2016 (2) TMI 316 - AT - Service Tax

Cenvat Credit - scope of capital goods and input services for providing output services being General insurance services - credit of duty of excise paid on furniture and fixture - Revenue is of the view that they could not have availed CENVAT credit on Furniture and Fittings as they were not capital goods and on the Outdoor Catering Services it was not related to the services rendered by them which are taxable. Held that - appellant is eligible to avail CENVAT credit to the extent of service tax paid by the canteen contractor and is not eligible to avail CENVAT credit of the service tax paid on the value of the services utilized by the employees of the appellant. Furniture and Fittings are nothing but tables and chairs which were procured by appellant during the relevant period. It is a common knowledge that any insurance company is required to have chairs and tables to render services to their clients. In our considered view, the said tables and chairs are used for rendering services of general insurance, accordingly, the appeal filed by the appellant on this issue needs to be allowed and we do so. Appellant is eligible to avail the CENVAT credit of excise duty paid on Furniture and Fittings and also the service tax paid on canteen services as indicated herein above. - Decided in favor of assessee.

Summary

Issues:
1. Eligibility of availing CENVAT credit on Furniture and Fittings.
2. Eligibility of availing CENVAT credit on "outdoor catering services".

Issue 1: Eligibility of availing CENVAT credit on Furniture and Fittings:
The appellant, engaged in general insurance services, availed CENVAT credit on Central Excise duty paid on Furniture and Fittings, along with other input services. The Revenue contended that CENVAT credit on Furniture and Fittings was not permissible as they were not capital goods, and on catering services as they were not related to taxable services. The adjudicating authority upheld the Revenue's view. The appellant argued that Furniture and Fittings were necessary for their services and qualified as inputs under the CENVAT credit rules. They cited relevant case laws and CBEC Circular to support their claim. The Departmental Representative countered that the Furniture and Fittings did not meet the definition of capital goods and lacked nexus with the services provided. The Tribunal found the Furniture and Fittings essential for the insurance business, allowing the appellant's appeal and granting them CENVAT credit on these items.

Issue 2: Eligibility of availing CENVAT credit on "outdoor catering services":
Regarding the CENVAT credit on catering services, the appellant claimed credit based on a High Court judgment allowing such credit for the portion paid by the canteen contractor. The Tribunal agreed with this interpretation, permitting CENVAT credit for the service tax paid by the contractor, excluding the value of services utilized by the appellant's employees. The Tribunal directed the lower authorities to recalculate the demand accordingly. The Departmental Representative's reliance on a different case was dismissed, as the Tribunal found the appellant had consistently demonstrated the use of tables and chairs for providing services, unlike the case cited. Consequently, the Tribunal allowed the appellant to avail CENVAT credit on both the excise duty paid on Furniture and Fittings and the service tax paid on canteen services.

In conclusion, the Tribunal ruled in favor of the appellant, allowing them to avail CENVAT credit on Furniture and Fittings as well as on "outdoor catering services" based on the specific criteria and interpretations discussed in the judgment. The impugned order was disposed of accordingly, providing clarity on the eligibility of CENVAT credit for the appellant in this case.