Service Tax Paid On Insurance Of Plant, Machinery For Manufacture Is Admissible As Cenvat Credit: CESTAT

The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the service tax paid on the insurance of plant, machinery, and equipment required for manufacture is admissible as CENVAT Credit.

The Bench of Anil G. Shakkarwar (Technical Member) has observed that the co-generation plant, though not installed during the relevant period, received consultancy during the period, and service tax paid on consultancy is claimed as CENVAT credit and is admissible. Manufacturing is not possible without plants, machinery, and equipment in order.

The appellant/assessee 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.

In the opinion of the department, CENVAT credit was not admissible to the appellant. Therefore, the appellant was issued a show-cause notice proposing to 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 tribunal allowed the appeal of the assessee and allowed the CENVAT credit of Rs. 1,56,584.

Case Title: M/s Bhaurao Chavan SSK Ltd. Versus Commissioner of Central Excise & Customs, Aurangabad

Case No.: Excise Appeal No. 85367 of 2013

Date: 03. 05.2023

Counsel For Appellant: J.N. Somaiya

Counsel For Respondent: Amrendra Kumar Jha

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