2014 (4) TMI 834 - AT - Central Excise

Denial of CENVAT Credit - Waiver of pre deposit - outdoor catering service - Held that - Commissioner examined the scope of the definition of input service independently and arrived at a conclusion against the assessee. This apart, we find that a few factual aspects are crucial in determining whether the appellant can claim the benefit of the two judgements. Firstly, the appellant should clearly plead the number of workers employed in the factory during the material period. Secondly, they should also clearly state whether the cost of service was included in the cost of production of the final products, and if so to what extent. Appellant has not pleaded any of these. They have not even claimed that no amount was recovered from the employees towards the cost of the service. In other words. the appellant has failed to set up the requisite factual foundation for claiming the benefit of the Hon ble High Court s judgements. In this scenario, we are unable to hold that they have made out a clear prima facie case against the demand. nevertheless, for the moment, we are not impressed with the way in which the case of Ultratech Cement Ltd. was distinguished by the adjudicating authority - Following decision of CCE, Nagpur Versus Ultratech Cement Ltd. 2010 (10) TMI 13 - BOMBAY HIGH COURT and Commissioner of Central Excise, Bangalore-III, Commissionerate Versus Stanzen Toyotetsu India (P.) Ltd. 2011 (4) TMI 201 - KARNATAKA HIGH COURT - Conditional stay granted.

Summary

Issues: Denial of CENVAT credit for 'outdoor catering service' used in factory canteen; Claim of prima facie case based on High Court decisions; Failure to establish factual foundation for claiming benefit of judgments.

In the judgment delivered by the Appellate Tribunal CESTAT CHENNAI, the issue revolved around the denial of CENVAT credit amounting to Rs.21,65,184/- to the appellant for the period from September 2007 to September 2010 concerning the use of 'outdoor catering service' in their factory canteen for providing food to the workers. The appellant contended a prima facie case citing two High Court decisions, emphasizing that the supply of food to factory workers through 'outdoor catering service' was integral to their business activities, thus warranting CENVAT credit. However, the adjudicating authority distinguished the case law cited by the appellant and did not follow the High Court's decision. The Tribunal noted that crucial factual aspects such as the number of workers employed during the period and the inclusion of service cost in the final product's production cost were not adequately pleaded by the appellant. The failure to establish these essential facts undermined the appellant's claim for the benefit of the High Court judgments. Despite finding the adjudicating authority's distinction of the case law unconvincing, the Tribunal directed the appellant to predeposit Rs.5,00,000/- within six weeks and report compliance, with a waiver and stay on the remaining dues subject to due compliance. The judgment highlighted the necessity for a clear factual foundation to support claims based on legal precedents, emphasizing the importance of pleading relevant details to substantiate entitlement to CENVAT credit.