2017 (10) TMI 1483 - AT - Central Excise

CENVAT Credit - input services - outdoor catering service received inside its factory for supply of food to its employees - HELD THAT - The learned Commissioner have misdirected himself by reading the word employees instead of the word employee in the exclusion clause C, thus the impugned order is erroneous and vitiated. Further, the learned Commissioner have refused to follow the order of this Tribunal. On similar facts and circumstances and on this ground also the impugned order is fit to be set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the appellant is entitled to Cenvat credit for outdoor catering services provided to employees inside the factory for running the staff canteen.

Analysis:
The issue in this appeal revolves around the eligibility of the appellant to claim Cenvat credit for outdoor catering services utilized for the staff canteen inside the factory. The Revenue contended that such services are perks for employees and do not have a nexus with the manufacturing process. The show cause notice alleged that the outdoor catering services were specifically excluded from the definition of input service effective from 01/04/2011. However, the Assistant Commissioner, relying on previous Tribunal rulings, dropped the show cause notice in favor of the appellant.

The Revenue, being dissatisfied, appealed to the learned Commissioner (Appeals), who disallowed the Cenvat credit on outdoor catering services, citing the amended definition of input service. The Commissioner referred to government clarifications indicating that outdoor catering primarily meant for personal use or consumption of employees is excluded from availing Cenvat credit.

The appellant argued that the impugned order was flawed due to a misinterpretation of the definition of input services and should be set aside. They maintained that the Cenvat credit was rightfully claimed for the canteen services available to all employees as a statutory requirement under the Factories Act, 1948. The appellant's counsel emphasized that the exclusion clause refers to services used primarily for personal use or consumption of any employee.

Upon review, the member (Judicial) found that the Commissioner misinterpreted the exclusion clause by substituting the word 'employees' with 'employee,' rendering the order erroneous and flawed. Additionally, the Commissioner failed to follow the Tribunal's previous orders on similar matters, further justifying setting aside the impugned order. Consequently, the appeal was allowed, and the impugned order was overturned, entitling the appellant to consequential benefits as per the law.