to avail CENVAT credit of the service tax paid on the value of the services utilized by the employees of the appellant. Lower authorities are directed to rework out the demand as per the judgment of Hon'ble High Court of Bombay and also recover interest at appropriate rate from the appellant.

6.2. As regards the CENVAT credit availed on the Furniture and Fittings, we find that the said Furniture and Fittings are nothing but tables and chairs which were procured by appellant during the relevant period. It is a common knowledge that any insurance company is required to have chairs and tables to render services to their clients. In our considered view, the said tables and chairs are used for rendering services of general insurance, accordingly, the appeal filed by the appellant on this issue needs to be allowed and we do so."

The case law cited by the AR was distinguished and the appeal was disposed of.

(See 2016-TIOL-367-CESTAT-MUM)