The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata bench has held that cenvat credit is allowable on the amount of premium paid towards group mediclaim policy for the factory employees in compliance with the Factories Act, 1948.
The issue before Shri P.K.Choudhary, Member(Judicial) was that whether the Cenvat credit of Service Tax paid on the insurance premium on the insurance policies taken for the employees of the Appellant, M/s. Diamond Beverages Private Limited, which is covered under the Employees State Insurance Act 1948 as well as the Factories Act, 1948 are eligible for Cenvat credit as per Rule 2(l) of the Cenvat credit Rules, 2004.
The Tribunal relied on the decision in the case of Hindalco Industries Ltd. V. Commissioner of C. Ex. & S.T., Nagpur, wherein it was held that “In the exclusion clause introduced with effect from 1-4-2011 in the CCR, 2004, such insurance and mediclaim, etc., shall be treated as inadmissible if those 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. Hence, in my considered view, the credit taken by the appellant on insurance and group mediclaim policy services is admissible credit.”
Relying on the above decision, the Tribunal observed that “the above policy has been taken by the Appellant for its factory employees and that the Appellant is registered under the Employees State Insurance Act, 1948 as well as the Factories Act, 1948, which mandates such policy to be obtained by the Appellant. Thus, by agreeing with the above view, I am of the opinion that in the case at hand also, the Cenvat credit on group Mediclaim policy cannot be disallowed.”
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