Sahab Singh
This appeal is filed by the appellant against the Order-in-Appeal No. RKR (143)44/08 dated 28.2.2008.
2. The brief facts of the case are that the appellants are engaged in the manufacture of excisable goods namely Copper Powder and Sintered Bushes falling under Chapters 74 and 84 of the Central Excise Tariff Act, 1985 and the appellants are availing CENVAT Credit facility of duty paid goods and capital goods. A show-cause notice was issued to them on 1.11.2007 denying the credit on Outdoor Catering Services and Garden Maintenance Services. The show-cause notice was confirmed by the original authority and penalty was imposed on the appellant, against which the appellant filed an appeal before the Commissioner (Appeals). The Commissioner (Appeals) rejected their appeal with regard to confirmation of demand of duty, however, he has reduced the penalty to Rs.12,000/-. The appellant has preferred this appeal against the said impugned order and Tribunal vide Order No. A/282/2009/SMB/C-IV dated 11.6.2009 allowed the appeal in respect of outdoor catering services. Revenue filed an appeal No. 434/2010 in the Bombay High Court and the Hon'ble High Court vide Order dated 28.6.2011 remanded the matter back to the Tribunal to decide the matter in light of the Hon'ble Bombay High Court’s decision in the case of Commissioner of Central Excise, Nagpur Vs. Ultratech Cement Ltd. - 2010 (20) STR 577 (Bom).
3. The learned Counsel appearing for the applicant submits that the issue regarding CENVAT Credit on the Outdoor Catering Services has been settled by the Hon'ble Bombay High Court in the case of Commissioner of Central Excise, Nagpur Vs. Ultratech Cement Ltd. - 2010 (20) STR 577 (Bom), wherein the Hon'ble High Court has held that input service credit availed by the assessee on Outdoor Catering Services is subject to the assessee does not charge anything from the employees. She submits that though in some of the cases, the appellant has recovered the amount with regard to the catering services from their employees, but in the show-cause notice issued to them, there was no such allegation that CENVAT Credit is not admissible on the account of recovery of the amount from the employees. She relied upon various decisions to support her contention that the show-cause notice did not propose denial of CENVAT Credit on the ground that appellant has recovered the amount of expenses incurred on catering services from their employees. In the absence of such allegation in the show-cause notice, the Order-in-Appeal is not sustainable. She, therefore, requests for allowing their appeal.
4. Learned Addl. Commissioner (A.R.) appearing for the Revenue submitted that this particular case has been remanded by the Hon'ble Bombay High Court in Appeal No. 434/2010 vide order dated 28.6.2011 directing the Tribunal to decide the issue in the light of observation made by the Division Bench of the this Court in the case of Ultratech Cement Ltd. (supra). He, therefore, submitted that the Tribunal is required to decide the case in the light of Hon'ble Bombay High Court’s decision in the case of Ultratech Cement Ltd. Therefore, argument of the learned Counsel that show-cause notice did not disclose the allegation of charge of recovery of the amount from the employees is not sustainable.
5. After hearing both sides, I find that the present case has been remanded by the Hon'ble Bombay High Court vide its order dated 28.6.2011 for decision in the light of decision of High Court in the case of Ultratech Cement Ltd. (supra).
6. I find that the issue whether the Outdoor Catering Services is to be considered as input service has been decided by the Hon'ble Bombay High Court in the said case. The Hon'ble High Court has also observed that use of Outdoor Catering Services was in or in relation to manufacture of final product and, therefore, credit is admissible. The Hon'ble High Court has further observed that in case the assessee is not providing the free catering services to the employees and charging the expenses on account of catering services from the employees, the benefit will not be admissible to the assessee on those expenses recovered from the employees. The relevant para of the decision of the Hon'ble High Court is reproduced as under: -
“39. The Larger Bench of CESTAT in the case of GTC Industries Ltd. (supra) has also observed that the credit of service tax would be allowable to a manufacturer even in cases where the cost of the food is borne by the worker (see last para). That part of the observation made by the Larger Bench cannot be upheld, because, once the service tax is borne by the ultimate consumer of the service, namely the worker, the manufacturer cannot take credit of that part of the service tax which is borne by the consumer. Shri Shridharan, learned Counsel for the assessee fairly conceded to the above position in law and in fact filed an affidavit affirmed by a responsible officer of the assessee wherein it is stated that the proportionate credit to the extent embedded in the cost of food recovered from the employee/worker has been reversed.”
7. Since the appellant has admitted that they have recovered certain amount from their employees, this needs to be verified by the lower authorities and in respect of the amount recovered from the employees by the assessee, the credit will not be admissible to the appellant. The matter is, therefore, remanded back to the original authority for the purpose of verification about the recovery of expenses incurred by the assessee from their employees in respect of outdoor catering services and thereafter to decide the matter afresh after affording a reasonable opportunity of personal hearing to the appellant.
8. The appeal is allowed by way of remand.