2023 (10) TMI 53 - AT - Central Excise

CENVAT Credit - input services - Constructions Services - Outdoor Catering - Travel Agent - AMC on Photocopy - Sify Communication (Broad Band Service). Constructions Services - HELD THAT - As regards Construction Services which was availed by the appellant prior to December 2008 for modifying the facilities related to production are covered in the definition of Input Service as provided under Rule 2(l) of the CENVAT Credit Rules, 2004. This issue has been decided in favour of the appellant in the case of M/S RICO AUTO INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EXCISE-DELHI-III 2023 (5) TMI 601 - CESTAT CHANDIGARH . Outdoor Catering - HELD THAT - The CENVAT credit has only been denied on the ground that the sample salary slip of one of the employees shows that the appellants are recovering some amount from the employees for providing outdoor catering but this allegation was not there in the show-cause notice and hence, the Order-in-Original has travelled beyond the show-cause notice. Moreover, prior to 1st April, 2011, CENVAT credit on Canteen Services was permitted as held by the Hon ble High Court of Karnataka in the case of TOYOTA KIRLOSKAR MOTOR PRIVATE LIMITED, VERSUS THE COMMISSIONER OF CENTRAL TAX, BANGALORE 2021 (5) TMI 880 - KARNATAKA HIGH COURT which was affirmed by the Hon ble Supreme Court in TOYOTA KIRLOSKAR MOTOR PRIVATE LIMITED VERSUS THE COMMISSIONER OF CENTRAL TAX 2021 (12) TMI 420 - SC ORDER also. Therefore, the CENVAT credit has rightly been availed with regard to the outdoor catering. Travel Agent - HELD THAT - The service tax paid to travel agents for making arrangements of the employees to visit customers, suppliers and other authorities is for the purpose of business only and cannot be termed as for personal use of the employees . This is also covered in the case of M/S. RAMCO CEMENTS LTD. VERSUS CCE, PUDUCHERRY 2017 (4) TMI 427 - CESTAT CHENNAI . AMC on Photocopy - Sify Communication (Broad Band Service) - HELD THAT - These services fall very much in the definition of Input Service as both the services are required for the business purposes and not for any personal use. The impugned order set aside by allowing all the five appeals of the appellant - appeal allowed.

Summary

Issues involved:
The denial of CENVAT credit on Input Services including Construction Services, Outdoor Catering, Travel Agency Service, AMC on Photocopy, and Broadband Services.

Construction Services:
The appellant, engaged in manufacturing, was denied CENVAT credit on Construction Services. The appellant argued that prior to 2008, these services were allowed as Input Services under the CENVAT Credit Rules. The appellant cited a judicial precedent to support their claim.

Outdoor Catering Service:
The denial of CENVAT credit on Outdoor Catering was based on an allegation of recovery from employees, which was not part of the original show-cause notice. The appellant contended that providing canteen facilities to employees was mandatory under the Factories Act, and prior to April 2011, CENVAT credit for Canteen Services was permissible as established by legal decisions.

Travel Agency Service:
The appellant utilized Travel Agency Services for business-related travel arrangements. The Adjudicating Authority presumed personal use without evidence. The appellant argued that these services were essential for business operations, citing relevant legal precedents.

AMC on Photocopy Machines:
CENVAT credit for AMC on Photocopy Machines was denied based on a presumption of personal use. The appellant emphasized the necessity of these services for business purposes and referred to a legal decision to support their position.

Broadband Services:
The denial of CENVAT credit on Broadband Services was challenged by the appellant, who argued that internet services were essential for modern business operations. The Adjudicating Authority's decision was contested, emphasizing the business necessity of broadband services.

Penalty Imposition:
The appellant argued against the imposition of penalties, asserting their entitlement to CENVAT credit.

The Member (Judicial) reviewed the arguments presented by both parties and examined the relevant legal provisions and precedents. The Member found in favor of the appellant on all issues, overturning the impugned order and allowing all five appeals. The decision was pronounced on 29/09/2023.