2016 (11) TMI 864 - AT - Central Excise

CENVAT Credit - outdoor catering services - input service - Held that - I do not find any substantial evidence produced by the Appellants before the authorities below, in support of their submission that the amounts have not been recovered from their employees. I am of the view that in the interest of justice, the Appellants be given fair chance to produce evidence before the Department to establish that the amounts paid for providing such service have not been recovered from the employees on which they have availed CENVAT Credit. In the result, the matters are remanded to the original adjudicating authority so as to enable the Appellants to produce sufficient evidence to establish that the amounts spent on outdoor catering services in providing canteen services to the employees, have not been recovered from the employees. Needless to mention that reasonable opportunity of hearing be given to the Appellants - appeal allowed by way of remand.

Summary

Issues:
Appeal against OIAs passed by Commissioner (Appeals) regarding availing CENVAT Credit on outdoor catering services.

Analysis:
The six appeals were filed against OIAs passed by the Commissioner (Appeals) regarding availing CENVAT Credit on outdoor catering services provided to employees. The Appellant had availed CENVAT Credit on canteen services, which was challenged as not meeting the definition of an input service under Rule 2(l) of CCR, 2994. The demands were confirmed with penalties, leading to the appeals. The Appellant argued that the canteen services were a statutory requirement under labor laws, and they did not recover the entire amount from employees. They cited judgments from the Hon'ble Bombay High Court and Hon'ble Gujarat High Court to support their claim.

The learned Advocate for the Appellant contended that the eligibility of CENVAT Credit for outdoor catering services was established by previous judgments. On the other hand, the Revenue's Authorized Representative acknowledged the eligibility principles but highlighted the lack of evidence provided by the Appellants to show that the amounts spent on outdoor catering services were not recovered from employees. The Tribunal noted the settled principles from previous court judgments but emphasized the importance of proving that the amounts were not recovered from employees to avail CENVAT Credit.

The Tribunal found that while previous court judgments clarified the eligibility of CENVAT Credit for outdoor catering services, it was crucial to demonstrate that the amounts spent on such services were not recovered from employees. Insufficient evidence was found in the records to support the Appellants' claim. In the interest of justice, the Tribunal remanded the matters to the original adjudicating authority to allow the Appellants to produce sufficient evidence showing that the amounts spent on outdoor catering services were not recovered from employees. The Tribunal emphasized providing a fair chance to the Appellants to establish this fact and instructed the original authority to give a reasonable opportunity for a hearing. The appeals were allowed by way of remand to the original authority, keeping all issues open for further consideration.