Appellant entitled to CENVAT credit for factory input services except outdoor catering. Production-related services eligible.

The Tribunal held that the appellant was entitled to CENVAT credit on common input services used in the factory, except for outdoor catering services. It was determined that services related to production were eligible for credit, while common amenities were to be distributed based on individual unit turnover. The Tribunal denied credit for outdoor catering services due to personal consumption by employees, distinguishing a prior judgment. The matter was remanded for re-quantification of credit based on turnover proportions.

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Issues: Entitlement of CENVAT credit on common input services, specifically outdoor catering services, for all divisions within a factory premises.

Analysis:
The issue at hand revolved around the entitlement of the appellant for CENVAT credit on common input services utilized by various divisions within a factory premises. The appellant was alleged to be ineligible for taking credit on input services shared among all divisions operating in the factory. The show-cause notice led to the impugned Order-in-Original, which was challenged by the appellant through an appeal before the Commissioner (Appeals) and subsequently before the Tribunal.

The appellant's counsel argued that since there was a common factory premises housing various divisions under one umbrella company, and the bills for services were in the name of the Transformer division, the credit should be admissible. It was emphasized that no other division availed any part of the credit. The counsel relied on several judgments to support their argument.

On the other hand, the Revenue contended that while certain services were admissible for credit, outdoor catering services were excluded from the definition of input services effective from a specific date. Additionally, it was argued that since services were availed by different divisions independently registered, the credit could not be attributed solely to the appellant. The Revenue highlighted that outdoor catering services were for personal consumption of employees, thus falling outside the realm of input services.

After considering both sides' submissions, the Tribunal found that except for outdoor catering services, all other services used in or related to the factory's production process were eligible for input credit. However, common amenities like gardening, canteen, premises maintenance, housekeeping, and fire protection were shared among all divisions, necessitating a distribution of credit based on individual unit turnover. The Tribunal upheld that the appellant was entitled to credit only to the extent attributed to their unit's turnover. Regarding outdoor catering services, the Tribunal ruled that personal consumption by employees excluded it from input services, thereby denying CENVAT credit for such services. The Tribunal differentiated a prior judgment where personal consumption was not a factor, thus upholding the demand for CENVAT credit on outdoor catering services. The appeal was disposed of by remanding the matter to the Adjudicating Authority for re-quantification based on turnover proportions.

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