2013 (11) TMI 21 - AT - Central Excise

CENVAT Credit - catering services Waiver of Pre-deposit - Whether the appellant is eligible for the benefit of CENVAT credit of service tax paid on outdoor catering services - Revenue was of the view that there is no obligation cast on the appellant to provide canteen facilities to the employees - Held that - CCE, Nagpur Vs. Ultratech Cement Ltd. 2010 (10) TMI 13 - BOMBAY HIGH COURT The effect of providing canteen within the factory is same whether the number of employees is more than 250 or less than 250 - providing catering services in the factory premises will improve their manufacturing efficiency and the credit in respect of catering services allowed - There are two orders in favour of the assessee out of three orders passed by three different Benches of Tribunal thus there shall be waiver of pre-deposit and stay against recovery of the dues during the pendency of appeal stay granted.

Summary

Issues involved: Eligibility for CENVAT credit of service tax paid on outdoor catering services.

Analysis:
1. The main issue in this case is whether the appellant is entitled to the benefit of CENVAT credit for service tax paid on outdoor catering services, considering the total number of workers being less than 250 and no obligation on the appellant to provide canteen facilities to employees.

2. The appellant relied on various decisions favoring their case, while the respondent cited the Tribunal's decision in a similar case where High Court decisions were considered, leading to the conclusion that credit is not admissible when the number of workers is less than 250 and no obligation exists to provide canteen facilities.

3. The judge noted that the appellant's own case cannot be considered a precedent due to being a consent order. Out of the three decisions cited by the appellant, two favored the assessee, while one was against. The judge highlighted the lack of consideration of these decisions by each other, leading to three independent Tribunal decisions. The judge analyzed the High Court decisions and concluded that providing catering services within the factory premises could enhance manufacturing efficiency, aligning with the decisions of the Bombay High Court and Gujarat High Court, allowing the credit for catering services.

4. The judge clarified that the High Courts' decisions considered in other cases were based on different grounds, where the obligation to provide canteen services was obligatory under the Factories Act due to having more than 250 employees, which was not the issue in the present case. Therefore, it was concluded that the High Courts did not establish a precedent that CENVAT credit is only admissible when the number of employees exceeds 250.

5. Despite contradictory Tribunal orders on the issue, the judge granted a waiver of predeposit and stay against the recovery of dues during the appeal process, considering the two out of three orders favored the assessee, following the general principle that stay should be granted in such circumstances.