2015 (2) TMI 962 - AT - Central Excise

Denial of CENVAT Credit - Outdoor Catering Services and Clearing & Forwarding services - Held that - major amount of the total demand of input credit relates to outdoor catering services and the amount involved on this count is ₹ 1,86,466 and in respect of C&F services the amount in dispute is ₹ 13352/-. On a query from the Bench as to whether the appellant has collected from the employees towards catering services, the learned advocate submitted that this aspect was not part of the SCN. However, he submits that he will file the supporting documents at the time of hearing the appeal to establish if any charges are reimbursed towards catering services. The appellants are eligible for cenvat credit if employees are more than 250 and if they have not reimbursed the catering charges from the employees. Since the appellant is not able to produce any evidence to prove reimbursement charges has not been collected from employees, prima facie, the appellant has not made out a case for waiver of entire amount of duty along with interest and penalty. The plea of the appellant for production of supporting documents in respect of reimbursement of catering charges would be examined at the time of appeal hearing. Accordingly, I direct the appellant to make a predeposit of ₹ 35,000 within 4 weeks - Partial stay granted.

Summary

Issues:
1. Denial of cenvat credit on Outdoor Catering Services and Clearing & Forwarding services.
2. Eligibility of the appellant to avail credit on the mentioned services.
3. Interpretation of the definition of "input services" as per Rule 2(1) of CCR 2004.
4. Predeposit requirement and waiver of the amount.

Analysis:

1. The adjudicating authority initially denied cenvat credit on Outdoor Catering Services and Clearing & Forwarding services, a decision upheld by the Commissioner (Appeals). The appellant claimed eligibility for credit on these services, emphasizing that the period in question predates the amendment of the definition of "input services" under Rule 2(1) of CCR 2004. The appellant cited relevant judgments from the Hon'ble Bombay High Court and the Hon'ble Karnataka High Court to support their argument and requested a waiver of predeposit.

2. The Ld. AR, however, supported the findings of the impugned order and highlighted that the total amount involved in both cases fell below the monetary threshold limit as per the amended provisions. On the merits, it was argued that the appellant failed to provide evidence showing that the number of employees exceeded 250, a crucial factor for claiming credit on outdoor catering services. The Ld. AR referenced specific decisions to strengthen their stance on the matter.

3. Following the submissions from both sides, the presiding judge noted that a significant portion of the total demand for input credit pertained to outdoor catering services and a smaller amount to Clearing & Forwarding services. The judge queried whether the appellant had collected charges from employees for catering services, to which the appellant's representative responded that this aspect was not part of the Show Cause Notice (SCN). The judge directed the appellant to produce supporting documents during the appeal hearing to establish if any charges were reimbursed for catering services. The eligibility for cenvat credit hinged on the condition that the employees numbered over 250 and that catering charges were not reimbursed from them. Due to the lack of evidence proving non-collection of reimbursement charges from employees, the appellant was directed to make a predeposit of a specified amount within a set timeframe for the appeal hearing, with the balance dues being waived upon compliance.

4. The judgment concluded by outlining the predeposit requirement, specifying the amount to be deposited by the appellant, and granting a waiver of the balance dues pending the appeal hearing. The recovery of the waived amount was stayed until the appeals were disposed of, with a compliance report deadline set for a future date.

This comprehensive analysis delves into the key issues surrounding the denial of cenvat credit, the eligibility criteria for claiming credit on specific services, the interpretation of relevant legal provisions, and the procedural aspects related to predeposit and waiver of amounts in the context of the appellate tribunal's decision.