2016 (12) TMI 1046 - AT - Central Excise

Demand - Cenvat credit - outdoor catering services - Held that - as per the fact of the case as appearing from the demand of service tax on the outdoor catering made in the show cause notice as well as from the CA certificate given by the appellant, there is no dispute that amount calculated equal to 50% amount calculated towards catering charges by the appellant represents 50% of the basic cost of the catering charges which does not include VAT and Service Tax. As per the Hon ble Bombay High Court decision in case of Ultratech Cement Ltd. 2010 (10) TMI 13 - BOMBAY HIGH COURT it was held that if the service tax /Cenvat amount is not recovered from the employee the credit is admissible in respect of outdoor catering services - As per the fact of the present case and having support of the above quoted judgment, appellant is entitle for the Cenvat credit in respect of outdoor catering service. Appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
Availment of Cenvat credit for outdoor catering services where 50% of the charges are recovered from employees.

Analysis:
The case involved a dispute regarding the availment of Cenvat credit for outdoor catering services where 50% of the charges were recovered from employees. The appellant had availed Cenvat credit, but the adjudicating authority confirmed the demand of Cenvat credit based on the recovery of 50% catering charges from employees. The Commissioner(Appeals) upheld the decision, leading to the appellant's appeal before the tribunal.

The appellant argued that the amount recovered from employees (50% of catering charges) did not include the service tax paid on outdoor catering services. They contended that the service tax was entirely borne by the company, and no part of it was recovered from the employees. Citing a judgment of the Hon’ble Bombay High Court in a similar case, the appellant asserted that Cenvat credit on outdoor catering services is not available when the service tax amount is recovered from employees. They provided a CA certificate supporting their claim that employees were only required to pay 50% of the basic value without any VAT or service tax elements.

On the other hand, the Revenue representative reiterated the findings of the lower authority, emphasizing that the amount recovered from employees included service tax. However, upon careful consideration of the submissions and records, the tribunal found that the amount calculated by the appellant towards catering charges represented only the basic cost without VAT and service tax elements. Referring to the Hon’ble Bombay High Court decision in a similar case, the tribunal held that if the service tax/Cenvat amount is not recovered from the employees, the credit is admissible for outdoor catering services.

The tribunal relied on a relevant para of the judgment to support its decision, stating that the appellant was entitled to Cenvat credit for outdoor catering services based on the facts of the case and the legal precedent cited. Consequently, the impugned order was set aside, and the appeals were allowed.