2015 (11) TMI 768 - AT - Central Excise

CENVAT Credit - outdoor catering services - Imposition of penalty - Held that - The original authority has in principle held that outdoor catering service as input service however credit attributed to the service charges recovered from the employee was disallowed. As regard the denial of the credit attributed on service charges recovered from the employee in case of outdoor catering service is covered by the Hon ble Bombay High Court judgment in case of Commissioner of C. Ex. Nagpur Vs. Ultratech Cement Ltd 2010 (10) TMI 13 - BOMBAY HIGH COURT . In view of this judgment, I upheld the demand confirmed by the original authority and upheld by the Ld. Commissioner(Appeals). As regard the penalty, since initially dispute was admissibility of the outdoor catering service which original authority itself has allowed, only dispute remains that service charges recovered from employee and service tax paid thereof is cenvatable or otherwise. It was also observed that appellant paid the amount confirmed by the original authority alongwith interest and as per the submission of Ld. Counsel they are not contesting the demand and interest. In view of this position I find that no malafide is proved against appellant therefore penalty should not have been imposed. - Decided partly in favour of assessee.

Summary

Issues:
1. Availability of Cenvat credit on outdoor catering services
2. Disallowance of credit attributed to service charges recovered from employees
3. Imposition of penalty under Section 11AC and interest under Section 11AB

Analysis:
1. The appeal addressed the availability of Cenvat credit on outdoor catering services, where part of the service charges was recovered from employees. The original order confirmed a portion of the amount while dropping the balance. The appellant challenged this decision before the Commissioner (Appeals) after paying the demanded amount along with interest.

2. The appellant did not contest the demand but sought to waive the penalty, arguing that although the Cenvat credit on outdoor catering services was admissible, only a portion of the amount was recovered from employees. The Revenue, represented by the Assistant Commissioner, supported the findings of the impugned order.

3. The Tribunal considered the submissions and reviewed the records. The issue revolved around the denial of credit attributed to service charges recovered from employees in the case of outdoor catering services. Referring to a judgment by the Hon'ble Bombay High Court, the Tribunal upheld the demand confirmed by the original authority and the Commissioner (Appeals).

4. Regarding the penalty, the Tribunal noted that the dispute primarily concerned whether service charges recovered from employees and the service tax paid were eligible for Cenvat credit. Since the appellant had paid the confirmed amount along with interest and did not contest the demand, the Tribunal found no malafide intent and dropped the penalty. The demand of Cenvat along with interest was upheld, and the appeal was partly allowed.

5. Consequently, the application for extension of stay was deemed infructuous and dismissed. The Tribunal's decision highlighted the distinction between the availability of Cenvat credit and the disallowance of credit attributed to specific service charges, ultimately resulting in the partial allowance of the appeal.