CENVAT credit - Outdoor Caterers Service availed by manufacturer

CCE, Mumbai – V vs. Industrial Ltd. 2013(30) S.T.R. 673 (Tri-MUM)

CENVAT credit - Outdoor Caterers Service availed by manufacturer - Held, providing canteen is statutory requirement - direct nexusand hence 'input service'.

Facts:

Manufacturer of cigarettes, packing materials of paper and paper board and printing inks availed CENVAT Credit on their inputs, capital goods and input services. CENVAT credit of service tax paid on outdoor caterer's services during March 2005-06 was disallowedand upheld but the Commissioner (Appeals) allowed the same. The department's appeal was decided by the Larger Bench in favour

ofthe assessee. The department challenged the order before the Hon'ble Bombay High Court which remanded it back to the Tribunal todecide in accordance with the decision of the High Court in Ultratech Cement Ltd. 2010 (20) STR 577 (Bom). The Revenue contended that in the case of UItratech Cement Ltd., the Hon'ble High Court held that 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. TheAssessee pleaded that the cost of canteen service was borne by the worker, was not the point of proceedings of the case, at any stage.

Held:

The Hon. Tribunal relying on the decision of the Hon. High Court in Ultratech Cements Ltd. (supra) held that the services having nexus orintegral connection with the manufacture/business of final products would qualify to be input service under Rule 2(1) of 2004 RulesUnder Factories Act, 1948, providing canteen is mandatory. The canteen service had nexus or integral connection with the busin.ess ofmanufacture of final product and thus would qualify to be input service.