2016 (4) TMI 886 - AT - Central Excise

Allowability of Cenvat credit for the period January, 2011 to March, 2011 - Outdoor catering services - appears to be ineligible input services - not used in or in relation to the manufacture of final products and also not covered under the inclusive clause of the definition under Rule 2(l) of CCR, 2004 - Held that - by following the judgment of the jurisdictional High Court in the case of Dalmia Cements Ltd. Vs. Dy. Commissioner of Central Excise, Trichy 2015 (10) TMI 1301 - MADRAS HIGH COURT , the Outdoor catering services are allowed for the benefit of input service credit. - Decided in favour of appellant

Summary

Issues:
1. Eligibility of Cenvat credit on outdoor catering services as input services under CCR, 2004.

Detailed Analysis:
The appellant, a manufacturer of automobile components, availed outdoor catering services for its workers and staff at their factory canteen. A Show Cause Notice was issued disallowing the Cenvat credit on outdoor catering services, alleging it was not used in or in relation to the manufacture of final products. The adjudicating authority disallowed the credit along with interest and imposed a penalty. On appeal, the Ld. Commissioner (Appeals) upheld the decision. The appellant contended that the outdoor catering services were essential for the employees engaged in manufacturing and clearance of goods, as mandated by the Factories Act, 1948. They argued that the cost of food was part of the production expenditure. The Department, however, supported the lower authorities' decision, citing precedents like Maruti Suzuki Ltd. and Vandana Global Ltd.

The Tribunal analyzed the issue and referred to the judgment of the jurisdictional High Court in the case of Dalmia Cements Ltd. and a previous order in favor of the same assessee. The Tribunal distinguished the cited precedents, stating they were not applicable to the present case. It was noted that the eligibility of Cenvat credit on outdoor catering had been allowed in similar cases. Consequently, the impugned order disallowing the credit was set aside, and the appeal was allowed. The Tribunal emphasized that the outdoor catering service qualified as an "input service" as defined in the Rules, aligning with the statutory obligation to provide canteen facilities to employees. The judgment highlighted the specific period of dispute and the relevance of the expenditure on food to the cost of production, ultimately leading to the favorable decision for the appellant.