Whether an assessee is eligible for availing Cenvat credit of service tax paid in respect of Outdoor catering, Maintenance of Lawns and garden, Maintenance of cycle stand and guest house:

PJ/Case Laws/2012-13/1183

CASE: M/s DCM SHRIRAM CONSOLIDATED LTD Vs COMMISSIONER OF CENTRAL EXCISE, JAIPUR-I

CITATION:2012-TIOL-973-CESTAT-DEL

ISSUE:Whether an assessee is eligible for availing Cenvat credit of service tax paid in respect of Outdoor catering, Maintenance of Lawns and garden, Maintenance of cycle stand and guest house:

BRIEF FACTS:The appellant is manufacture of fertilizer and chemicals. Appellant avail Cenvat credit of central excise duty paid on inputs and capital goods and service tax paid on input services as per the provisions of Cenvat Credit Rules. Appellant have taken Cenvat credit of service tax paid in respect of:-

1.    Outdoor catering services availed for providing canteen services to workers;
2.    Maintenance of lawns and gardens within the factory as per the requirement of Pollution Control Board;
3.    Maintenance of cycle stand located in the factory premises;
4.    Maintenance of guest house located adjacent to factory premises.

amounting to Rs. 1, 27,365/- which was disallowed by the Assistant Commissioner who ordered its recovery alongwith interest and imposed penalty of equal amount. The Commissioner (Appeals), vide order-in-appeal dated 1/2/12 upheld the Assistant Commissioner's order, against which this appeal alongwith stay application has been filed.

APPELLANT’S CONTENTION:The appellant contended that so far as outdoor catering service is concerned, the same is required to be availed for providing canteen service to the workers which is the requirement of Factories Act and, hence, the same is eligible for Cenvat credit, that in this regard he relies upon judgment of Hon'ble Bombay High Court in the case of CCE, Nagpur vs. Ultratech Cement Ltd. reported in 2010 (20) S.T.R. 577 (Bom.) = (2010-TIOL-745-HC-MUM-ST), of High Court of Gujarat in the case of CCE, Ahmedabad - I vs. Feromatik Milacron India Ltd. reported in 2011 (21) S.T.R. 8 (Guj.) = (2010- TIOL-851-HC-AHM-ST) and of Hon'ble Karnataka High Court in the case of CCE, Bangalore - I vs. Bell Ceramics Ltd. reported in 2012 (25) S.T.R. 428 (Kar.).

The maintenance of lawns and gardens is the mandatory requirement of the Pollution Control Board subject to which the permission for running this factory has been granted and, hence, the Cenvat credit of service tax paid on the services for maintenance of lawns and gardens is admissible for Cenvat credit, that in this regard he relies upon the judgments of the Tribunal in the case of CCE, Bhavnagar vs. Nirma Ltd. reported in 2010 (20) S.T.R. 346 (Tri. - Ahmd.) and in the case of CCE, Hyderabad vs. Voith Turbo Pvt. Ltd. reported in 2011 (21) S.T.R. 52 (Tri. - Bang.) = (2010- TIOL-1768-CESTAT-BANG).

The maintenance of cycle stand is also a necessary requirement for the factory workers and that the guest house is used by the guests of the company and hence, the service tax paid on the guest maintenance charges is also cenvatable. He also contended that the impugned order disallowing the Cenvat credit is not correct.

RESPONDENT’S CONTENTION:The learned Departmental Representative, opposed the stay application by reiterating the findings of Commissioner(Appeals) in the impugned order.

REASONING OF JUDGEMENT:As far as Cenvat credit of Rs. 34,933/- in respect of outdoor catering service is concerned, the same is admissible in view of judgment of Hon'ble Bombay High Court in the case of CCE, Nagpur vs. Ultratech Cement Ltd. (supra), as admittedly the number of workers in the appellant's factory is more than 250 and, hence, the providing of canteen facility to the factory workers is mandatory requirement of the provisions of Section 46 of the Factories Act.

As regards the service tax credit of Rs. 27,560/- in respect of maintenance of lawns and gardens, it is a necessary condition imposed by the Rajasthan Pollution Control Board, while giving permission to the appellant to operate this factory, as per the provisions of water (Prevention and Control of Pollution) Act, 1974 and also Air (Prevention and Control of Pollution) Act, 1981. In view of this, service tax credit in respect of the services for maintenance of lawns and gardens is also admissible.

As regards, the service tax credit in respect of maintenance of cycle stand, the same also prima facie appears to be necessary requirement and, hence, the same also appears to be admissible.

However, the service tax in respect of maintenance of guest house does not appear to be admissible as prima facie there does not to be any nexus between maintenance of the guest house and manufacture of final product. In view of this, this is not the case for total waiver. So, it was directed to the assessee to pre-deposit an amount of Rs. 45000/-.

DECISION: The appeal is partly allowed and Conditional stay granted.

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PJ/Case Laws/2012-13/1183

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