Credit admissibility on outdoor catering & rent-a-cab service.

PJ/CASE LAW/2016-17/3108

Case:- CAPARO FASTENERS VERSUS COMM. OF CENTRAL EXCISE, JAIPUR

Citation:- 2016(41) S.T.R 1002 (Tri.-Del.)

Brief facts:- The brief facts of the case are that the appellants are in appeal against the impugned orders wherein the input service credit has been denied on the premise that input service credit availed by the appellants does not qualify as ‘input service’ as per Rule 2(l) of Cenvat Credit Rules, 2004.

Appellant’s Contention:- In Appeal No. E/545/12, the input service credit has been availed by the appellant on outdoor catering service and rent-a-cab service and in Appeal No. E/546/2012, the appellant has availed input service credit on repair and maintenance of company’s vehicles used for business of appellant company. The Revenue is of the view that ‘outdoor catering’ services and ‘rent-a-cab’ services have no nexus with the business of manufacture of the appellant. Therefore, they are not entitled to take Cenvat credit of Service Tax paid on these services. Learned Counsel for the appellant submits that outdoor catering’ services has been availed by the workers of the appellant company and it is statutory requirement for them to maintain canteen in their factory as there are more than 350 workers in their factory. He further submitted that the appellant has recovered some amount of Rs. 6,14,930/- from the workers towards supply of concessional food and the service tax attributable to that amount works out to Rs. 38,003/-. Therefore, he pleads that the amount apart from Rs. 38,003/- is entitled for ‘input service’ credit as held by this Tribunal in the case of Ultratech Cement reported in [AIT-2010-487-HC (Bombay)]. He further submits that the ‘rent-a-cab’ services have been availed by them for bringing the workers to their factory and vice versa. He also submits that in the case of Federal Mogul Goetz (India) Ltd. [AIT-2011-420-HC (P &H)], the Hon’ble High Court held that as service tax paid on the said service has been availed by the appellant in the course of process of manufacture, they are entitled to take credit of ‘input service’. In these terms, he pleads that appeal be allowed to the extent of availment of Cenvat credit except Rs. 38,003/-, which is recovered from the workers of the factory. With regard to the appeal No. E/546/2012, he submits that services of repair and maintenance have been availed by the appellant for the vehicles owned by the appellant company, which are used by the appellant in the course of business of manufacturing. Therefore, they are entitled to take Cenvat credit as held by the Hon’ble High Court of Bombay in the case of Ultratech Cement.

Respondent’s Contention:- On the other hand, learned AR opposed the contention of the learned Counsel and submits that from the facts of the case, it is not coming out whether the appellant is required to maintain canteen in their factory as per statutory provisions of Factories Act. She further submits that it is also not coming out from the facts of the case that whether appellant has recovered any amount from the employees towards rendering ‘outdoor catering’ services. She further submits that a ‘rent-a-cab’ service has not availed by the appellant in the course of business of manufacturing. Therefore, they are not entitled to take Cenvat credit. She further submits that appellant is not entitled to take Cenvat credit for the service of repair and maintenance for the vehicles owned by the appellant as per the case of Maruti Suzuki Ltd. [2009 (240) E.L.T. 641 (S.C.)].

Reasoning Of Judgement:-Heard the parties and considered the submissions in Appeal No. E/545/2012. In this case the issue is related to availment of Cenvat credit on ‘outdoor catering’ service and ‘rent-a-cab’ services. In the case of Ultratech Cement Ltd. (supra), the Hon’ble High Court has held that any services availed by a manufacturer of excisable goods in the course of their business, is entitled to take Cenvat credit. Admittedly, both the services have been availed by the appellant in the course of business of manufacturing of excisable goods. Therefore, it was held that appellant is entitled to take Cenvat credit of service tax on these services, subject to the fact that appellant has not recovered the amount from the employees towards rendering service of ‘outdoor catering’ and rent-a-cab services. As this fact has not been examined by the lower authorities, therefore, matter needs examination at the end of adjudicating authority to ascertain whether appellant has recovered any amount from the employees towards rendering a service of ‘outdoor catering’ and ‘rent-a-cab’ service. If any amount recovered from the appellant from the employees towards these services, same is not entitled to input service credit. With these terms the impugned order is set aside. Appeal is allowed by way of remand to examine the quantification of admissible input service credit only. Appeal No. E/546/2012. In this case, the short issue is whether the appellant is entitled to take input service credit on repair and maintenance service availed by the appellant for repair and maintenance of the vehicles which have been used in their business activity. Learned AR relied on the decision of Maruti Suzuki to deny the Cenvat credit. The said decision is not applicable to the facts of this case as the said decision deals with entitlement of Cenvat credit on inputs as per Rule 2(k) of the Cenvat Credit Rules, 2004 but the case in hand deals with entitlement of inputs service credit as per Rule 2(l) of Cenvat Credit Rules, 2004 and the Hon’ble High Court of Bombay in the case of Ultratech Cement (supra) has held that any service availed by an assessee being a manufacturer of excisable goods in the course of their business, the assessee is entitled to take Cenvat credit. Admittedly, the vehicles in question have been used by the appellant in the course of their business being a manufacturer of excisable goods. Therefore, it was held that the appellant are entitled to take Cenvat credit on repair and maintenance services. In these circumstances, impugned order is set aside. Appeal is allowed with consequential relief, if any.

Decision:-Appeal allowed.

Comment:- The essence of the case is that since the assessee is using services of outdoor catering and repair or maintenance services of vehicles in the course of manufacture of excisable goods, the same will be eligible for cenvat credit. This is backed by decisions given in the case of Maruti Suzuki and Ultratech Cement.

Prepared By: - Alakh Bhandari

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PJ/CASE LAW/2016-17/3108

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