2017 (12) TMI 1155 - AT - Central Excise

CENVAT credit - outdoor catering service - whether appellant is entitled to Cenvat credit in respect of outdoor catering service particularly when such service was excluded from the definition of input service w.e.f. 1st April, 2011? - Held that - outdoor catering service was mainly provided to outsider business guests. Firstly outdoor catering service is in relation to overall function of the manufacturer related to business, therefore it cannot be said that this service is for personal use of the employees. Secondly, it is primarily used not for the employees but for other than the employees which are business guests of the appellant. In the present case outdoor catering service is not provided primarily for personal use and consumption of the employees therefore does not fall under the exclusion category. I also find that even if the exclusion of certain service is provided from the definition of input service, this Tribunal has allowed the credit on the identical services. Extended period of limitation - Held that - on the identical issue auditors have raised objection by issuing show cause notice dated 24-4-2015 for the almost same period - reliance placed in the case of Nizam Sugar Factory Vs. Collector of Central Excise, A.P. 2006 (4) TMI 127 - SUPREME COURT OF INDIA that once the SCN for a particular period was issued, for the same period, another SCN cannot invoked extended period - demand is clearly time barred for the extended period. Appeal allowed - decided in favor of appellant.

Issues Involved:
- Entitlement to Cenvat credit for outdoor catering service excluded from input service definition
- Applicability of exclusion based on the purpose of the service
- Limitation period for raising demand based on audit findings

Analysis:

Issue 1: Entitlement to Cenvat credit for excluded outdoor catering service
The primary issue in this case revolved around whether the appellant was entitled to Cenvat credit for outdoor catering services, despite being excluded from the definition of input service from April 1, 2011. The appellant argued that the outdoor catering service provided during the Annual Day function was not primarily for personal use or consumption of employees but for business-related purposes. They cited various judgments where Cenvat credit was allowed even after the exclusion. The appellant contended that the Annual Day function was an essential part of their business activity, and the cost incurred formed part of the manufacturing cost, making the credit admissible. The Tribunal analyzed the nature of the event, the attendees, and the purpose of the service to determine that the catering was mainly for business guests and not primarily for personal employee use, thus falling outside the exclusion category. Citing precedents where similar credits were allowed, the Tribunal held that in the present circumstances, the credit on outdoor catering service was admissible.

Issue 2: Applicability of exclusion based on the purpose of the service
The Tribunal further delved into the purpose for which the outdoor catering service was provided during the Annual Day function. By examining the ratio of business guests to employees attending the function, it was established that the service was primarily for the business guests and not the employees. The Tribunal emphasized that since the service was related to the overall business function of the manufacturer and not primarily for personal employee use, it did not fall under the exclusion category. Relying on judgments allowing Cenvat credit for similar services used in business-related events, the Tribunal concluded that the credit for the outdoor catering service was justified in the present case.

Issue 3: Limitation period for raising demand based on audit findings
Regarding the limitation period for raising the demand, the appellant argued that the show cause notice was time-barred as it was issued based on an audit conducted by EA 2000 audit, which had previously raised objections for a similar period. Citing legal precedents, the appellant contended that the demand for the extended period was not sustainable. The Tribunal agreed with the appellant's submission, holding that once a show cause notice for a specific period had been issued, another notice for the same period could not invoke the extended period. Relying on settled legal principles, the Tribunal found the demand for Cenvat credit both unsustainable on merit and time-barred. Consequently, the impugned order was set aside, and the appeal was allowed.

This detailed analysis of the issues involved in the judgment showcases the Tribunal's thorough examination of the facts, legal precedents, and arguments presented by both parties to arrive at a well-reasoned decision in favor of the appellant.

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