2017 (10) TMI 790 - AT - Central Excise

CENVAT credit - input services - Outdoor Catering Services - Held that - the Hon ble High Court in the case of Commissioner of Central Excise, Nagpur Vs. Ultratech Cement Ltd 2010 (10) TMI 13 - BOMBAY HIGH COURT , upheld the admissibility of CENVAT credit on outdoor catering/canteen facility in manufacturing unit, subject to proportionate disallowance of credit as regards cost of food, recovered from the employee/worker - credit allowed. Extended period of limitation - Held that - the issue being wholly interpretational in nature and there being no suppression of facts on the part of the appellant-assessee, the extended period of limitation is not invocable - SCN not tenable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of CENVAT credit on "Outdoor Catering Services" by the Commissioner (Appeals)
2. Allegation of suppression of facts by the appellant-assessee
3. Invocation of extended period of limitation for demanding CENVAT credit

Analysis:

Issue 1: Denial of CENVAT credit on "Outdoor Catering Services"
The appeal questioned the denial of CENVAT credit on "Outdoor Catering Services" received by the appellants, who are manufacturers of construction chemicals. The Revenue contended that such services did not fall under the definition of input services under Rule 2(l) of CENVAT Credit Rules, 2004, as they were not used directly or indirectly in the manufacture of final products. The show-cause notice alleged suppression of facts by the appellants to evade duty payment, invoking penalties under relevant sections of the Central Excise Act, 1944. The issue was settled in favor of the assessee by the Hon'ble Bombay High Court, which upheld the admissibility of CENVAT credit on outdoor catering/canteen facility in a manufacturing unit, subject to proportionate disallowance of credit for the cost of food borne by the worker.

Issue 2: Allegation of Suppression of Facts
The Commissioner (Appeals) considered the submission that the details of CENVAT credit were mentioned in monthly returns and proper records were maintained. It was observed that the Department became aware of the credit only during a scrutiny of records by Audit Officers. However, the appellate tribunal found the Commissioner's finding erroneous, stating that there was no obligation for the assessee to separately inform the Department about each credit taken, except through prescribed returns. Given the settled nature of the issue regarding CENVAT credit for Outdoor Catering/Canteen Services, the tribunal held that the extended period of limitation was not applicable due to the interpretational nature of the issue and the absence of suppression of facts by the appellant-assessee.

Issue 3: Invocation of Extended Period of Limitation
The tribunal concluded that the extended period of limitation was not justifiable in this case, as the issue was interpretational, and there was no suppression of facts by the appellant. The tribunal allowed the appeal, setting aside the impugned order and providing consequential relief in accordance with the law.