Admissibility of Cenvat Credit for Outdoor Catering Service Upheld by Tribunal, Revenue's Appeal Rejected

The Tribunal rejected the Revenue's appeal challenging the admissibility of Cenvat credit on Outdoor Catering Service used for canteen facilities for employees. While the lower authorities did not consider the Bombay High Court ruling regarding recovery from employees affecting Cenvat credit, the Tribunal emphasized the need to reevaluate based on new legal positions. Consequently, the Revenue was granted the right to verify and demand payment for consideration recovered from employees, but the appeal was ultimately rejected.

---

---

Issues:
Admissibility of Cenvat credit on Outdoor Catering Service for canteen facility provided to employees.

Analysis:
In the present case, three appeals were consolidated concerning the admissibility of Cenvat credit on Outdoor Catering Service utilized for offering canteen services to the employees. The Revenue challenged the Commissioner (Appeals) ruling, which allowed the credit on these services used for providing Call Centre Service output and subsequent refund under Rule 5 of Cenvat Credit Rules, 2004. The Counsel cited various decisions in support of their argument, including CCE vs. Stanzen Toyotetsu India (P) Ltd 2011 (23) STR 444 (Kar), CCE vs. Micro Labs Ltd 2011 (24) STR 272 (Kar), and CCE Nagpur vs. Ultratech Cement Ltd 2010 (20) STR 577 (Bom).

Upon examination, it was noted that the lower authorities had not considered the ruling of the Bombay High Court in Ultratech Cements, which stated that if any amount is recovered from employees, the credit of service tax on such amounts cannot be claimed as Cenvat credit. The Tribunal emphasized that when a court lays down a rule subsequent to the dispute, the issue must be reevaluated based on the new legal position. As the lower authorities did not consider the criteria established by the Bombay High Court, the matter could not be conclusively decided in favor of either party. Consequently, the Tribunal held that the Revenue had the right to verify and demand payment for the consideration recovered from employees. However, subject to this observation, the appeal filed by the Revenue was rejected.

---