Custom, Excise & Service Tax Tribunal
M/S Positive Packaging Industries Ltd vs Cce, Raigad on 28 August, 2014
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. II IN APPEAL NO. E/365/12 (Arising out of Order-in-Appeal No. US/466/RGD/2011 dated 12.12.2011 passed by the Commissioner of Central Excise (Appeals) Mumbai II.) For approval and signature: Honble Shri Anil Choudhary, Member (Judicial) =====================================================
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?
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M/s Positive Packaging Industries Ltd.
: Appellant
Versus
CCE, Raigad
: Respondent
Appearance
Shri P.K. Shetty, Advocate
: For Appellant
Shri S.G. Dewalwar, Addl. Commissioner (A.R.)
: For Respondent
CORAM:
HONBLE SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL)
Date of Hearing : 28.08.2014 Date of Decision: 28.08.2014
ORDER NO.......................................................
Per: Anil Choudhary:
The appellant M/s Positive Packaging Industries Ltd. is in appeal against the Order-in-Appeal No. US/466/RGD/2011 dated 12.12.2011, upholding the Order-in-Original No. RGD/KPL/DC/06/11-12 dated 19.05.2011 passed by Dy. Commissioner of Central Excise, New Panvel, denying the CENVAT credit of Rs. 1,42,606 on catering service, availed by the appellant and imposed equal amount of penalty.
2. That appellant is a manufacturer of flexible laminated films, printed pouches of plastics, falling under chapter heading No. 39 of the schedule to the Central Excise Tariff Act, 1985 & are registered with Khopoli Division. The manufacturing unit is located at remote place around 50 Kms away from Panvel, in a village called Ransai and have direct employee strength of over 300 and contract employees of equal numbers, working in three shifts. Appellant is availing CENVAT credit on inputs, Capital Goods & Input Services under the CENVAT credit Rules, 2004 as manufacturers. Appellant submits that it is mandatory under Section 46 of the Factories Act, 1948 where employees in factory are more than 250 workers, to provide canteen within the factory. Rule 19 of Maharashtra Factories Rules, 1963 also mandates such requirement of provision of canteen within the factory. Failure to provide such facilities would subject the appellant to penal action by the state government and also amounts to violation of the rules made under the Factories Act. Appellant has availed the credit of Service Tax paid on the catering service on the invoices raised by the canteen contractors for the food and snacks provided to workmen round the clock within the factory. This being an activity directly relating to day to day operations in the factory, is an allowable input. Further, there can be not production without labour.
2.1 Appellant has regularly filed monthly ER1 return showing the details of credit availed on input, capital goods & input services along with a copy of CENVAT account. Appellant has submitted statement of CENVAT availed, Service Tax paid on catering service and shown the same under category of Catering/Canteen Services. Appellants Central Excise records were audited by Central Excise EA 2000 Audit Team on 18.12.2006, 11.03.2008, 21.04.2009 & CERA audits on 02.09.2008 and credits on catering service were verified.
2.2 A show-cause notice dated 31.01.2011, demanding reversal of Rs. 1,42,606/- alleging contravention of provision of rules 2(1) of CENVAT credit Rules, 2004 was served. The notice also alleged suppression of facts and invoked penal provisions for penalty & interest on the allegation that they have suppressed the details of credit taken on such services and the same has come to notice only during the EA 2000 audit.
2.3 The Order-in-Original was passed denying the complete CENVAT credit and also imposing the equal amount of penalty under Rule 15(1) of CCR, 2004 on the ground that:
(a) Catering service is neither used in nor in relation to manufacture in final products i.e. Flexible Laminated printed films. The said service is not figuring in inclusive part of definition of Input service.
(b) The judgment of Hon'ble High Court in the case of Ultratech Cement Ltd. 2010 (20) STR 577 (Bom.) and GTC Ltd. 2008 (12) STR 468 (T-L-B) has not been accepted by the department and same have been challenged by way of appeal.
(c) Provisions of Section 11A(1) of the Central Excise Act, 1944 for demanding inadmissible credit, availed by the assessee, is applicable.
3. That the Commissioner (Appeals) heard the appellant on 2.11.2011 wherein appellants have made the submissions and also submitted case laws of Honble Gujarat High Court in the case of Ferromatik Milacron India 2011 (21) STR 8 (Guj), Honble Bombay High Court in the case of Ultratech Cement Ltd. (Supra) and the Tribunal Larger Bench judgement in the case of GTC Ltd. 2008 (12) STR 468 (T-LB). However appellant was surprised to receive the Order-in-Appeal upholding the order of adjudicating authority. Commissioner (Appeals) relied upon a judgment of Tribunal in the case of CCE Vs. Sundaram Brake Linings- 2010 (14) STR 172 (T) in which it was held that for eligibility of CENVAT credit of Service Tax, Nexus theory and relevance test as held by Hon'ble Supreme Court is required to be followed. Aggrieved with the said order, appellant is in appeal on the following grounds:-
(a) Catering service not only mandatory but also a need based requirement in view of the remote location of the factory.
(b) Judicial indiscipline of not following the binding judgments of Two Hon'ble High Court on the very same issue, not considered.
(c) No suppression, no penalty as held in appellant own case for the earlier period, by Commissioner (Appeals) in favour of appellant.
4. The learned A.R. appearing for the Revenue relies on the impugned order.
5. After hearing both sides and considering the case record, I find that the issue is no longer race-integra as the matter is decided by the Hon'ble Bombay High Court in the case of Ultratech Cement ltd. (Supra) in favour of assessee. Accordingly, I allow the appeal and set aside the impugned order. The matter is remanded for verifying, if the appellant have taken credit on the contribution, if any, by the employees, to such extent credit is held not allowable.
(Dictated and pronounced in open Court) (Anil Choudhary) Member (Judicial) Sp 5