MAHINDRA SONA LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) AFTER examining the records and hearing both sides, I note that the lower authorities have denied input service tax credit to the appellants for the period October 2006 to June 2007 amounting to Rs. 1,98,247/ - and have also imposed on them a penalty of Rs. 10,000/ -. It is also noted that the issue is covered by the Tribunal's Larger Bench decision in CCE, Mumbai v. GTC Industries Ltd. : 2008 (12) S.T.R. 468 (Tribunal -LB) : 2008 (89) RLT 197 (CESTAT -LB) followed by a line of decisions of various Benches of the Tribunal. The case law is available on record. In the circumstances, I am of the view that the appeal itself can be finally disposed of at this stage. Accordingly, after dispensing with pre -deposit, I take up the appeal.

(2.) THE issue to be decided is whether Cenvat credit of service tax paid on catering service received by the assessee was admissible to them as input service tax credit in terms of Explanation to Rule 2 of the Cenvat Credit Rules, 2004 during the aforesaid period. In the impugned order, the learned Commissioner (Appeals) noticed that identical issue had been held in favour of the Revenue by the Tribunal by order No. 108 -113/08, dated 18 -1 -08, 2008 (10) S.T.R. 256 (Tribunal), and, on that basis, held against the assessee. In answer to a query from the Bench, the learned Counsel submits that the above order of the Tribunal was taken in appeal to the Hon'ble High Court (CE appeal No. 198/08) and that the case has been remanded to the Tribunal for de novo consideration and decision. The Hon'ble High Court's remand order, produced today by the learned Counsel, indicates that the counsel for both sides conceded before the Court that the issue was already covered by the Tribunal's Larger Bench decision on Appeal No. E/1279/07 in the case of CC, Mumbai v. GTC Industries Ltd. It is the same Larger Bench decision which has been relied upon today by the counsel for the appellants. It is settled law now that Cenvat credit of service tax paid on catering service would be available as input service to a manufacturer having a canteen attached to his factory where the cost of food is shown to be part of the expenditure incurred by the manufacturer with bearing on the cost of production calculated on CAS -4 formula. In the present case, however, the lower authorities apparently did not examine this aspect. In the circumstances, I find, this is a case fit for remand to the original authority, which shall, after giving the assessee a reasonable opportunity of being heard as also of producing evidence, ascertain as to whether the service tax paid on the catering service received by them in the canteen attached to their factory formed a part of the cost of production of final product (motor vehicles) based on CAS -4 formula, duly certified by a competent Cost Accountant. If it is found that the cost of production of motor vehicles during the period of dispute included the service tax paid on catering service, such service tax would be admissible as input service tax credit for the manufacturer, as per the Larger Bench decision in GTC Industries Ltd. (supra). Accordingly, the orders of the lower authorities are set aside and this appeal is allowed by way of remand.