The appeal and the stay application are directed against the Order-in-Appeal No: US/114/RGD/2012 dated 22/02/20112 passed by the Commissioner of Central Excise (Appeals - II), Mumbai.
2. The appellant M/s. Uttam Galva Steels Ltd. availed CENVAT credit amounting to Rs. 1,74,118/- on the service tax paid on the outdoor catering service. The department was of the view that outdoor catering service is not an ‘input service’ as defined under Rule 2(l) of the CENVAT Credit Rules, 2004 and accordingly, issued a show cause notice dated 20/12/2010 for denial of the credit taken on the outdoor catering service during the period November, 2006 to October 2009. The same was confirmed by the adjudicating authority who ordered recovery of the CENVAT credit wrongly taken along with interest thereon and also imposed penalties of equivalent amount under Rule 15(1) and Rule 15(2) of the CENVAT Credit Rules, 2004.
2.1. The appellant preferred an appeal before the Commissioner (Appeals), who vide the impugned order upheld the demand for service tax along with interest thereon but set aside the penalty imposed under Rule 15(1). Hence the appellant is before me.
3. The learned counsel for the appellant submits that the issue is settled by the decision of the hon'ble High Court of Bombay in the case of Commissioner of Central Excise vs. Ultratech Cement Ltd. 2010 (260) ELT 369 wherein the hon’ble High Court held that catering service is an eligible ‘input service’ under Rule 2(l) of the CENVAT Credit Rules,2004 and the manufacturer is entitled to avail credit of the service tax paid thereon, subject to the condition, that in respect of the amounts recovered from the employees, if any service tax has been paid thereon, to that extent the manufacturer shall not be eligible for the credit. The learned counsel submits that, in the instant case, the service tax on the amounts recovered from the employees amounts to Rs. 26,235/- and against this, they have already reversed an amount of Rs. 87,059/- on 10/12/2011. In view of the decision of the hon’ble High Court of Bombay in the Ultratech Cements case cited supra, the issue is decided in favour of the assessee and he prays for final disposal of the appeal itself.
4. The learned AR appearing for the Revenue fairly conceded the issue and submits that the matter be decided in the light of the hon’ble High Court of Bombay in the case of Ultratech Cements case.
5. I have carefully considered the rival submissions. Inasmuch as the issue lies in a narrow compass, I take up the appeal itself for consideration and disposal after granting stay.
5.1. The Hon’ble High Court of Bombay in the case of Ultratech Cements case, cited supra, has held that outdoor catering service is an eligible input service and the manufacturer is entitled to avail CENVAT credit on the service tax paid thereon subject to the condition that in case the manufacturer has recovered any amount from their employees in respect of outdoor catering service, on that amount the assessee is not eligible for the credit of the service tax paid. In the instant case, the service tax paid on the amount recovered from the employees is Rs. 26,235/- and the appellant is liable to reverse this credit along with interest thereon. The appellant is eligible for the balance of the credit taken. Inasmuch as, the appellant has already reversed an amount of Rs. 87,059/-, which is for in excess of the amount of Rs. 26,235 plus interest thereon, the appellant is entitled for the consequential relief for the amount which they have reversed in excess. Since the appellant are eligible for the credit on outdoor catering services, the question of imposition of any penalty does not arise and the same is set aside.
6. Thus, the appeal is allowed as per the terms mentioned above.