Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, Pune-I vs M/S. Bosch Chassis Systems India Ltd on 27 September, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. E/1148/2009-Mum. (Arising out of Order-in-appeal No. P-I/VSK/189/2009 dated 21/08/2009 passed by the Commissioner (Appeals) Central Excise, Pune-I ) For approval and signature: Honble Mr. Sahab Singh, 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, Pune-I
:
Appellant
Vs.
M/s. Bosch Chassis Systems India Ltd.,
Respondent
Appearance:
Shri S.R. Bhatti, DC Authorized Representative for appellant
Shri Sachin Chitnis, Advocate for respondent
CORAM:
Mr. Sahab Singh , Member (Technical)
Date of hearing : 27/09/2011
Date of decision : 27/09/2011
ORDER NO.
This is an appeal filed by the Revenue against the order-in-appeal No. PI/VSK/189/2009 dt. 21.8.2009.
2. The brief facts of the case are that M/s. Bosch Chassis Systems India Ltd. (hereinafter referred to as respondent) had availed CENVAT Credit of Rs.3,46,167/- of Service Tax paid on the Outdoor Catering service during the period from January 2008 to May 2008. The department was of the view that Outdoor Catering Services were not eligible to be treated as an input services as they were not in or in relation to manufacture of final products and were also not included in the illustrative list contained in the definition of input service in rule 2 of the CENVAT Credit Rules, 2004. A show-cause notice was therefore issued to the respondent asking them why the CENVAT Credit should not be denied to the respondents case. The show-cause notice was adjudicated by the original authority who disallowed the CENVAT Credit amounting to Rs.41,123/- and allowed the credit of Rs.3,05,044/-. The respondent filed appeal before Commissioner (Appeals) who vide the impugned order relying upon the decision of the Tribunal in case of GTC Industries Ltd. reported in 2008 (12) STR 468 (Tri.LB) has allowed the appeal of the respondent.
3. Revenue did not accept the order-in-appeal and filed the appeal before this Tribunal against the impugned order.
4. The Ld. DR appearing for the Revenue stated that it was not proper on the part of the learned Commissioner (Appeals) to allow the benefit without considering as to whether the expenses on the outdoor catering services are being recovered by the assessee from their employee wholly or partly. In such a situation the amount of canteen expenses borne by the employee will not form a part of the assessees expenditure to that extent credit of service tax would not be permissible. In support of his contention he relied upon the decision of the Bombay High Court in the case of Commissioner of Central Excise Nagpur, Vs. Ultratech Cement Ltd. reported in 2010 (20) S.T.R. 577 (Bom.) and the Tribunal decision in the case of Titan Industries Ltd. Vs. Commissioner of C. Ex. Bangalore-I reported in 2011 (23) S.T.R. 600 (Tri.Bang.). In view of this decision when the cost of the food is borne by the worker, CENVAT Credit of service tax paid on outdoor catering service is not admissible to the assessee. He, therefore, requested that order-in-appeal passed by the Ld. Commissioner (Appeals) needs to be set aside.
5. The learned Advocate appearing for the respondent submitted that the Honble Gujarat High Court in the case of Commissioner of Central Excise Ahmedabad-I Vs. Ferromatik Milacron India Ltd. reported in 2011 (21) S.T.R 8 (Guj.) has held that the outdoor catering service provided in the factory canteen which is mandatory for the employer to provide canteen services to staff under Factories Act. Service is indirectly used in relation to manufacture of final product. He therefore contended that the Commissioner (Appeals) has rightly allowed the benefit of the CENVAT Credit to the respondent. He also submitted that in case the Commissioner (Appeals) order is modified there is no case for the department for imposition of the penalty as there was a difference of interpretation of the GTC Industries Ltd. case in different manner by the department and the Commissioner (Appeals).
6. After hearing both the sides. I find that the Commissioner (Appeals) has allowed the benefit of the CENVAT credit of the service tax paid on the catering services relying upon the decision of Tribunal in the case of GTC Industries Ltd. (supra). He has set aside the findings of the original authority in which the CENVAT Credit was disallowed on the catering service on the premise that cost of outdoor catering service was recovered by the company from their employees. I find that the Honble High Court of Bombay in the case of Ultratech Cement Ltd. cited (supra) in para 39 of the order held as under:-
The Larger Bench of CESTAT in the case of GTC Industries Ltd. (supra) has also observed that the credit of service tax would be allowable to a manufacturer even in cases where the cost of the foods is born by the worker (see last para). That part of the observation made by the Larger Bench cannot be upheld, because, once the service tax is borne by the ultimate consumer of the service, namely the worker, the manufacturer cannot take credit of that part of the service tax which is borne by the consumer. Shri Shridharan, learned Counsel for the assessee fairly conceded to the above position in law and in fact filed an affidavit affirmed by a responsible officer of the assessee wherein it is stated that the proportionate credit to the extent embedded in the cost of food recovered from the employee/worker has been reversed.
In view of this, once the service tax is borne by the ultimate consumer of the service, namely the worker, the manufacturer cannot take credit of that part of the service tax. The Tribunal in the case of Titan Industries Ltd. followed this decision of the Honble Bombay High Court and has held once the tax is borne by the ultimate consumer of the services, namely the workers manufacturer could not take the credit of that part of the service tax.
7. As regards the judgment of the Gujarat High cited by the respondent it is not clear from the facts of the case whether the tax was borne by the workers and employees of the company in that case. The facts of the case are different from the present case. Therefore this decision is not applicable in the present case. Following the decision of the Honble High Court of Bombay the appeal of the Revenue is allowed in respect of the service tax only and the Cross-objection are also disposed of.
(Pronounced in Court) (Sahab Singh) Member (Technical) Sm 5