2017 (3) TMI 1139 - AT - Central Excise

CENVAT credit - Outdoor Catering Service (Canteen Service) - services for shifting of the machineries at Chennai - interest - penalty - extended period of limitation - Held that - credit on service tax paid on services for shifting of the machineries at Chennai is rightly denied and accordingly its recovery with interest and penalty confirmed by the authorities below is upheld - they are eligible to avail the benefit of discharging 25% of the penalty. With regard to the liability to the CENVAT credit on Outdoor Catering Service (Canteen Service) the principle is well settled by the Hon ble Bombay High Court in the case of CCE Nagpur vs. Ultratech Cements Ltd. 2010 (10) TMI 13 - BOMBAY HIGH COURT where it was held that all services used in relation to the business of manufacturing the final product are covered under the definition of input service and in the present case the outdoor catering services being integrally connected with the business of the manufacture of cement credit of service tax paid out on catering services has been rightly allowed - to ascertain the amount recovered in providing the said service from the employees and reversal of the proportionate credit the matter is remanded to the Adjudicating Authority. Appeal allowed by way of remand.

Summary

Issues:
1. Recovery of wrongly availed CENVAT credit for shifting activities.
2. Eligibility of CENVAT credit on Outdoor Catering Service.

Analysis:
1. The appellant submitted two issues: the recovery of wrongly availed CENVAT credit of ?1,18,285 for shifting activities at their Chennai plant and the credit of ?89,809 for Outdoor Catering Service provided to their employees. They reversed the credit for shifting activities but argued against the penalty due to limitation. The Revenue argued that the credit for shifting activities was inadmissible as it was not related to the manufacture of goods at their Vadodara unit. The penalty was confirmed for suppression of facts. The Tribunal upheld the denial of credit for shifting activities but allowed a 25% penalty reduction if conditions were met.

2. Regarding the eligibility of CENVAT credit on Outdoor Catering Service, the appellant claimed that the service was admissible based on a Bombay High Court judgment. However, they acknowledged that credit was not admissible on the amount collected from employees for the service. The Revenue contended that the appellant could not claim credit on the amount recovered from employees for the Canteen Service. The Tribunal agreed with the Revenue, citing precedents from the Bombay High Court and Gujarat High Court. The matter was remanded to determine the non-admissible amount for the Canteen Service.

In conclusion, the Tribunal upheld the denial of CENVAT credit for shifting activities but allowed a penalty reduction. The eligibility of CENVAT credit for the Outdoor Catering Service was denied on the amount collected from employees, and the matter was remanded for further assessment.