2011(06)LCX0016
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
V.G. Sabhahit and Ravi Malimath, JJ.
Commissioner of Central Excise & Service tax, LTU, Banglore
Versus
Micro Labs Ltd.
C.E.A. No. 1 of 2011, decided on 9-6-2011
Cases Quoted -
Stanzen Toyotetsu India Pvt. Ltd. v. Commissioner - 2008(12)LCX0131 Eq 2009 (014) STR 0316 (Tribunal) - Referred [Para 2]
Commissioner v. Stanzen Toyotetsu India (P) Ltd. - CEA No. 96/2009, decided on 8-4-2011 by Kar. H.C. - Relied on [Para 3]
Advocated By -
Shri N.R. Bhaskar, Advocate, for the Appellant.
Shri K.S. Ravishankar, Advocate, for the Respondent.
[Judgment per : Ravi Malimath, J.]. -
This appeal is by the Revenue being aggrieved by the order of the Tribunal which held that the assessees are liable to avail Cenvat credit towards service tax paid on Group Mediclaim Policy premium.
2. The assessees are engaged in the manufacture of medicaments and are holders of Central Excise Registration. On scrutiny of the records by the authority it was seen .that they had availed Cenvat credit for payment made towards Group Mediclaim Policy premium. Accordingly, a show cause notice was issued as to why the Cenvat credit availed by the assessees towards payment of Group Mediclaim Policy premium should not be demanded and recovered since it was irregularly availed by them and also as to why the penalty and interest should not be imposed. After submitting the reply the assessing authority confirmed the demand, penalty and interest. Aggrieved by the same, an appeal was preferred to the Commissioner who confirmed the order of the assessing authority and dismissed the appeal. Aggrieved by the same the assessees preferred an appeal before the Tribunal. The Tribunal by placing reliance in the case of Stanzen Toyotetsu India Pvt. Ltd. v. CCE, Bangalore-Ill reported in 2008(12)LCX0131 Eq 2009 (014) STR 0316 (Tri. - Bang.) held that the assessees are entitled to avail Cenvat credit of the service tax paid on Group Mediclaim Policy premium. Hence, the present appeal by the Revenue.
3. The question for consideration therefore is as to whether the assessees are liable to avail Cenvat credit towards payment of service tax on the Group Insurance Health policy. An identical question came up for consideration before the Division Bench in CEA 96/2009 and connected matters which were disposed off on 8-4-2011. The question considered therein was as to whether the assessees are entitled to claim Cenvat credit for the service tax paid on Insurance/Health Insurance policy. The Division Bench held that in so far as Insurance coverage to the employees is concerned in the course of employment if the employees suffer injury or dies, there is a vicarious liability imposed on the employer to compensate the employee. If the employer employs its own transporta-tion facility in order to cover the risk which also includes the risk of workers who are covered in that statutory establishment, he has to take the insurance policy with which the vehicle cannot go on the road. Even for entering into the premises to meet the obligations under the workmen's compensation Act he has to obtain the Insurance Policy covering the risk of the employees. The employee State Insurance Act takes care of the health of the employees also and casts an obligation on the employer to provide insurance services. Under these circumstances, this Group Insurance Health Policy though is also a welfare measure is an obligation which is cast under the Statute that the employer has to obey. Section 38 of the Employees State Insurance Act, 1948, mandates that subject to the provisions of the Act, all employees in factories or establishments to which 'this Act applies shall be insured in the manner provided by this Act. May be the employees also have to contribute but the employer is under an obligation to take an Insurance policy and contribute his share. Therefore, the said Group Insurance Health Policy taken by the assessee is a service which would constitute an activity relating to business which is specifically included in the input service definition.
4. Therefore, merely because these services are not expressly mentioned in the definition of input service it cannot be said that they do not consti-tute input service and the assessees are not entitled to the benefit of CENVAT credit. Infact, Rule 3 of the Cenvat Rules, 2004, specifically provides that the manufacturer of final products shall be allowed to take credit. The service tax is leviable under Section 66 of the Finance Act and paid on any input service received by the manufacturer of a final product. Therefore under the scheme of the Cenvat Credit Rules, 2004, the service tax paid on all those services which the assessee has utilized directly or indirectly in or in relation to the final product is entitled to claim the credit. Therefore, the Judgment of the Tribunal is legal and valid and is in accordance with law and does not suffer from any legal infirmity which calls for any interference.
5. Therefore it is evident that the assessees are entitled to avail Cenvat credit of the service tax on Group Medical Policy and Group Insurance Health Policy. Under these circumstances, the question of law that arises for consideration in this appeal having since been answered by the Division Bench as mentioned hereinabove, this appeal is dismissed in view of the aforesaid reasons.
Equivalent 2011 (270) ELT 0156 (Kar.)
Equivalent 2012 (026) STR 0383(Kar)
Equivalent 2012 (026) STR 0383 (Kar.)