Eligibility for CENVAT credit on Outdoor Catering service upheld by judge, subject to cost recovery evidence.

The respondent is eligible for CENVAT credit on Outdoor Catering service used to provide food to employees, subject to the extent of the service cost not borne by the workers. The judge upheld the lower appellate authority's decision, directing the original authority to quantify the credit amount based on the cost recovered from employees. The respondent must provide evidence of partial cost recovery. The ruling aligns with the Bombay High Court's decision in Commissioner Vs. Ultratech Cement Ltd., emphasizing adherence to legal precedents and compliance with rules for claiming CENVAT credit.

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Issues: Eligibility of CENVAT credit on Outdoor Catering service used for providing food to employees during a dispute period.

Analysis:
1. The appeal questions the lower appellate authority's decision allowing the respondent to avail CENVAT credit on Outdoor Catering service. The original authority deemed the respondent eligible for the credit, which was upheld by the appellate authority citing a Tribunal decision. The appellant argues that a service must be used in or in relation to the manufacture of goods to qualify as an 'input service' under CENVAT Credit Rules 2004.

2. The respondent, represented by Mr. Vijayendra Bhat, cites the Bombay High Court's decision in Commissioner Vs. Ultratech Cement Ltd. to support their claim. The essential fact that Outdoor Catering service was used in the factory canteen to supply food to employees is not disputed. However, only 25% of the service cost was recovered from the workers. The High Court's ruling in Ultratech Cement case establishes that if the service tax is borne by the consumer, the manufacturer cannot claim credit for that portion. Therefore, the respondent can only claim CENVAT credit for the portion of the service tax not borne by their employees.

3. The judge, P G Chacko, upholds the lower appellate authority's decision on the eligibility of the respondent for CENVAT Credit based on the Ultratech Cement case ruling. The original authority is directed to quantify the credit amount considering the extent to which the cost of Catering service was recovered from the employees. The respondent must provide documentary evidence of the partial cost recovery to support their claim. The final CENVAT credit granted should align with the High Court's ruling.

4. The appeal is resolved in favor of the respondent, with the judge emphasizing the need for proper documentation and evidence to determine the admissible CENVAT credit amount. The judgment highlights the importance of adhering to legal precedents and ensuring compliance with the established rules and regulations in such matters.

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