2012 (6) TMI 639 - AT - Central Excise

Entitlement to Cenvat credit on catering service received - Held that - Since Revenue has not placed a copy of show cause notice while filing its appeal and once the authority is satisfied that the invoices placed by learned Counsel relates to discharge of obligation under Factories Act, there shall not be difficulty to resolve the dispute - in view of the ratio laid down in COMMR. OF C. EX., AHMEDABAD-I Versus FERROMATIK MILACRON INDIA LTD 2010 (4) TMI 649 (HC) the service tax paid on outdoor catering services by the canteen located in the respondent s manufacturing premises has to be considered as an input service relating to business and that CENVAT credit is admissible the appellant deserves hearing - matter is remanded to the Adjudicating Authority to consider the issue in accordance with law laid down .

Summary

Issues:
- Appeal against entitlement to Cenvat credit on catering service received.
- Interpretation of the Factories Act regarding canteen service obligation.
- Validity of availing catering service for factory workers.
- Requirement of service tax payment for Cenvat credit eligibility.

Analysis:
1. The appeal was filed by the Revenue challenging the first appellate order that allowed the appellant's entitlement to Cenvat credit on catering services received. The respondent argued that the catering service provided to coal mill, Kiln, and mechanical department workers was in compliance with the obligation under Section 46 of the Factories Act, which mandates providing canteen services to workers. The respondent contended that whether the service was provided directly by the canteen or indirectly by a caterer did not affect its classification as an input service. Reference was made to a judgment of the High Court of Gujarat to support this argument.

2. The Revenue disputed the respondent's claim, leading to a hearing where both sides presented their arguments, and the records were examined by the tribunal.

3. The presiding judge acknowledged the obligation imposed by law to provide canteen services to workers and emphasized that this obligation must be fulfilled without any attempt to circumvent it. It was noted that if catering services were procured from external sources to fulfill this obligation, it would still be considered compliant with the Factories Act. The judge highlighted the importance of service tax payment on such services for the appellant to claim Cenvat credit. Additionally, the absence of a copy of the show cause notice from the Revenue during the appeal was noted as a factor that led to the dispute reaching the tribunal level.

4. Considering the arguments presented and the legal principles cited, the judge decided to remand the matter back to the Adjudicating Authority for further consideration. The Adjudicating Authority was instructed to review the issue in line with the legal precedent set by the High Court of Gujarat, as per the contentions made by the respondent's counsel. It was emphasized that all relevant evidence and legal points should be presented before the Adjudicating Authority for a thorough examination of the matter.

5. The judgment concluded by stating that the appellant deserved a fair hearing based on the observations made and the legal principles established by the High Court of Gujarat, thereby directing the matter to be reconsidered by the Adjudicating Authority in accordance with the law laid down by the said court.