2014 (9) TMI 1014 - AT - Central Excise

Appellant wins appeal for Cenvat credit on Canteen & Gardening Services under Cenvat Credit Rules

The Tribunal allowed the appellant's appeal, permitting Cenvat credit on both Canteen Services and Gardening Services. The appellant successfully argued ... CENVAT credit on Canteen Service and Gardening Service - Held that:- The issue is no longer res integra as the same is settled by the Hon'ble Bombay High Court in the case of Ultratech Cement Ltd [2010 (10) TMI 13 - BOMBAY HIGH COURT ] and thereafter the same has been consistently followed by various benches of CESTAT. The appellant therefore submit that the cenvat credit is available, in the instant case on canteen services and the impugned order is not legal and correct. To a specific query, as to whether the appellant-firm recovered a part of the cost of the catering services from their employees, it was submitted by the learned Counsel that they had recovered part of the cost. However, they have reversed proportionate amount of CENVAT Credit to the extent of credit involved in the cost of food recovered from the employees/worker, on 7.10.2012, vide PLA Entry No. 20, which is after passing of the order confirming the demand but before the appellate authority's order. This fact is also noted in the lower appellate authority's order. Following the ratio of the Hon'ble Bombay High Court in Ultratech Cement Ltd. (supra), hold that the appellants are eligible to avail CENVAT Credit on Garden Maintaining Services and Canteen services - Decided in favour of assessee. Issues:- Admissibility of Cenvat credit on Canteen Services- Admissibility of Cenvat credit on Gardening ServicesAdmissibility of Cenvat credit on Canteen Services:The appellant, a manufacturer of Agro Products, availed Cenvat credit on Service Tax paid on Canteen Services. The audit party observed that the appellant had wrongly availed Cenvat credit on Canteen Services, leading to demands and penalties. The adjudicating authority confirmed the demands, stating that the cost of food in the factory canteen did not form part of the assessable value of goods, thus not qualifying as an input service. The appellant argued that Cenvat credit on Canteen Services is admissible as per Cenvat Credit Rules, supported by the High Court and CESTAT judgments. They provided evidence of statutory compliance and employee strength but were faulted for not submitting specific documents. The Tribunal, citing the Ultratech Cement Ltd. case, allowed Cenvat credit on Canteen Services, noting the appellant's partial recovery of food costs from employees.Admissibility of Cenvat credit on Gardening Services:Regarding Gardening Services, the appellant contended that such services are essential for pollution control in their Agro Products manufacturing process. They argued that maintaining gardens and greenery aligns with environmental standards, making Gardening Services integral to their manufacturing activities. Citing a Supreme Court decision on pollution control equipment, the appellant asserted that Gardening Services qualify as input services. The Tribunal agreed, recognizing the pollution control aspect and the necessity of such services in relation to manufacturing Agro Chemical products. The Tribunal allowed Cenvat credit on Gardening Services based on the pollution control rationale and the Supreme Court precedent.In conclusion, the Tribunal set aside the impugned orders, allowing both appeals filed by the appellant and granting them consequential relief as per the law.