It was held that it is a common knowledge that any insurance company is required to have chairs and tables to render services to their clients. The said tables and chairs are used for rendering services of general insurance, accordingly CENVAT credit availed on such furniture & fittings is allowed.
Facts of the Case
The relevant facts that arise for consideration are the appellant being in the business of general insurance were paying service tax on the services rendered by them and were availing benefit of CENVAT credit of service tax paid on the various input services as also on capital goods and inputs. Appellant availed the CENVAT credit of Central Excise duty paid on Furniture and Fittings during the period 2006-07, 2008-09 and also on the service tax paid by the canteen contractor. 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. Show cause notice was issued which was contested on merits as well as on limitation; after due process of law, the adjudicating authority confirmed the demands raised on the ineligibility of CENVAT credit on Furniture and Fittings and canteen services, along with interest and imposed penalties under various sections and rules.
Contentions of the Assessee
The assessee contended that Furniture and Fittings are required by the appellant for rendering the services of general insurance. The said Furniture and Fittings may not classify as capital goods but are definitely inputs. The assessee submitted that the CENVAT credit on the canteen services as availed by the appellant is now confirmed by the Hon’ble High Court of Bombay in the case of Ultratech cement 2010-TIOL-745-HC-Mum, holding that such credit is available. As regards the Furniture and Fittings, the tribunal in the case of Agarwal Foundries-2015(321) E.L.T. 267 has held CENVAT as they are used for any other purposes. He would also draw our attention to CBEC Circular no. 943/04/2011-CX dated 29.04.2011 and specifically to point no. 3 in the said Circular.
Contentions of the Revenue
The Revenue contended that the appellant had availed the CENVAT credit on Furniture and Fittings holding them to be capital goods. The said Furniture and Fittings do not classify as capital goods as per the definition in the rules, as they fall under different chapter and not those chapters which are treated as capital goods by the rules. The ratio of judgment to the tribunal in the case of Bharti Airtel Ltd. 2012-TIOL-209-CESTAT-Mum will apply & there has to be sufficient nexus between the inputs and input service, while in the case in hand is not forth coming and the appellant had not evidenced that the Furniture and Fittings which have used for providing services. On the CENVAT credit availed on catering services, the revenue reiterated the findings of the adjudicating authority.
Held by Hon’ble CESTAT
As regards the CENVAT credit of the service tax paid on catering services, the law is fairly settled by a judgment of Hon’ble High Court of Bombay in the case of Ultratech Cement (supra). The Hon’ble High Court has categorly stated that CENVAT credit can be availed on the service tax paid on the portion which is being paid by the canteen contractor. The Hon’ble High Court has also held that service tax paid on contribution or value of the canteen services enjoyed by the employees will not be available as CENVAT credit. In view of this, 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. Lower authorities are directed to rework out the demand as per the judgment of Hon’ble High Court of Bombay and also recover interest at appropriate rate from the appellant.
As regards the CENVAT credit availed on the Furniture and Fittings, the Hon’ble CESTAT stated that the said 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. 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.
The reliance placed by the department on the judgment of Bharti Airtel (supra) will not carry their case any further, as in that case the tribunal has recorded a clear findings that the appellant therein had not established that products were used for purpose of providing mobile telephone services, on the other hand, in the present case that the appellant has been taking a consistent plea that these tables and chairs are utilized for rendering the services as the employees need to sit and work on these tables and chairs.
In view of the forgoing, in the facts and circumstances of this case, the 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.