2018 (8) TMI 1567 - AT - Central Excise

CENVAT credit - credit alleged to be on the basis of ineligible documents and on ineligible services - Outdoor catering services. Credit with regard to which documents not provided - Held that - The ld. Counsel appearing for the appellants submit that in the interest of justice he is ready to furnish all the invoices issued by the service providers for verification. The Ld. AR has no objection if the matter is sent back for verification, to the file of adjudicating authority - The matter is to be considered afresh by the adjudicating authority who shall pass an order after verifying the invoices issued by the service providers. CENVAT Credit - Outdoor catering services - Held that - The availment of input credit on the outdoor catering services is being extended with the support of interpretations drawn by various Courts with a rider that the employer has to satisfy the test that it has not collected anything in return, from its employees while providing the said service - the appellant is entitled for availment of Cenvat credit but however, it has only to establish that it has provided the impugned service free of cost without charging its employees. Appeal allowed by way of remand.

Summary

Issues:
1. Disallowance of Cenvat credit on the basis of ineligible documents and services.
2. Eligibility of Cenvat credit on outdoor catering services.

Analysis:

*Issue 1: Disallowance of Cenvat credit on the basis of ineligible documents and services*

The appellant, a manufacturer of aerated water and beverages, availed Cenvat credit against invoices issued by service providers. The Revenue issued six show cause notices objecting to the Cenvat credit availed. The adjudicating authority disallowed a portion of the credit and imposed a penalty. The Commissioner (Appeals) upheld this decision. The appellant contended that the denial was due to missing service tax registration numbers on some invoices. The appellant argued that the Revenue did not dispute the availment of Cenvat credit on merits and some invoices did contain the registration number. The Tribunal directed the adjudicating authority to verify all invoices submitted by the appellant and pass an order accordingly.

*Issue 2: Eligibility of Cenvat credit on outdoor catering services*

The appellant claimed Cenvat credit for outdoor catering services provided to its workers as mandated by the Factories Act, 1948. The appellant cited a favorable decision by the Hyderabad Bench of the Tribunal in a similar case. The Revenue argued that input credit need not be given if the employer does not charge its employees for such services. The Tribunal noted that input credit on outdoor catering services is permissible if the employer provides the service free of charge to its employees. The Tribunal held that the appellant is entitled to the Cenvat credit but must demonstrate that the service was provided without any charge to its employees.

In conclusion, the Tribunal allowed the appeals for further verification of invoices and upheld the eligibility of Cenvat credit on outdoor catering services provided the service was free for employees.