2015 (8) TMI 1371 - AT - Central Excise

CENVAT credit - catering service - tent service - design, supply, erection of rerouting - denial on account of nexus - Held that - Catering facility provided by the employer to its employees is a statutory requirement under the Factories Act, 1948 - the appellant had recovered the catering charges at subsidized rates from its employees, which will not be eligible for cenvat credit - the matter is remanded to the Original Authority for ascertaining the fact as to the actual cost recovered by the appellant from its employees and the service tax attributable to such service will not be eligible for CENVAT Credit. With regard to the other services like tent service, design, supply, erection for re routing pipe line etc., the nature and purpose of said services as explained by the ld. Advocate will be considered as input service, since those services have nexus with the manufacture of final product by the appellant - credit allowed. Appeal allowed - decided partly in favor of assessee and part matter on remand.

Summary

Issues: Denial of CENVAT Credit on catering service, tent service, and design, supply, erection services.

Analysis:
1. The appellant argued that providing canteen facility to employees is a statutory requirement under the Factories Act, 1948, and is essential for business activities. The appellant also claimed that other services like tent service, design, supply, and erection were used for protecting raw materials and expansion projects. The appellant relied on various judgments to support their claim.

2. The respondent contended that the disputed services had no nexus with the manufacture of the final product and should not be considered as input services for CENVAT Credit. The respondent argued that catering service is more of a welfare service than a business-related service. Additionally, the respondent raised the issue of the limitation period for issuing Show Cause Notice (SCN) regarding the wrong availment of CENVAT Credit.

3. The tribunal observed that the catering facility provided to employees is a statutory requirement under the Factories Act, 1948. While expenses for catering were included in the product costing, the subsidized rates charged from employees made it ineligible for CENVAT Credit. However, the tribunal found that other services like tent service, design, supply, and erection had a nexus with the manufacturing process, supporting the appellant's claim. The tribunal referred to previous decisions where CENVAT Credit was allowed for similar services.

4. Consequently, the tribunal set aside the impugned order and allowed the appeal partially. CENVAT Credit was granted for tent services, business, supply, and erection for rerouting the pipeline. Regarding catering service, the matter was remanded to the Original Authority to determine the actual cost recovered from employees, making the service tax attributable to it ineligible for CENVAT Credit.

5. The appeal was disposed of based on the above findings and decisions, providing clarity on the eligibility of CENVAT Credit for different services in the context of the appellant's business operations.