Custom, Excise & Service Tax Tribunal
M/S. Hindustan Coca Cola Beverages Pvt. ... vs Cce, Hyderabad-I on 30 June, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Bench SMB Court I Appeal No.E/22074/2014 (Arising out of Order-in-Appeal No.40/2014-15 (H-I)CE dt. 21/04/2014 passed by CC,CE&ST(Appeals-I&III), Hyderabad) For approval and signature: Honble Ms. Sulekha Beevi, C.S., Member(Judicial) 1. Whether Press Reporters may be allowed to see 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 Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? M/s. Hindustan Coca Cola Beverages Pvt. Ltd. ..Appellant(s) Vs. CCE, Hyderabad-I ..Respondent(s)
Appearance Shri Karan Talwar, Advocate for the appellant.
Shri Anish Gupta, Asst. Commissioner(AR) for the respondent.
Coram:
Honble Ms. Sulekha Beevi, C.S., Member(Judicial) Date of Hearing:30/06/2016 Date of decision:30/06/2016 FINAL ORDER No._______________________ [Order per: Sulekha Beevi, C.S.] The appellants are manufactures of aerated waters containing / not containing added sugar, fruit pulp or fruit juice based drinks. They are availing CENVAT credit on inputs, capital goods and input services. During the period October 2012 to March 2013, they availed service tax credit of Rs.1,81,612/- on outdoor catering services. The department was of the view that after 01/04/2011, these services are excluded in the definition of input service and that therefore credit is not admissible. A show-cause notice was issued proposing to disallow the credit availed on out-door catering services. After due process of law, the original authority confirmed the demand of Rs.1,81,612/- along with interest and imposed penalty of Rs.40,000/- under Rule 15(1) of CENVAT Credit Rules, 2004. The appellants filed appeal before the first appellate authority. The Commissioner(Appeals) upheld the same. The appellants are now before the Tribunal.
2. The learned counsel for appellant Shri Karan Talwar submitted that after the amendment to the definition of input service w.e.f. 01/04/2011, as per the exclusion part of the definition, what is excluded is services in relation to out-door catering when such services are used primarily for personal use or consumption of any employee. It is submitted that catering services was provided by appellant within the factory premises to provide food to the employees and labourers as per statutory requirement imposed by Factories Act, 1948. It is their case that not providing facility of food has direct impact on production as the unit is located 15 kms. away from the city and it has large number of employees. He relied on the decision of the Tribunal in their own case, Yazaki Wiring Technologies India Pvt. Ltd. Vs. CCE, Chennai-III [2016-TIOL-858-CESTAT-MAD] and in CST, Mumbai Vs. Reliance Capital Asset Management Ltd. [2016(41) STR 508 (Tri. Mumbai)].
3. The learned AR Shri Anish Gupta reiterated the findings in the impugned order. He argued that outdoor catering services are specifically mentioned in the exclusion part of the definition and that therefore these services do not qualify as input service.
4. I have heard both sides.
5. The definition of input service in Rule 2(l) of CENVAT Credit Rules, 2004 w.e.f. 01/04/2011 is reproduced as under:-
RULE 2(l) : Input Service means any service,-
(i) used by a provider of output service for providing an output service; or
(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products, up to the place of removal, and includes services used in relation to modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage up to the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation up to the place of removal; but excludes services,-
(A) specified in sub-clauses (p), (zn), (zzl(zzm), (zzq), (zzzh) and (zzzza) of clause (105) of Section 105 of the Finance Act (hereinafter referred as specified services), in so far as they are used for
(a) construction of a building or a civil structure or a part thereof; or
(b) laying of foundation or making of structures for support of capital goods, except for the provision of one or more of the specified services; or (B) specified in sub-clauses (d), (o), (zo) and (zzzzj) of clause (105) of Section 105 of the Finance Act, in so far as they relate to a motor vehicle except when used for the provision of taxable services for which the credit on motor vehicle is available as capital goods; or (C) such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee;
6. In Circular No.334/3/2011-TRU dt. 28/02/2011, the Board has discussed the highlights of the changes brought forth by Finance Bill, 2011. The amendment to the definition of input service is discussed and the specific portion regarding the exclusion portion clause (c) is as under:-
1.9. On the same lines, a service meant primarily for the personal use or consumption of employees will not constitute an input service. A list of specific services has also been given by way of example in the definition. Most of these services constitute a part of the cost-to-company package of the employee and are provided either free of charge or on concessional basis to company employees.
7. The appellants contend that canteen/outdoor catering services is provided within the factory premises in compliance to the provisions of the Factories Act, 1948. It is also submitted that such services are not used primarily for personal use or consumption of employee. In P. Ramanathan Aiyars Advanced Law Lexicon 3rd edition, the word primarily is defined as that which is first in order, rank or importance, anything from which something else arises or is derived. The word means something which is more most proximate or more important. When outdoor catering services, beauty treatment, health services etc. used for personal use or consumption of an employee, it would not qualify as input service. In the instant case, as per Factories Act, 1948, the appellants are compelled to provide food facilities inside the factory. It is more importantly used by the appellant to comply with the mandatory requirement under Factories Act. If they do not comply with such provision of the Factories Act, the appellants will definitely not be able to engage in the production / manufacture of final products. Therefore outdoor catering services are used by appellant in relation to the business of manufacture and not for any personal use or consumption of employee.
8. In view thereof following the decision laid in the appellants own case as well as the decision of the Tribunal in Yazaki Wiring Technologies India (P) Ltd. case and Reliance Capital Asset Management case (supra), I hold that the disallowance of credit is not legal or proper. The impugned order is set aside. The appeal is allowed with consequential reliefs, if any.
(Operative part of this order was pronounced in court on conclusion of the hearing) SULEKHA BEEVI C.S. MEMBER(JUDICIAL) Raja.
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