Custom, Excise & Service Tax Tribunal
Finolex Industries Ltd vs Commissioner Of Central Excise, Pune on 23 November, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No.E/1447/09 (Arising out of Order-in-Appeal No.P-I/VSK/247/09 dated 24/11/2009 dated passed by Commissioner of Central Excise & Customs (Appeals), Mumbai) For approval and signature: Honble Mr. S.K. Gaule, 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 :
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?
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Finolex Industries Ltd., Appellant
Vs.
Commissioner of Central Excise, Pune Respondent
Appearance:
Miss.Purnima Lakshminarayanan, Advocate for appellant
Shri.Manish Mohan, SDR, for respondent
CORAM:
Honble Mr. S.K. Gaule, Member (Technical)
Date of Hearing : 23/11/2010
Date of Decision : 23/11/2010
ORDER NO
1. Heard both sides.
2. The appellant filed this appeal against the order-in-appeal No.P-I/VSK/247/09 dated 24/11/2009 whereby the Commissioner (Appeals) has denied them the Cenvat credit on outdoor catering services on the ground that the appellants have not demonstrated that the outdoor catering expenses formed part of the assessable value of the final product.
3. Briefly stated the facts of the case are that the appellants are engaged in the manufacture of PVC pipes and fittings falling under Chapter No.39 of the CETA, 1985. They availed Cenvat credit on inputs, capital goods and inputs services used in the manufacture of their final products. The appellants have availed Cenvat credit on outdoor catering services. The lower adjudicating authority denied them the Cenvat credit on the services and confirmed the demand of the Cenvat credit utilized amounting to Rs.78,715/- and along with interest and also imposed penalty of Rs.10,000/-. Aggrieved by this, the appellant preferred an appeal with the Commissioner (Appeals), who upheld the findings of the lower adjudicating authority. Hence, this appeal.
4. The contention of the appellant is that outdoor catering services is a mandatory service provided in terms of the Section 46 of the Factory Act, 1948. They contended that outdoor catering services have nexus with the manufacturing of the final product. In support of their contention they have placed reliance on Honble Bombay High Courts decision in the case of CCE, Nagpur Vs. Ultratech Cement Ltd., 2010-TIOL-745-HC-MUM-ST. The contention is that the expenses are incurred in their factory are included in the cost of production of their final products. In support of this they have also produced a certificated dated 03/12/2009 issued by the Cost Accountant.
5. The contention of the department is that there is no nexus between the manufacture of goods and the services in question and the certificate of Cost Accountant is being produced before the Tribunal for the first time and it was not produced at any stage before the lower authorities. They also contended that as per Section 37 (xvi a) rules will be framed in relation to the manufacture of excisable goods and they also contended that in view of the said provisions, the decision of Honble Bombay High Court is sub-silentio to the expressed provisions of the Act.
5.1 I have perused the records and considered the submissions. The appellants are providing canteen facilities to their workers, which is being done through a outdoor caterer engaged by them. The canteen facilities are mandatorily required to be provided under the provisions of factory Act, 1948. This question was before the Honble Bombay High Court in the case of Ultratech Cement Ltd. (supra), which has been answered as under:-
As rightly contended by Shri Shridharan, learned Counsel for the respondent-assessee, in the present case, the assessee carrying on the business of manufacturing cement by employing more than 250 workers is mandatorily required under the provisions of the Factories Act, 1948 to provide canteen facilities to the workers. Failure to do so entails penal consequences under the Factories Act, 1948. To comply with the above statutory provision, the assessee had engaged the services of a outdoor caterer. Thus, in the facts of the present case, use of the services of an outdoor caterer has nexus or integral connection with the business of manufacturing the final product namely, cement. Hence, in our opinion, the Tribunal was justified in following the Larger Bench decision of the Tribunal in the case of GTC Industries Ltd., (supra) and holding that the assessee is entitled to the credit of service tax paid on outdoor catering service.
From the above, it follows that the issue stands settled in favour of the assessee. As regards the contention that the Honble Bombay High Courts decision is sub-silentio to the express provisions of Section 37. The learned SDR could not produce any evidence that the department raised this issue before the Honble Bombay High Court. Further, the department could not produce any decision modifying staying the operation of the Honble Bombay High Courts decision. The other sequel to the Honble Bombay High Courts decision while answering the question is that the Tribunal was justified in following the Larger Bench decision of the Tribunal in the case of CCE Vs. GTC Industries Ltd. 2008-TIOL-1634-CESTAT-MUM-LB). Therefore, the appellants are required to show that the outdoor services are forming part of the cost of production. Now the appellant have produced a certificate issued by the Cost Accountant, which was at no stage produced before the lower authorities, the same is required to be examined. So far as the Cenvat credit on outdoor catering services is concerned, the same stands allowed by the Honble High Court in the case of Ultratech Cement (supra). Therefore, the case is remanded to the lower adjudicating authority for limited purpose of examining whether the outdoor catering services are forming part of the cost of production. The appellant are at liberty to produce the Cost Accountants certificate before the lower adjudicating authority. Needless to say, reasonable opportunity of personal hearing may be granted. The appeal is accordingly disposed of.
(Dictated in open Court) (S. K. Gaule) Member (Technical) pj 1 2