2013 (8) TMI 304 - AT - Central Excise

Cenvat Credit of service tax paid on Outdoor catering Service - Respondent unit having more than 250 workers in their factory providing canteen facility to the workers and staff of the factory - Held that - Cenvat Credit would be inadmissible only to the extent the charges for canteen facility are recovered by the Respondent from employees and to the extent the charges are not recovered from the employees, they would be eligible for Cenvat Credit relying upon the decision in the cases of CCE Nagpur Vs. Ultratech Cement Limited reported in 2010 (10) TMI 13 - BOMBAY HIGH COURT and also in the case of Commissioner of Central Excise, Ahmedabad-I Vs. Ferromatik Milacron India Ltd. reported in 2010 (4) TMI 649 - GUJARAT HIGH COURT Also, number of workers in the respondent s factory is more than 250 and, therefore, in term of the provisions of factories Act, the appellant are required to provide canteen facility to the workers.

Summary

Issues:
Whether a unit with more than 250 workers is eligible for Cenvat Credit on service tax paid for 'Outdoor catering Service' provided for canteen facility to workers and staff.

Analysis:
The judgment revolves around the eligibility of a respondent unit, with over 250 workers, for Cenvat Credit on service tax paid for 'Outdoor catering Service' utilized for canteen facilities. The Assistant Commissioner initially disallowed the credit, leading to a demand of Rs. 3,10,407 along with penalties. However, the Commissioner (Appeals) partially allowed the appeal, restricting the inadmissibility of Cenvat Credit only to the extent that charges for the canteen facility were recovered from employees. This decision was based on the judgment of the Hon'ble Bombay High Court in a specific case. The Revenue appealed against this decision.

Upon hearing both sides, the judge noted that the issue had been settled against the Department not only by the Bombay High Court but also by the Gujarat High Court in similar cases. The judge emphasized that as the respondent's factory had more than 250 workers, they were obligated under the Factories Act to provide canteen facilities. The judge concurred with the Commissioner (Appeals) that Cenvat Credit would only be inadmissible to the extent that charges for the canteen facility were recovered from employees. The judge found no fault in the Commissioner's decision, aligning it with the precedents set by the Bombay and Gujarat High Courts. Consequently, the Revenue's appeal was dismissed, affirming the decision in favor of the respondent unit.

This judgment underscores the significance of statutory obligations under the Factories Act regarding canteen facilities for workers in determining the admissibility of Cenvat Credit on service tax paid for such services. It also highlights the importance of judicial precedents in interpreting and applying tax laws, ensuring consistency and fairness in tax disputes.