M/S. RESIL CHEMICALS PRIVATE LTD. Vs. THE COMMISSIONER OF CENTRAL EXCISE BANGALORE COMMISSIONERATE-I BANGALORE

JUDGEMENT

(1.) THE denial, by the lower authorities, of CENVAT credit to the appellant in respect of certain services for the relevant period is under challenge in these appeals. The services which were claimed to be input services by the appellant before the lower authorities are (i) outdoor catering service, (ii) air travel service, (iii) rent -a -cab service, (iv) cleaning/house -keeping service, and (v) CHA Service. The periods of dispute are (i) February 2006 to January 2008 ( No. E/1116/2010), (ii) January to May 2008 ( No. E/1117/2010) and (iii) August to December 2008 (E/945/2011). The lower authorities denied CENVAT Credit on the aforesaid services holding that the services were not proved to be input services coming within the ambit of the definition of 'input service' given under Rule 2(l) of the CENVAT Credit Rules (CCR), 2004. Various reasons were stated by the authorities for holding that the services availed by the appellant did not qualify to be input services for the purpose of CENVAT credit. The appellant was found to have contravened the provisions of the CCR, 2004 through irregular availment of CENVAT credit on the aforesaid services and, on this basis, penalties were also imposed on them under Rule 15 of the CCR, 2004.

(2.) ON a perusal of the records and hearing both sides, I note that the appellant was maintaining a canteen in their factory premises and providing food to the employees by availing the services of outdoor caterers during the relevant period. I am told that the number of employees/workers was less than 250 throughout the material period. The learned counsel for the appellant submits that the cost of supply of food to employees formed a part of the assessable value of the goods manufactured by the appellant as evidenced by certificate of their Chartered Accountant. He has made similar pleading in respect of other services also. As regards 'outdoor catering service', the learned counsel has also claimed support from the Larger Bench decision in the case of Commissioner vs. GTC Industries Ltd.: : 2008 (12) STR 468 (Tri. -LB) wherein one of the conditions laid down for allowing CENVAT credit on 'outdoor catering service' was the cost of food being a part of cost of production of goods. It is pointed out that the decision in GTC Industries case was upheld by the Hon'ble Bombay High Court (Nagpur Bench) in the case of Commissioner vs. Ultratech Cement Ltd.: : 2010 (260) E.L.T. 369 (Bom..) Claiming further support from the High Court's judgment, the learned counsel submits that 'outdoor catering service' having been availed in connection with the business of the company merits recognition as an 'input service' defined under Rule 2(l) of CCR, 2004. In this context, it is fairly pointed out that the appellant recovered a part of the cost of food from their employees (ultimate consumers). The learned counsel quickly adds that the company will not claim CENVAT credit on 'outdoor catering service' to the extent of recovery from their employees. The learned Commissioner (AR), on the contrary, submits that the appellant who admittedly did not employ 250 or more people during the material period cannot claim the benefit of CENVAT credit on 'outdoor catering service'. It is further submitted that, even otherwise, the benefit cannot be claimed by them to the extent the food supplied to the employees was subsidized. According to the learned Commissioner (AR), the appellant cannot claim the benefit under Rule 2(l) of the CCR, 2004 as interpreted by the Hon'ble High Court in the case of Ultratech Cement Ltd. and also by the jurisdictional High Court in the case of Commissioner vs. Stanzen Toyotetsu India (P) Ltd.: : 2011 (23) S.T.R. 444 (Kar.). Para 39 of Ultratech Cement Ltd. (supra) and para 12 of Stanzen Toyotetsu (supra) are particularly referred to. In his rejoinder, the learned counsel for the appellant refers to Bell Ceramics Ltd. vs. Commissioner: : 2011 (21) S.T.R. 417 (Tri. -Bang.) wherein, on the facts of that case, CENVAT credit was allowed to the assessee on 'outdoor catering services', who employed less than 250 workers. It is argued that the CCR, 2004 do not stipulate any condition related to number of employees for a manufacturer to claim CENVAT credit on 'outdoor catering service' and therefore the benefit is available to the appellant irrespective of the number of employees.

(3.) AS regards 'air travel service' and 'rent -a -cab service', the learned counsel submits that these services were availed in connection with the business of the appellant. The employees of the company made use of these services to travel locally and outside the country for various purposes connected with the business of the company. Therefore, according to the learned counsel, these services would qualify to be 'input services' in terms of Rule 2(l) ibid. In this connection, he has shown me copies of specimen invoices issued by air travel agents and rent -a -cab operators. I have perused these documents and have found nothing therein indicating the purpose of travel. The submission of the learned Commissioner (AR) is also that the appellant has not established any connection between the travel of employees and the business of the company. It is the submission of the learned counsel that, given an opportunity, evidence of such connection can be established by the appellant. Similar submissions have been made from both sides in respect of 'cleaning/house keeping service' also. I am of the view that, for the ends of justice, a reasonable opportunity should be given to the appellant to establish, before the original authority, the requisite nexus between the business of manufacture of goods and the services which are claimed to be input services for the purpose of CENVAT credit.