2018 (7) TMI 600 - AT - Central Excise

CENVAT Credit - input services - Outdoor Catering service - period involved is from March 2006 to February 2011 - Held that - The period is prior to 01.04.2011 and the issue has been settled by the decision in the case of CCE, Chennai Vs. Visteon Powertrain Control Systems Pvt. Ltd. 2015 (3) TMI 736 - MADRAS HIGH COURT , where it was held that use of the outdoor catering services is integrally connected with the business of manufacturing cement and therefore, credit of service tax paid on outdoor catering services would be allowable - credit allowed. However, the appellant is not eligible to avail credit on the contribution collected from the employees. It is brought from the facts as well as from the records that the appellant has reversed an amount (credit to the tune of ₹ 6,11,608/-) being the credit applicable to the employees contribution - The appellant is definitely eligible for the credit on the amount contributed by them being the employer s contribution. Appeal allowed - decided in favor of appellant.

Summary

Issues: Eligibility of Cenvat credit on Outdoor Catering Service/Canteen facilities provided in the factory.

Analysis:
1. Facts and Background: The appellants, manufacturers of parts and accessories of two-wheeler motor vehicles, availed Cenvat credit on inputs and input services. The department disputed the eligibility of the appellants to avail credit on Outdoor Catering service, leading to the issuance of Show Cause Notices (SCNs) proposing to disallow the credit, recover the amount with interest, and impose penalties. The adjudicating authority disallowed the credit, confirmed the demand, and imposed penalties, prompting the appellant to appeal before the Tribunal.

2. Appellant's Argument: The appellant's counsel argued that during the period from March 2006 to February 2011, the appellants employed over 250 individuals in their factory, availing canteen facilities for staff, workers, and employees. The appellants collected employee contributions for the food provided in the canteen, and the dispute centered on the eligibility of credit for Outdoor Catering Services, particularly on the employer's contribution. The department contended that there was no nexus between outdoor catering service and manufacturing activities, citing relevant legal precedents.

3. Department's Position: The Assistant Commissioner (AR) supported the findings of the impugned order, emphasizing the ineligibility of the appellant to claim credit on the contribution collected from employees.

4. Tribunal's Decision: The Tribunal deliberated on whether the appellants were entitled to credit on Outdoor Catering Service/Canteen facilities provided in the factory, noting the settled issue based on legal precedents cited by the appellant's counsel. The Tribunal ruled that while the appellant could not claim credit on the contribution collected from employees, they were eligible for credit on the employer's contribution. The Tribunal set aside the impugned order, allowing the appeal with consequential reliefs, if any.

5. Conclusion: The Tribunal's decision clarified that the appellant could avail credit on the employer's contribution for canteen facilities, overturning the disallowance of credit by the adjudicating authority. The judgment highlighted the distinction between employee and employer contributions in determining Cenvat credit eligibility, providing relief to the appellant in this particular case.