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2016 (6) TMI 665 - AT - Central ExciseCenvat credit of the service tax paid - catering services provided to workers - Held that - Following the judgment of the Madras High Court in the case of Commissioner of Central Excise Chennai-III Vs Visteon Powertrain Control Systems (P) Ltd. 2015 (3) TMI 736 - MADRAS HIGH COURT this bench has taken a view that an obligation meant to be discharged under a central statute should not be defeated by another statute when services is to be provided in accordance with the provisions of labour welfare legislation. Therefore, the appellant should not be denied Cenvat credit of catering services provided to workers. However, the recovery if any from the workers should be considered for proportionate allowance of the credit. If the appellant has reversed the credit to that extent, there may not be difficulty. But similarly any default in payment of interest, if any, the authority shall appropriately recover the same. - Decided in favour of assessee
Issues:
1. Consideration of essentiality of catering service provided to factory workers under the Factories Act for Cenvat credit. 2. Denial of Cenvat credit due to lack of necessary details provided by the appellant. 3. Application of judgment of the Madras High Court regarding obligations under central statute and labour welfare legislation. 4. Direction on Cenvat credit for catering services provided to workers and recovery from workers if necessary. 5. Recovery of interest in case of default. Analysis: 1. The appellant argued that the essentiality of the catering service provided to factory workers under the Factories Act was not considered by the authorities, which could defeat the purpose of the Act. The appellant requested that the Cenvat credit of the service tax paid for such services should not be denied. However, both authorities below did not take this into account. 2. The learned DR acknowledged that the appellant had raised this point in the reply to the show-cause notice, but since necessary details were not provided by the appellant, both authorities denied the Cenvat credit. The lack of essential information led to the denial of the credit. 3. The tribunal referred to a judgment of the Madras High Court, emphasizing that obligations under a central statute should not be defeated by another statute when services are provided in accordance with labour welfare legislation. Based on this principle, the tribunal held that the appellant should not be denied Cenvat credit for catering services provided to workers. However, any recovery from the workers should be taken into consideration for the allowance of credit. 4. The tribunal directed that if the appellant had reversed the credit to the extent of any recovery from the workers, there should not be any difficulty. It was also mentioned that any default in payment of interest, if applicable, should be appropriately recovered by the authority. The decision highlighted the importance of compliance with statutory obligations while allowing for necessary recoveries. 5. Ultimately, the appeal was allowed with the specified directions regarding the Cenvat credit for catering services provided to workers. The judgment emphasized the need to balance statutory requirements and recovery considerations to ensure compliance and fairness in the application of tax credits.
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