2011 (5) TMI 727 - AT - Service Tax

Whether the outdoor catering service received by the respondent can be treated as input service has to be examined in the light of definition of input service as given in Rule 2(l) of the Cenvat Credit Rules, 2004 - maintaining of canteen for the workers being a requirement under the provisions of the Factory s Act, the same has to be held as activity related to manufacturing business - Revenue s appeals are dismissed

Summary

Issues:
1. Whether outdoor catering service received by the respondent is covered by the definition of input service for Cenvat credit eligibility.
2. Interpretation of the definition of input service under Rule 2(l) of Cenvat Credit Rules, 2004.
3. Application of judgments by different High Courts and Tribunals in determining the eligibility of outdoor catering service as an input service.

Analysis:

The dispute in this case revolves around the eligibility of the respondent for Cenvat credit on outdoor catering services received. The Commissioner (Appeals) allowed the credit, citing the requirement under the Factory's Act to provide canteen facilities for workers and referring to precedents. The Revenue challenged this decision, arguing that outdoor catering lacks nexus with manufacturing, thus disqualifying it as an input service.

The Departmental Representative contended that the outdoor catering service should not qualify as an input service based on the judgment in the case of Maruti Suzuki Ltd. v. Commissioner. They highlighted various court decisions to support their argument, emphasizing the need for a direct link between the service and the manufacturing process to be considered an input service.

However, the respondent's representative relied on precedents like the case of CCE, Mumbai v. GTC Industries Ltd., and the judgment of the Hon'ble Bombay High Court in CCE, Nagpur v. Ultratech Cement Ltd. to support their stance. They argued that maintaining a canteen for workers is a statutory requirement under the Factory's Act, establishing a clear connection to the manufacturing business.

Upon careful consideration, the Tribunal found that the provision of canteen facilities for workers is mandated by the Factory's Act, making it an activity related to the manufacturing business. Citing the judgment in Maruti Suzuki Ltd. v. Commissioner, the Tribunal emphasized the importance of services integral to the manufacturing process qualifying as input services. The Tribunal concluded that outdoor catering services, being integrally connected to the business of manufacturing cement, rightfully qualified as an input service, upholding the Commissioner (Appeals) decision.

The Tribunal distinguished other judgments cited by the Departmental Representative, noting that the specific context and requirements of the Factory's Act in this case justified the inclusion of outdoor catering services as an input service. Consequently, the Tribunal dismissed the Revenue's appeals, affirming the eligibility of the respondent for Cenvat credit on outdoor catering services.

In summary, the Tribunal's decision hinged on the statutory obligation to provide canteen facilities for workers under the Factory's Act, establishing a clear nexus between the outdoor catering service and the manufacturing business. This case underscores the importance of considering the specific circumstances and legal requirements in determining the eligibility of services as input services for Cenvat credit purposes.