2012 (12) TMI 102 - AT - Central Excise

CENVAT credit on outdoor catering service Held that - When the assessee provides outdoor canteen facilities because of a statutory obligation imposed on him under Section 46 of the Factories Act it becomes a condition of service as far as the employees are concerned. He has paid the service tax on outdoor canteen services - cost incurred in rendering such service will be included in the cost of production - credit of service tax would be allowable to a manufacturer even in cases where the cost of the food is borne by the worker matter remanded to original authority in de novo proceedings to ascertain whether respondent employed more than 250 workers during the material period - it is found that the relevant conditions have been satisfied by the respondent they would be entitled to the CENVAT credit in

Summary

Issues:
- Interpretation of the definition of input service for CENVAT credit eligibility on outdoor catering service
- Conditions for claiming CENVAT credit on outdoor catering service
- Verification of facts and remand to original authority

Analysis:
1. The appeals filed by the department challenged the appellate Commissioner's order granting CENVAT credit on outdoor catering service to the respondent, covering the period from March 2007 to May 2008. The original authority had ordered recovery of an amount from the assessee for irregularly availing CENVAT credit on outdoor catering service and imposed penalties. The Commissioner (Appeals) allowed the appeals based on Tribunal decisions, including Commissioner vs. GTC Industries Ltd. and Stanzen Toyotetsu Pvt. Ltd. The department contended that outdoor catering service did not fall under the definition of input service, emphasizing legislative intent.

2. The department argued that the respondent could not claim CENVAT credit on outdoor catering service without proving specific conditions, such as providing food to not less than 250 workers without cost recovery. The respondent, supported by judgments from the Karnataka High Court and Bombay High Court, submitted an affidavit and a certificate of credit reversal to demonstrate compliance with the conditions. The Tribunal directed the respondent to file a miscellaneous application with the required fee for further verification.

3. The Tribunal decided to remand the matter to the original authority for verification of facts regarding the claimed credit reversal and compliance with conditions for CENVAT credit on outdoor catering service. The High Court judgments highlighted the legal obligations and conditions for claiming such credit, emphasizing the need for the original authority to ascertain the number of workers and the correctness of the credit reversal amount. The Tribunal allowed the appeals by remanding the case to the original authority for proper verification and consideration of evidence.

4. The orders of the lower authorities were set aside, and the appeals were allowed by remanding the case for verification. The Tribunal emphasized the importance of following the conditions for claiming CENVAT credit on outdoor catering service and providing a fair opportunity for the respondent to present evidence. If the fee for the miscellaneous application was not paid as promised, the department's appeals would be allowed in absolute terms.