Cenvat Credit On Group Mediclaim Policy Cannot Be Disallowed: CESTAT

The two-member bench of P.K. Choudhary (Judicial Member) has observed that the insurance policy was taken by the Appellant for its factory employees. The appellant is registered under the Employees State Insurance Act, 1948 as well as the Factories Act, 1948, which mandates insurance policies to be obtained by the appellant.

The appellant/assessee was aggrieved by the order which disallowed the Cenvat credit with respect to the Service Tax paid on the premium of the Group Mediclaim Policy for its employees. The Commissioner (Appeals) had further remanded the matter to the adjudicating authority for determination of the penalty imposed on the appellant.

The issue raised was whether the Cenvat credit of Service Tax paid on the insurance premium on the insurance policies taken for the employees of the appellant, which are covered under the Employees State Insurance Act, 1948 as well as the Factories Act, 1948, is eligible for Cenvat credit as per Rule 2(l) of the Cenvat Credit Rules, 2004.

The CESTAT has riled on the decision of the Tribunal in the case of Hindalco Industries, in which it was held that insurance and mediclaim, etc., shall be treated as inadmissible if they are used primarily for personal use or consumption of any employee but not all employees in a group when unrelated to their availing vacation or LTC. The credit taken by the appellant on insurance and group medical insurance policy services is admissible credit.

Case Title: M/s. Diamond Beverages Private Limited Versus Commissioner of CGST & CX, Kolkata South Commissionerate

Citation: Excise Appeal No.75020 of 2022

Date: 23.08.2022

Counsel For Appellant: Advocates Ankit Kanodia, Megha Agarwal

Counsel For Respondent: S.S.Chattopadhyay

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