Appellant entitled to claim Cenvat credit for staff canteen services

The appellant was entitled to claim Cenvat credit for outdoor catering services provided to employees in the staff canteen inside the factory. The Revenue's contention that such services were excluded from the definition of input service was rejected. The Commissioner's decision disallowing the credit was overturned as it misinterpreted the exclusion clause and failed to follow previous Tribunal rulings. The appellant's claim for the credit was upheld, granting them consequential benefits under the law.

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Issues:
Whether the appellant is entitled to Cenvat credit for outdoor catering services provided to employees inside the factory for running the staff canteen.

Analysis:
The issue in this appeal revolves around the eligibility of the appellant to claim Cenvat credit for outdoor catering services utilized for the staff canteen inside the factory. The Revenue contended that such services are perks for employees and do not have a nexus with the manufacturing process. The show cause notice alleged that the outdoor catering services were specifically excluded from the definition of input service effective from 01/04/2011. However, the Assistant Commissioner, relying on previous Tribunal rulings, dropped the show cause notice in favor of the appellant.

The Revenue, being dissatisfied, appealed to the learned Commissioner (Appeals), who disallowed the Cenvat credit on outdoor catering services, citing the amended definition of input service. The Commissioner referred to government clarifications indicating that outdoor catering primarily meant for personal use or consumption of employees is excluded from availing Cenvat credit.

The appellant argued that the impugned order was flawed due to a misinterpretation of the definition of input services and should be set aside. They maintained that the Cenvat credit was rightfully claimed for the canteen services available to all employees as a statutory requirement under the Factories Act, 1948. The appellant's counsel emphasized that the exclusion clause refers to services used primarily for personal use or consumption of any employee.

Upon review, the member (Judicial) found that the Commissioner misinterpreted the exclusion clause by substituting the word 'employees' with 'employee,' rendering the order erroneous and flawed. Additionally, the Commissioner failed to follow the Tribunal's previous orders on similar matters, further justifying setting aside the impugned order. Consequently, the appeal was allowed, and the impugned order was overturned, entitling the appellant to consequential benefits as per the law.

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