Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs M/S Apar Industries Ltd on 27 April, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. IV Appeal No. E/1306 & 1413/11 (Arising out of Order-in-Appeal No. PKS/31/BEL/2011-12 dated 25.5.2011 passed by the Commissioner of Central Excise (Appeals), Mumbai-III). For approval and signature: Honble Shri Raju, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== Commissioner of Central Excise, Belapur M/s Apar Industries Ltd. Appellant Vs. M/s Apar Industries Ltd. Commissioner of Central Excise, Belapur Respondent Appearance: Shri Ashutosh Nath, AC (AR) for Appellant Shri D.H. Nadkarni, Advocate for Respondent CORAM: SHRI RAJU, MEMBER (TECHNICAL) Date of Hearing: 07.04.2016 Date of Decision: 27.04.2016 ORDER NO. Per: Raju
M/s Apar Industries Ltd. utilized services of CHA and Outdoor Catering Services. The credit of the Service Tax paid on Outdoor Catering Services was denied to the appellant by both the original adjudicating authority as well as first appellate authority. The credit of CHA services was denied by the original adjudicating authority but the same was allowed by the first appellate authority. Aggrieved by the order of first appellate authority, both Revenue as well as M/s Apar Industries Ltd. are in appeal before the Tribunal.
2. The first appellate authority has allowed the credit of CHA services on the ground that the CHA services were used for clearance of goods for export after removal from the factory on the strength of CBE&C Circular No. 137/85/2007-CX-4. The Commissioner (Appeals) had, however, denied the credit of Service Tax paid on the Outdoor Catering Service availed on the canteen services provided by M/s Apar Industries Ltd. in their factory. It was denied on the grounds that the cost of the services received in the canteen was not borne by M/s Apar Industries Ltd. but was borne by the employees. It was observed that no evidence to show that the cost of the said services was borne by M/s Apar Industries Ltd.
3. Learned Counsel for M/s Apar Industries Ltd. argued that when the place of removal for the purpose of export is a Port of Export in terms of Circular No. 999/6/2015-CX dated 28.2.2015 and therefore, credit of CHA services needs to be allowed. He also relied on the decision of Hon'ble High Court of Gujarat in case of Dynamic Industries Ltd. 2014 (307) ELT 15 (Guj) and the decision of Tribunal in case of JSW Steel Ltd. 2014 (36) STR 801 (Tri). In respect of the Outdoor Catering Services, he relied on the decision of GTC Industries Ltd. - 2008 (12) STR 468 (Tri-LB). He argued that their factory is covered by the Section 92 of the Factories Act, 1948 and hence it is mandatory for them to provide canteen services. He, however, clarified that the part of the cost of the catering is borne by M/s Apar Industries Ltd. and balance is borne by the employees.
4. Learned AR relied on the impugned order for the purpose of Outdoor Catering Services. He argued that in respect of CHA services, credit will not be admissible as these services are used beyond the place of removal.
5. I have gone through the rival submissions. I find that the Circular No. 999/6/2015-CX dated 28.2.2015 in para 6 clarified as under: -
6. In the case of clearance of goods for export by manufacturer exporter, shipping bill is filed by the manufacturer exporter and goods are handed over to the shipping line. After Let Export Order is issued, it is the responsibility of the shipping line to ship the goods to the foreign buyer with the exporter having no control over the goods. In such a situation, transfer of property can be said to have taken place at the port where the shipping bill is filed by the manufacturer exporter and place of removal would be this Port/ICD/CFS. Needless to say, eligibility to CENVAT Credit shall be determined accordingly. In view of the above, the issue stand settled in favour of M/s Apar Industries Ltd. in so far as credit of CHA services is concerned. The appeal of the Revenue on this count is dismissed.
6. So far as the credit of Outdoor Catering Services availed inn the canteen are concerned, a Larger Bench of this Tribunal in the case of GTC Industries Ltd. (supra) has observed as under: -
The above paras of CAS-4 clearly shows that cost of subsidised food is included in the cost of production. We further note that in case of a factory having more than 250 workers under Section 46 of the Factories Act, 1948, it is mandatory on the part of the factories to provide a canteen facility within the factory premises and failure to comply with the provisions of Section 46 attracts prosecution and penalty under Section 92 of the Factories Act, 1948. A service tax on outdoor catering services is paid by the manufacturer for running the canteen, irrespective of the fact that a subsidised food is provided or not. Whether the cost of food is borne by the worker or by the factory, the same will form part of expenditure incurred by the manufacturer and will have a bearing on the cost of production. In view of the same, employment of outdoor caterer for providing catering services has to be considered as an input service relating to the business and Cenvat credit in respect of the same will be admissible. We, therefore, concur with the views of the tribunal expressed in the case of Victor Gaskets India Ltd. and Others - 2008 (10) S.T.R. 369 (Tri. - Mumbai). The reference is answered accordingly and the matter is sent back to referral Bench for passing appropriate orders. In view of the above, the credit of Outdoor Catering Services in the proportion in which the expenditure is borne by M/s Apar Industries Ltd. would be admissible to them. However, proportion of Service Tax in respect of the cost of such catering services borne by the employees of Apar Industries Ltd. would not be admissible.
6. The appeal of M/s Apar Industries is thus partly allowed on above terms.
(Pronounced in Court on 27.04.2016) (Raju) Member (Technical) Sinha 4 Appeal No. E/1306 & 1413/11