2016 (2) TMI 552 - AT - Central Excise

Cenvat Credit - Input Services - Held that - The issue involved in this case is squarely covered by the decision of CCE Nagpur vs. Ultratech Cement Ltd. reported ( 2010 (10) TMI 13 - BOMBAY HIGH COURT ) held that the credit of service tax would be allowable to a manufacturer even in cases where the cost of the food is borne by the worker (see last para). That part of the observation made by the Larger Bench cannot be upheld because once the service tax is borne by the ultimate consumer of the service namely the worker the manufacturer cannot take credit of that part of the service tax which is borne by the consumer. Shri Shridharan learned Counsel for the assessee fairly conceded to the above position in law and in fact filed an affidavit affirmed by a responsible officer of the assessee wherein it is stated that the proportionate credit to the extent embedded in the cost of food recovered from the employee/worker has been reversed. Since the issue is squarely covered by the judgment cited by the learned AR do not find any infirmity in the order of the Commissioner (Appeals) denying the benefit of cenvat credit to the appellant

Summary

Issues:
1. Availment of cenvat credit on service tax paid on charges recovered from employees for catering and rent-a-cab services.

Analysis:
The appeal was directed against an Order-in-Appeal upholding the order-in-original passed by the Commissioner of Central Excise. The appellant, engaged in manufacturing wire & cables and OFC, availed cenvat credit on service tax paid on charges recovered from employees for catering and rent-a-cab services. The jurisdictional Assistant Commissioner objected to this, issued a show cause notice, and adjudicated against the appellant. The appeal filed by the appellant was also dismissed by the Commissioner (Appeals).

Nobody appeared on behalf of the appellant during the proceedings, but the appellant requested the Tribunal to decide the case on merits. The learned Assistant Commissioner argued that the issue was covered by a judgment of the Hon'ble Bombay High Court in the case of CCE, Nagpur vs. Ultratech Cement Ltd. The High Court observed that a manufacturer cannot take credit of service tax borne by the consumer, in this case, the employees. The appellant was deemed not entitled to take credit of service tax paid by the company relating to recoveries from employees for services.

The Tribunal concurred with the arguments presented by the learned Assistant Commissioner, stating that the issue was squarely covered by the cited judgment. Consequently, the Tribunal found no fault in the Commissioner (Appeals) decision to deny the cenvat credit benefit to the appellant, leading to the dismissal of the appellant's appeal.