2021 (3) TMI 789 - AT - Central Excise

Tribunal Allows CENVAT Credit for Catering, Travel, and Club Services; Verification Required Within 3 Months.

The Tribunal set aside the order of the Commissioner of GST & Central Excise (Appeals - Thane), allowing the appellant to claim CENVAT credit on outdoor ... CENVAT credit - input service - interpretation of 'includes' vis-a -vis 'such as' in definition - conditional exclusion where services are 'used primarily for personal use or consumption' - statutory compliance as basis for availment of credit (canteen under Factories Act) - binding effect of Tribunal precedent - limited remand for verification of documentary evidenceInput service - interpretation of 'includes' vis-a -vis 'such as' in definition - conditional exclusion where services are 'used primarily for personal use or consumption' - Interpretation of Rule 2 definition of 'input service' (post 01.04.2011) and scope of exclusions - HELD THAT: - The Tribunal construed the amended definition of 'input service' w.e.f. 01.04.2011 as moving from an illustrative list (previously introduced by words like 'such as') to a definitional list by use of the word 'includes', thereby restricting the scope of eligible services to those specified. At the same time the exclusions in the sub clauses are not absolute prohibitions but conditional: a service listed in an exclusion (for example outdoor catering, club membership, travel benefits) is excluded only if it is used 'primarily for personal use or consumption' by employees. Thus services such as outdoor catering, club maintenance and travel are not automatically disentitled; the entitlement turns on whether they were primarily personal in nature or were used in relation to manufacture/clearance or for statutory compliance.The amended definition confines eligible input services to the specified list, while exclusions operate conditionally and must be established to be primarily for personal use before denial of credit.CENVAT credit - statutory compliance as basis for availment of credit (canteen under Factories Act) - binding effect of Tribunal precedent - Availment of CENVAT credit on outdoor catering where service is used to meet statutory canteen requirement - HELD THAT: - Applying the principle that tax paid to meet a statutory requirement should not result in double taxation, the Tribunal held that expenditure on outdoor catering used to meet the statutory obligation of providing a canteen under the Factories Act is eligible for CENVAT credit, provided the employer has paid the amount and has not recovered it from employees. The Tribunal relied on earlier Tribunal and High Court decisions favouring credit where services were availed to meet statutory obligations and declined to reopen settled precedent in the facts of this case.Denial of credit on outdoor catering was set aside; credit allowed to the extent the amount was not recovered from employees, subject to verification by adjudicating authority.CENVAT credit - limited remand for verification of documentary evidence - Availment of CENVAT credit on air and rail travel agent, and tour operator services - HELD THAT: - The Commissioner (Appeals) had disallowed travel related credits for want of satisfactory evidence that travels were for official/business purposes. The Tribunal set aside the denial but did not finally adjudicate the factual question on the papers. It accepted additional documentary material produced before the Tribunal (call letters and emails) as admissible under procedural rules and observed that presumption may favour official travel for short tours. However, the Tribunal directed a limited remand to the adjudicating authority solely to verify the documentary evidence and substantiate the business purpose of travels, with the exercise to be completed within three months.Denial set aside and matter remanded for limited verification of documentary evidence to establish business purpose of travels.CENVAT credit - binding effect of Tribunal precedent - Availment of CENVAT credit on courier services - HELD THAT: - The Tribunal observed that the Commissioner (Appeals) improperly declined to follow the Tribunal's earlier order in the appellant's own case which had allowed courier services where movement from factory to depot on stock transfer was effected by courier. Respecting judicial discipline and precedent, the Tribunal held that the courier service input qualifies as an input service used in relation to clearance up to place of removal and allowed the credit.Denial of courier service credit was set aside and credit allowed in accordance with the Tribunal's earlier findings.CENVAT credit - Availment of CENVAT credit on goods transport operator service - HELD THAT: - The Commissioner (Appeals) had already allowed the small claimed amount for goods transport operator service and the Tribunal noted that the discrepancy in figures in the appeal memo arose from a typographical error in the Commissioner (Appeals) order. There was no substantive dispute remaining in respect of this service.Claim for goods transport operator service credit is treated as allowed in full.CENVAT credit - Availment of CENVAT credit on club and association (monthly maintenance) service relating to corporate office premises - HELD THAT: - The Tribunal rejected the Commissioner (Appeals)'s narrow interpretation that each item must be expressly enumerated to qualify as an input service. Given that Rule 2(l) expressly covers services used in relation to premises of the provider of output service or an office relating to such factory or premises, monthly maintenance charged by the building society for the corporate office was held not to be a personal use expense of employees and therefore eligible for credit.Denial of credit on club and association (maintenance) charges set aside and credit allowed.Final Conclusion: The appeal is allowed: the Commissioner (Appeals) order denying CENVAT credit on outdoor catering (subject to non recovery from employees), courier services, air and rail travel/tour operator services (remanded for limited documentary verification), and club & association (maintenance) charges is set aside; goods transport operator service claim is treated as allowed. The adjudicating authority is directed to complete verification on remand within three months. Issues Involved:1. Denial of CENVAT credit on Outdoor Catering service.2. Denial of CENVAT credit on Air Travel Agent, Rail Travel Agent, and Tour Operator services.3. Denial of CENVAT credit on Courier services.4. Denial of CENVAT credit on Goods Transport Operator service.5. Denial of CENVAT credit on Club and Association service.Detailed Analysis:1. Outdoor Catering:The primary issue was whether the appellant could avail of CENVAT credit on outdoor catering services. The Tribunal referenced the Larger Bench decision in M/s Wipro Limited Vs. CCE Bangalore –III, which held that post-amendment on 01.04.2011, outdoor catering services were not eligible for input service credit. However, the appellant argued that the canteen services were a statutory requirement under the Factories Act, 1948, and thus should be eligible for credit. The Tribunal agreed, emphasizing that statutory requirements cannot be equated with 'primarily for personal use of consumption of employees.' The Tribunal concluded that the appellant is entitled to avail of such credit, provided the expenses were not recovered from employees.2. Air Travel Agent, Rail Travel Agent, and Tour Operator Services:The appellant's claim for CENVAT credit on travel services was initially denied due to insufficient evidence proving that travel was for official purposes. The Tribunal noted that the appellant had provided additional evidence, such as email communications for an interview, justifying the travel. The Tribunal accepted this evidence and directed a reassessment at the adjudication level to conclusively determine the nature of the CENVAT credit availed.3. Courier Services:The Tribunal criticized the Commissioner (Appeals) for not honoring a previous CESTAT order that allowed CENVAT credit on courier services for the appellant. The Tribunal emphasized judicial discipline and upheld the previous decision, allowing the appellant to avail of credit on courier services.4. Goods Transport Operator:The Tribunal noted that the Commissioner (Appeals) had already allowed CENVAT credit on goods transport operator services, and the discrepancy in the amount was due to a typographical error. Thus, the appellant’s claim on this service was accepted in full.5. Club and Association Service:The appellant's claim for CENVAT credit on club and association services was initially denied on the grounds that monthly maintenance charges were not included within the definition of input service post-01.04.2011. The Tribunal found this interpretation incorrect, stating that maintenance of corporate office premises is covered under the definition of input service. Therefore, the Tribunal allowed the appellant to avail of CENVAT credit for these services.Conclusion:The appeal was successful, and the order passed by the Commissioner of GST & Central Excise (Appeals -Thane) was set aside. The Tribunal allowed CENVAT credit on outdoor catering, courier services, air and rail travel, tour operator services, and club & association services, subject to verification. The adjudicating authority was directed to complete the verification process within three months, with the appellant required to produce documentary proof upon notice.