Credit eligibility for outdoor catering and manpower recruitment service.

PJ/Case Law /2016-17/3250

Case:-BAJAJ MOTORS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI-III

Citation:- 2015 (39) S.T.R. 85 (Tri. - Del.)

Brief Facts:-The appellant is in appeal against the impugned order wherein the input service credit on manpower recruitment service and outdoor catering service has been denied to the appellant.
The facts of the case are that during the period 2011-12, the appellant availed input service credit on manpower recruitment service and outdoor catering service being manufacturer of excisable goods. The input service credit was sought to be denied on manpower recruitment service on the premises that in the invoices the name of the service was not mentioned. For outdoor catering service, the service does not directly relate to the manufacturing. Therefore, the show cause notice was issued to the appellant. By the impugned order, the input service credit on these services has been denied to the appellant. Aggrieved with this order, the appellant appeared before the Tribunal.
Appellants contention:-Learned counsel for the appellant submits that mere non-mentioning the name of the service in the invoice does not take away the entitlement of input service credit. He submits that if the invoice is perused, it is coming out from the invoice that the service is none other than the service of a manpower recruitment service. He further submits that the allegation in the show cause notice against the appellant is outdoor catering service is not directly or indirectly related to the business of the manufacturer and therefore they are not entitled to input service credit. He submits that as the input service credit for the earlier period has been allowed, therefore, input service credit on outdoor catering service be allowed to the appellant following the decision of Hon’ble Bombay High Court in the case of Ultratech Cement- 2010 (20) S.T.R. 577 (Bom.) = 2010 (260) E.L.T. 369 (Bom.).

Respondents Contention:-On the other hand, ld. AR opposes the contention of the appellant on the issue of outdoor catering service. He submits that as per the provisions of Rule 2(l) of Cenvat Credit Rules, 2004 with effect from 1-4-2011 on outdoor catering service, the appellant is not entitled to input service credit.

Reasoning Of Judgement:- The Tribunalheard the parties and considered the submissions.
On perusal of the invoice, the Tribunal found that manpower recruitment agency mentioned in the invoice instead of manpower recruitment service, input service credit cannot be denied on this ground. Accordingly, the impugned order is set aside. On the second issue, for availability of input service credit on outdoor catering service, the Tribunal found that with effect from 1-4-2011 relevant para (C) under 2(l) has been inserted which is reproduced below:-
“(C) such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee.”
As per amended statute with effect from 1-4-2011, outdoor catering service has been excluded from the definition of input service. The Tribunal held that the appellant is not entitled to take input service credit on outdoor catering service of Rs. 78,312/-. Further, it found that in this case accumulated show cause notice was issued to the appellant in 2012 by invoking the provision of Rule 2(l) of CCR, 2004, prior to 2011. In these circumstances, the Tribunal found that the provision denying input service credit on outdoor catering service came into existence with effect from 1-4-2011. Therefore, it was held that the penalty is not imposable on the appellant.
With these terms, input service credit on outdoor catering service along with interest is denied to the appellant. The appeal is disposed of in the above terms.

Decision:-Appeal partly allowed.

Comment:-The gist of the case is that Credit cannot be denied on the ground that name of the service mentioned in the invoice was ‘Manpower Recruitment Agency’ instead of ‘Manpower Recruitment service’. Further with effect from 1-4-2011, outdoor catering service has been excluded from the definition of input service .Therefore the assessee is not entitled for input service credit availed during 2011-12 in accordance with Rule 2(l) of Cenvat Credit Rules, 2004.

Prepared By:- Praniti Lalwani

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PJ/Case Law /2016-17/3250

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