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2019 (6) TMI 1603 - AT - Central ExciseCENVAT Credit - input services - outdoor catering services availed at the factory - levy of penalty in case credit is held to not available to them - HELD THAT - The Hon ble Madras High Court in its decision dated 31.08.2017 in the case of CCE Coimbatore vs. PRICOL 2017 (8) TMI 1467 - MADRAS HIGH COURT has held that the use of outdoor catering services in the factory has a nexus and integrally connected with the manufacture of final products and hence eligible for credit. Similar views have been taken by the Hon ble Gujarat High Court in CCE Vadodara vs. Transpek Industry Ltd 2017 (10) TMI 86 - GUJARAT HIGH COURT - T he appellant is entitled to avail Cenvat credit on outdoor catering and therefore the order passed by the Ld. Commissioner allowing credit on outdoor catering services in factory is legally correct. Penalty - HELD THAT - The entire details regarding availment of credit were available to the department and thus there is no suppression on the part of the assessee. Therefore, penalty of ₹ 1,51,080/- imposed on the assessee is set aside. Appeal allowed - decided in favor of appellant.
Issues involved:
1. Determination of entitlement to avail credit on outdoor catering services at the factory. 2. Imposition of penalty on the appellant. Analysis: Issue 1: Entitlement to avail credit on outdoor catering services at the factory The case involved the appellant claiming Cenvat Credit of service tax paid on various input services at their factory. The Ld. Commissioner disallowed a portion of the credit related to commission on air tickets, travel booking, insurance, rent, research & development, and catering services other than those availed at the factory. The main contention was regarding the availability of credit on outdoor catering services at the factory. The Tribunal referred to the decision in the case of Wipro Limited, where it was held that credit on outdoor catering is not available as food is mainly for personal consumption. However, the Tribunal distinguished the present case by noting that catering services were for all employees, not specific individuals. Additionally, the Tribunal cited the decision of the Hon'ble Rajasthan High Court, which upheld the entitlement of Cenvat credit on outdoor catering. Relying on this, the Tribunal held that the appellant was entitled to avail credit on outdoor catering services at the factory based on legal precedents from High Courts. Issue 2: Imposition of penalty Regarding the imposition of penalty, the appellant challenged it on the grounds that details of input services availed were duly informed to the department. The appellant argued that any disallowed credit was not due to fraud or suppression. The Tribunal noted that all details regarding credit availment were available to the department, indicating no suppression by the assessee. Consequently, the penalty imposed on the appellant was set aside, amounting to &8377; 1,51,080. The Tribunal concluded that there was no basis for imposing the penalty given the circumstances of the case and the information provided to the department. In conclusion, the Tribunal ruled in favor of the appellant, allowing the credit on outdoor catering services at the factory and setting aside the penalty imposed. Both appeals and the Cross Objection were disposed of accordingly, emphasizing the legal entitlement of the appellant to the credit and the absence of suppression warranting a penalty.
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