In the case of Commissioner Of Central Excise, Delhi Vs M/S Bajaj Motors, it was held that the outdoor catering service provided has not been used for the personal use or consumption of the employee and the said service has been provided by the employer to its employees for preserving proper working atmosphere in the factory for enhancing the productivity. Therefore, the CENVAT credit of outdoor catering service is allowed.
Brief Facts of the Case
The Revenue is in appeal against the impugned order dated 22.04.2014 passed by Commissioner of Central Excise (Appeals) Gurgaon, wherein cenvat credit of service tax paid on the outdoor catering service has been allowed in favour of the appellant.
The Revenue has preferred this appeal on the ground that during the period April 2012 to February 2013, the appellant had availed Cenvat Credit on outdoor catering service, which according to the amended definition of ‘input service’ w.e.f. 01.04.2011 is not categorized as an input service, for the purpose of taking Cenvat credit. The other ground raised in this appeal is that the impugned order has not dealt with the aspect that there is no nexus between the input service and the manufacturing activities undertaken by the Respondent.
Contentions of the Revenue
The Revenue relied on the judgment of Hon’ble Gujarat High Court in the case of CEMA Electric lighting Products (India) Pvt. Ltd. vs CCE, reported in 2015 (37) STR 718 (Guj) to justify his stand that cenvat credit is not permissible to the appellant on the disputed service.
Contentions of the Assessee
The Assessee contended that that the exclusion clause (C) contained in the definition of input service is not applicable to the facts of the present case, inasmuch as, the services with regard to outdoor catering has not been used for the personal use or consumption by the employee of the company. In this context, the assessee referred to the impugned order, wherein the Commissioner (Appeals) has made a specific finding that the catering service has not been used for the personal consumption, rather the same is in the nature of facilitation of working environment of the employees engaged in the activity of manufacture of excisable goods.
Held by Hon’ble CESTAT, Mumbai
The Hon’ble CESTAT, Mumbai stated that Input service definition was amended w.e.f. 01.04.2011 providing for certain excluded services on which the manufacturer or the service provider is not entitled to take cenvat credit of service tax paid thereon. The excluded services are contained in clause (C) of the definition of ‘input service’. As per the definition, the excluded services are not to be considered as input service, when such services are used primarily for personal use or consumption of any employee. Outdoor catering is one of such excluded service itemized in the said clause. In the present case since, the outdoor catering service has not been used for the personal use or consumption of the employee and the said service has been provided by the employer to its employees for preserving proper working atmosphere in the factory for enhancing the productivity. In view of this the Ld. Commissioner (Appeals) has rightly extended the Cenvat benefit on the disputed service to the respondent.
The Hon’ble CESTAT further stated that this Tribunal in the case of Hindustan Coca Cola Beverages (P) Ltd. vs CCE Nasik reported in 2015 (38) STR 129 (Tri. Mum) has allowed the cenvat credit on the disputed service. The Judgment of CEMA Electric Lighting Products (supra) cited by the Revenue is not applicable to the facts of the present case, inasmuch as, in the said decided case the payment made to the canteen contractor had been recovered from the employee/beneficiary; whereas, in the case in hand, no amount has been recovered from the employee towards the said disputed service by the employer.
In view of the above, the appeal filed by the Revenue is dismissed.