CX - Health insurance services for CISF personnel employed by assessee not CENVATable since, in exclusion clause, word used is not 'employee of assessee' but 'any employee': CESTAT
By TIOL News Service
MUMBAI, MAR 05, 2018: THE issue is whether the service tax paid on medical insurance premium for health insurance is admissible for CENVAT credit or otherwise.
As the lower authorities denied the credit, the appellant is before the CESTAT and submits that the period involved is April 2014 to September 2014; that w.e.f. 01.04.2011, the definition of "input service" has undergone change whereby certain services were excluded, however, as per Clause (C) of Rule 2(l) of CCR, the services of health insurance is excluded only when it is consumed or used for personal use of any employee.
Inasmuch as since in the present case the health insurance is for the employees of CISF personnel, who are not the employees of the appellant, the exclusion clause would not be applicable and resultantly credit is admissible.
The appellant also contended that interest u/r 14 of CCR is not imposable as they had been maintaining credit balance much more than the credit involved in dispute and, therefore, it could not be said that credit had been utilised.
The AR reiterated the findings of the impugned order.
The definition of 'input service' contained in rule 2(l) of CCR, 2004, exclusion clause (C) reads –
(C) such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee;
The Bench extracted the above definition and observed -
"…From the above definition in clause (C) the health insurance for personal use for consumption of any employee is excluded from the purview of input service. The submission of Ld. Counsel that medical insurance premium is paid not for their own employee but for the employee of the security agency i.e.CISF, therefore it does not fall under the exclusion clause, I do not agree with this submission for the reason that as per the exclusion clause the word is not employee of the assessee but it is any employee . Moreover the CISF employees are working for the appellant. In this fact, the service on which credit was availed i.e. medical premium for consumption is clearly excluded from the definition of input service. I agree with the findings of the lower authority for denial of credit on such service…"
In the matter of imposition of interest, the CESTAT referred to the amendment made to rule 14 of CCR by notification 18/2012-CX(NT) dated 17.03.2012 whereby for the words "taken or utilised wrongly", the words "taken and utilised wrongly" were substituted.
And observed thus –
"…it can be seen, the interest is chargeable only when the cenvat credit is taken as well as utilized therefore merely by taking credit and without utilization the interest under Rule 14 is not payable. As per the submission the appellant have been maintaining the cenvat balance which is much more than the credit involved in the present case which shows that the credit so availed has not been utilized Accordingly interest is not chargeable, I therefore hold that cenvat credit on medical premium insurance is not admissible, hence the demand is upheld. The demand oninterest is set aside, the impugned order is modified to the above extent…"
The appeal was partly allowed.
(See 2018-TIOL-722-CESTAT-MUM)
