Cenvat credit of Service Tax on Insurance for vehicle in personal name of Directors

The fact that the vehicle is registered in the personal name of the Director cannot be a reason to deny Cenvat credit on services relating to assets belonging to the company and used by Directors. Quite often companies register such assets in the name of the Directors as it may be convenient to transfer the vehicle to the Directors themselves on payment of depreciated cost at the end of the tenure of the Director. Since, the vehicles were used by the Directors of the company in the interest of the company as evidenced from the fact that the expenditure was being met by the company; Cenvat credit is allowed. However, it is necessary to verify the fact that vehicles were figuring as assets in the balance sheet of the company and its expenditure was being met by the company. Further, it is necessary to apportion the Cenvat credit on this item also between the value of dutiable goods and value of exempted products manufactured by the appellants following the principles laid down under Rule 6 of Cenvat Credit Rules, 2004.

For full text please refer the decision of the CESTAT , Principal Bench, New Delhi in the case of Valco Industries Ltd. Vs. Commissioner of C. Ex., Chandigarh [2012 (286) E.L.T. 54 (Tri. - Del.)]