2017 (8) TMI 1378 - AT - Central Excise

CENVAT credit - input services - services for personal use of employees - tax paid to providers of transport service for staff - outdoor catering services - Circular no. 943/4/2011-CX dated 29th April 2011 of Central Board of Excise & Customs stating that The principle is that cenvat credit is not allowed when any goods and services are used primarily for personal use or consumption of employees - Held that - The disallowance of CENVAT credit by the lower authorities is not order. Reliance placed in the case of M/S. MARVEL VINYLS LTD. VERSUS C.C.E. INDORE 2016 (11) TMI 1126 - CESTAT NEW DELHI , where it was held that the interpretation of the lower authorities that motor vehicle are not capital goods for the services recipient cannot be appreciated in as much as motor vehicles are admittedly capital goods in terms of the Rule 2 (A) of Cenvat Credit Rules - credit of tax paid to providers of transport service for staff allowed. In Hindustan Coca-Cola Beverages Pvt. Ltd. v. Commissioner of Central Excise Nashik 2014 (12) TMI 596 - CESTAT MUMBAI , it was held that even the Government while issuing the budget clarification or subsequent circular has clarified that what is not eligible is that service which is meant for personal use or consumption by an employee or the cost of which is included as part of salary of the employee as a cost to company basis - Cenvat credit on outdoor catering services allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues: Entitlement to CENVAT credit of tax paid to providers of transport service for staff and outdoor catering services during 2011-13.

Entitlement to CENVAT Credit - Transport Service:
The appeal revolves around the entitlement to CENVAT credit of tax paid to providers of transport service for staff. The appellant argued that the motor vehicle should be considered a capital good, thus making the CENVAT credit admissible. The Tribunal referred to a previous case and highlighted that the exclusion clause pertains to input services of renting a motor vehicle, not in totality. The appellate authority's interpretation was criticized for not extending the benefit to the assessee based on the capital goods definition. The Tribunal emphasized that the motor vehicle should be considered a capital good based on the service provider, not the service recipient, and disagreed with the lower authorities' interpretation.

Entitlement to CENVAT Credit - Outdoor Catering Services:
Regarding the entitlement to CENVAT credit for outdoor catering services, the appellant relied on a case where it was held that services used primarily for personal use or consumption of any employee are excluded from CENVAT credit. The Tribunal noted that outdoor catering services were used in relation to business activities and by all employees in general. It was emphasized that the cost of such services was borne by the company, not the employee, making the CENVAT credit claim valid. The Tribunal set aside the impugned orders and allowed the appeals based on the clarification that services meant for personal use or consumption by an employee are not eligible for CENVAT credit.

Conclusion:
In conclusion, the Tribunal set aside the lower authorities' disallowance of CENVAT credit for tax paid to providers of transport service for staff and outdoor catering services during 2011-13. The decision was based on the interpretation that motor vehicles should be considered capital goods based on the service provider and that services primarily for personal use or consumption by employees are excluded from CENVAT credit. The appeals were allowed, providing consequential relief to the appellant.