Order Date – 08 February 2024

Parties: M/s. Kalyan Jewellers India Limited Vs Commissioner of Central Tax & Central Excise, Cochin and C.C., C.E. & S.T., Calicut

Facts –

• The Appellant, M/s. Kalyan Jewellers India Limited, is engaged in retail business of gold jewelry. The appellant is an interface between M/s Oriental Insurance Co. Ltd., and customers purchasing jewelry, operating under a tripartite agreement. They collect fees from customers for subsidiary policies, including premiums and administration charges, paying service tax. Premiums and service tax are remitted to the insurance company upon receipt of invoices.
• The appellant had taken CENVAT credit of the service tax paid by the insurance company on the premium for the master insurance policy issued to the appellant, which was held that said service is not eligible as input service and not eligible for CENVAT credit.

Issue –

• Whether the appellants are eligibility of CENVAT credit of service tax paid on the services provided by M/s Oriental Insurance Co., Ltd., to the appellant?

Order –

• The Tribunal observed that the issue in present appeals is similar to the issue considered by Larger bench in the matter of M/s South Indian Bank and held that insurance service provided by the Deposit Insurance Corporation to the banks is an “input service” and Cenvat credit of service tax paid for this service received by the banks from the Deposit Insurance Corporation can be availed by the banks for rendering ‘output services’.
• Similarly in the matter of Commissioner of Central Excise, Bangalore Vs. PNB Metlife India Insurance Co. Ltd. [2015 (39) S.T.R. 561 (Kar.)], held that “We only reiterate that the issuance of insurance policy by insurer, and then taking of reinsurance by it, is a continuous process, and in the facts of the present case, it cannot be said that the same would not be an ‘input service’ eligible for Cenvat credit within the meaning of Rule 2(l) of the Cenvat Credit Rules, 2004”.
• In view of above discussion and the decisions of the Hon’ble High Court of Karnataka in M/s PNB Metlife India Insurance the cenvat credit on the service tax paid by the Insurance Company on the premium paid by the appellant cannot be denied and has to be considered as input service received from the Insurance Company.
• Hence Appeals are allowed.