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CENVAT credit — Services used by employees — Allowable if used for the business.
Facts
The appellant provided to the employees working in their factory canteen service (outdoor catering service), rent-a-cab service, group insurance health policy (insurance service) and claimed service tax paid thereon as CENVAT credit.
The Revenue disputed this claim and treated it as wrong utilisation of credit on the ground that the facilities provided were no way related to the manufacture of goods. According to the party, all the 3 services provided were within the definition of input services as per Rule 2(I) of CCR, 2004 and the services were used indirectly in relation to the manufacture of final products.
Held
Only by reason that the above-mentioned services are not contained in the definition of input service, the assessee could not be denied credit. Rent-a-cab service was used to bring the employees to the place of work to carry out manufacturing activities and thus could be treated as input service. Service tax was paid on canteen service irrespective of the fact that whether the food provided was subsidised or not. The cost of the food would thus form part of the cost of production and thus credit on such amount could be claimed. The group health insurance policy was taken to protect the interest of the employees either during the course of journey to the factory or while working in the factory. In such a case, the amount of premium was also to be considered by the manufacturer while fixing the price of the goods manufactured. The assessee was thus entitled to CENVAT credit.
