2015 (12) TMI 1489 - AT - Central Excise

Denial of CENVAT Credit - outdoor catering service - Held that - Impugned order has not dealt with the aspect that there is no nexus between the input service and the manufacturing activities undertaken by the Respondent. - Input service definition was amended w.e.f. 01.04.2011 providing for certain excluded services on which the manufactureror the service provider is not entitled to take cenvat credit of service tax paid thereon. The excluded services are contained in clause (C) of the definition of input service . As per the definition, the excluded services are not to be considered as input service, when such services are used primarily for personal use or consumption of any employee. Outdoor catering is one of such excluded service itemized in the said clause. In the present case since, the outdoor catering service has not been used for the personal use or consumption of the employee and the said service has been provided by the employer to its employees for preserving proper working atmosphere in the factory for enhancing the productivity, I am of the view that the Ld. Commissioner (Appeals) has rightly extended the Cenvat benefit on the disputed service to the respondent. I find that this Tribunal in the case of Hindustan Coca Cola Beverages (P) Ltd. vs CCE Nasik reported in 2014 (12) TMI 596 - CESTAT MUMBAI has allowed the cenvat credit on the disputed service. - Decided against revenue.

Summary

Issues:
- Appeal against allowing cenvat credit on outdoor catering service
- Interpretation of the definition of 'input service' post-amendment
- Nexus between input service and manufacturing activities

Analysis:
The appeal was filed by the Revenue against an order passed by the Commissioner of Central Excise (Appeals) Gurgaon, which allowed cenvat credit of service tax paid on outdoor catering service in favor of the appellant. The Revenue contended that the appellant had availed cenvat credit on outdoor catering service during a specific period, which, as per the amended definition of 'input service' from April 2011, is not categorized as an input service for cenvat credit purposes. Another ground raised was the lack of nexus between the input service and the manufacturing activities undertaken by the Respondent.

During the proceedings, the Ld. DR for the appellant relied on a judgment of the Hon'ble Gujarat High Court to support the contention that cenvat credit should not be allowed on the disputed service. On the other hand, the Ld. Consultant for the respondent argued that the exclusion clause in the definition of input service did not apply to the case since the outdoor catering service was not used for personal consumption by the employees but to enhance the working environment for manufacturing activities. The Commissioner (Appeals) had specifically noted that the catering service was not for personal consumption but for facilitating the working environment of the employees engaged in manufacturing excisable goods.

The Tribunal analyzed the amended definition of 'input service' effective from April 2011, which excluded certain services, including outdoor catering, if primarily used for personal consumption by employees. Since the catering service in this case was not for personal use but for maintaining a conducive working environment to enhance productivity, the Commissioner (Appeals) correctly allowed the cenvat credit. The Tribunal also cited a previous case where cenvat credit on a similar service was allowed. The Tribunal distinguished the judgment cited by the Ld. DR, stating that in that case, amounts were recovered from employees for the canteen service, unlike in the present case where no such recovery occurred.

Ultimately, the Tribunal found no fault in the impugned order and dismissed the Revenue's appeal, along with disposing of the Cross Objection filed by the appellant. The decision was made after considering the arguments from both sides and examining the relevant records.

This detailed analysis of the issues involved in the judgment provides a comprehensive understanding of the Tribunal's decision regarding the cenvat credit on outdoor catering service and the interpretation of the 'input service' definition post-amendment.