SAMRUDDHI CEMENT LTD. Vs. CCE

JUDGEMENT

(1.) THE appellant are manufacturers of cement chargeable to Central Excise duty. They during the period from March 2007 to May 2007 took Cenvat credit of Rs. 3,65,758/ - in respect of service tax paid on the premium for group insurance/mediclaim policy in respect of employees. The department being of the view that this insurance service for providing group insurance/mediclaim/life insurance to the employees is not covered by the definition of input service, issued a show cause notice dated 08/01/2008 for recovery of Cenvat credit alongwith interest and imposition of penalty imposed upon them. Para 2 of the show cause notice clearly mentions that the appellant have wrongly availed Cenvat credit of Rs. 3,65,758/ - on the premium paid by the company for the group insurance/mediclaim/life insurance in respect of employees as per Annexure A. Annexure A to the show cause notice also gives details only of the service tax credit taken on insurance services for employees. The show cause notice was adjudicated by the Assistant Commissioner who vide order -in -original dated 30th December 2008 confirmed the above -mentioned Cenvat credit demand alongwith interest and imposed penalty of equal amount on the ground that the judgment of the Tribunal in the case of Stanzen Toyotetsu India Pvt. Ltd. vs. Commissioner reported in : 2009(14) S.T.R. 316 (Tri.) is not applicable to the facts of this case, as while the Tribunal's judgment is in respect of group insurance/health policy for the employees of a manufacturer, in this case the insurance cover is for the workers alongwith their family members. On appeal being filed by the appellant to Commissioner (Appeals), the Commissioner (Appeals) vide order -in -appeal dated 29/3/10 upheld the Assistant Commissioner's order on the same ground. Against this order of the Commissioner (Appeals), this appeal has been filed. Heard both the sides.

(2.) SHRI Hemant Bajaj, Advocate, the learned Counsel for the appellant, pleaded that the show cause notice alleges that the insurance premium, in question, in respect of which the service tax credit has been taken, had been paid by the company for group insurance/mediclaim/life insurance in respect of employees as per Annexure A to the show cause notice, that Annexure A to the show cause notice only gives details of the Cenvat credit taken on insurance services for employees, that the insurance for the employees is required to be provided in terms of the provisions of Section 38 of the Employees' State Insurance Act, 1948, according to which the subject to the provisions of this Act, all employees in factories or establishments to which this Act applies, shall be insured in the manner provided in this set, that this provision is applicable to the appellant, that in view of this, the group insurance/mediclaim/life insurance provided by the appellant to their employees is an activity in relation to their manufacturing activity, as without providing the group insurance/life insurance/mediclaim to the employees, they would not be allowed to carry on manufacturing operations, that for this reason only, the Hon'ble Karnataka High Court in the case of CCE, Bangalore -III vs. Stanzen Toyotetsu India (P) Ltd. reported in : 2011(23) S.T.R. 444 (Kar.) has in para 14 of the judgment held that insurance/health policy provided by the manufacturer to the employees is an input service eligible for Cenvat credit, that same view has been taken by Hon'ble Karnataka High Court in the case of CCE & ST, LTU, Bangalore vs. Micro Labs Ltd. reported in, 2011(24) S.T.R. 272 (Kar.), that both Assistant Commissioner as well as Commissioner (Appeals) taking note of the judgment of the Tribunal/High Courts in the case of Stanzen Toyotetsu India Pvt. Ltd. vs. Commissioner (supra) have denied the Cenvat credit on the ground that the insurance/mediclaim/life insurance policies provided by the appellant cover the family members of the employees also, that in this regard there is no such allegation made in the show cause notice, that it is settled law by the judgment of Apex Court in the case of CCE, Nagpur vs. Ballarpur Industries Ltd. reported in : 2007(215) E.L.T. 489 (S.C.) and CCE, Bangalore vs. Brindavan Beverages (P) Ltd. reported in : 2007(213) E.L.T. 487 (S.C.), that show cause notice is the foundation of a case and the Adjudicating Authority cannot travel beyond the allegations made in the show cause notice, that both the original Adjudicating Authority and the 1st Appellate Authority have travelled beyond the show cause notice and, hence, the impugned order is not sustainable.

(3.) I have carefully considered the submissions from both the sides and perused the records. The allegation against the appellant is contained in para 2 of the show cause notice dated 18/01/2008, the relevant portion of which is reproduced below: -