Tribunal allows Cenvat credit on catering but requires verification for tour and travel services

The Tribunal allowed the Cenvat credit on catering services but remitted the matter concerning tour and travel services for further verification of facts. The Respondent was directed to produce supporting documents within a specified deadline, failing which the credit for tour and travel services would be considered ineligible.

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Issues:
1. Allowance of Cenvat credit on catering service and tour and travel services.
2. Nexus between services and manufacturing activity.
3. Requirement of clear nexus between service and final product.
4. Proof of recovery of service costs.
5. Eligibility of services as input services.

Analysis:

Issue 1: Allowance of Cenvat credit on catering service and tour and travel services.
The Revenue filed an Appeal challenging the Commissioner (Appeals) order allowing Cenvat credit on catering service and tour and travel services. The amounts involved were Rs.2,07,085/- for catering service and Rs.1,41,532/- for tours and travel. The argument raised was that a clear nexus between the services and the final products of the manufacturer must be established for the services to qualify as input services.

Issue 2: Nexus between services and manufacturing activity.
The Advocate for the Respondent argued that providing canteen facilities to employees within the factory premises is essential for smooth manufacturing activity as per the Factory Act. The Advocate relied on previous court decisions to support the claim that catering services for employees in the factory qualify as input services in or in relation to the manufacture of the final product.

Issue 3: Requirement of clear nexus between service and final product.
Regarding tours and travels services, the Respondent argued that these services were utilized for bringing employees from their residence to the factory and back, which is integrally connected with the manufacture of the final product. Previous Tribunal decisions were cited to support this argument.

Issue 4: Proof of recovery of service costs.
The Revenue argued that there was no evidence to show whether the costs of tour and travel services were recovered from the persons actually using the service. The Respondent clarified that the bill raised by the caterer was towards the subsidy provided by the Appellant for running the canteen, and Service Tax was paid only on that value, which was not recovered from the workers.

Issue 5: Eligibility of services as input services.
The Tribunal found that providing catering services in the factory premises improves manufacturing efficiency, following the decisions of the Bombay High Court and Gujarat High Court. However, for tours and travels services, the Respondent failed to provide sufficient documentary evidence to establish a direct or indirect relation to the manufacture or clearance of the final product.

In conclusion, the Tribunal allowed the credit in respect of catering services but remitted the matter regarding tours and travels services for verification of relevant facts. The Respondent was given a deadline to produce supporting documents, failing which the credit would be deemed ineligible. The appeal was disposed of accordingly.

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