Custom, Excise & Service Tax Tribunal
M/S Keihin Fie Pvt. Ltd vs Commissioner Of Central Excise, Pune Ii on 15 February, 2013
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. II IN APPEAL NO. E/1672/10 Mum (Arising out of Order-in-Appeal No. P-I/RKS/87/2010 Dated 18.06.2010 and passed by the Commissioner of Central Excise (Appeals), Pune- I.) For approval and signature: Shri S.K. Gaule, Honble 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 : yes of the order? 4. Whether Order is to be circulated to the Departmental : yes Authorities? ========================================================
M/s Keihin FIE Pvt. Ltd.
: Appellant Versus Commissioner of Central Excise, Pune II : Respondent Appearance Shri S.A. Gundecha, Advocate : For Appellant Shri V.K. Agrawal, Addl. Commissioner (A.R.) : For Respondents CORAM:
Shri S.K. Gaule, Honble Member (Technical) Date of Hearing :
15.02.2013 Date of Decision:
.02.2013 ORDER NO. ............................................
Per: S.K. Gaule Heard both sides.
2. The appellant filed this appeal against Order-in-Appeal No. P-I/RKS/87/2010 Dated 18.06.2010 where by learned Commissioner (Appeals), upheld the lower adjudicating authority and dismissed the appeal filed by the appellant.
3. Briefly stated the facts of the case are that, the appellant is engaged in the manufacture of excisable goods falling under chapter 84 & 87 of the First Schedule to the Central Excise Tariff Act, 1985. They availed CENVAT credit on Outdoor Catering services during the period March 2008 to March 2009 amounting to Rs.8,20,029/-. The department found that the appellant had taken credit on the portion of the charges recovered from the employees for canteen facilities, which was the deducted from the salaries of the employees. The lower adjudicating authority confirmed the demand of Rs.1,42,252/- alongwith interest and penalty was imposed under Rule 15 (A) of the CENVAT Credit Rules, 2004. The appellant filed the appeal before the learned Commissioner (Appeals) who upheld the order of the lower adjudicating authority.
4. Learned Advocate Mr. S.A. Gundecha, appearing for the appellant contented that as per the provisions of the Factories Act, 1948 and contract of employment with each of the employees, the appellant is required to provide canteen facility at its factory. The contention is that as per terms of employment and in order to keep discipline, the appellant recovered fixed amount from each of the employees enjoying canteen facility provided/arranged by the appellant. The contention is that the show-cause notices were issued for denial of CENVAT credit in respect of Service Tax charged by the Outdoor Caterer to the appellant, to the extent of amount received by the appellant from its employees. The Commissioner, Central Excise, Pune I, and the Commissioner (Appeals) Central Excise Pune I, Pune, confirmed the demand of Rs.2,56,925/- and Rs.1,42,252/- respectively. The contention is that in view of Rule 2(l) of the CENVAT credit Rule if a service is treated as input service, for a manufacturer assessee, then the entire amount of Service Tax which is charged as per the provisions of the Finance Act, 1994 needs to be allowed as CENVAT credit. The contention is that as per Rule 4(7) of the Rule, the word used is payment and not cost or part of the assessable value etc. The contention is that the word used in this Rule for the time when the CENVAT credit can be enjoyed is the word paid and not incurred cost or formed part of the assessable value etc. The contention is that the Rule 9 of the Rules provides for manner for availing the CENVAT credit. The contention is that in view of the above provisions of the Rules, the following conditions need to be satisfied.
(a) The services must be input services.
(b) The payment of consideration along with Service Tax has been made by the manufacturer assessee to the service provider.
(c) The invoices evidencing the fact of payment of Service Tax and condition of requiring details shall be available for claiming CENVAT credit.
The contention is that all the condition of these Rules are fulfilled by the appellant. The contention is that there is no privity of contract between the service provider and the employees, (as in the present case) then CENVAT credit cannot be disallowed in spite of the fact that the contract of service is with the appellant, the appellant has made payment of Service Tax to the service provider and the invoice is in the name of the appellant only. The contention is that their case is covered under Hon'ble High Court of Bombay in the case of Commissioner of Central Excise, Nagpur Vs. Ultratech Cement Ltd. reported in 2010 (20) STR 577 (Bom.).
4.1 The contention is that the appellant were at obligation for providing catering services to it is their employees and the recovery was made as per a separate contract with each of the employees. Therefore the observation of the Hon'ble High Court of Bombay is not applicable. The only contention of the appellant is that Hon'ble High Court of Bombay held that burden of Service Tax imposed most have been passed on to the ultimate consumer of the services and in their case there is a separate contract between the appellant and each of the employees and there is no contract between the Outdoor Caterers and their employees.
5. The contention of learned Authorised Representative Shri V.K. Agrawal, Additional Commissioner is that the case is fully covered by decision of the Hon'ble High Court of Bombay in the case of Ultratech Cement Ltd. The contention is that the Hon'ble High Court of Bombay has held that where Service Tax is borne by the ultimate consumer of the service, namely worker, the manufacturer cannot take credit of that part of Service Tax which is borne by the consumer.
6. I have carefully considered the submissions and perused the records. There is no dispute that CENVAT credit is available in case of Service Tax paid on Outdoor Catering Services. The only issue is whether CENVAT credit is available on the portion of cost of the food which is born by the employees. This issue was decided by the Hon'ble Bombay High Court in the case of Ultratech Cement Ltd (Supra). The learned Counsel appearing for the appellant had contended that the Hon'ble Bombay High Courts decision is only observation and the said observation would not apply to their case. Hon'ble High Court of Bombay where in para 39 of order in the case of Ultratech Cement Ltd (Supra) held as under:-
39.?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 food is borne 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.
From the above it is clear that Hon'ble High Court held that the manufacturer cannot take credit of that part of Service Tax which is borne by the consumer. It is not mere observation, but it is ratio decidendi. Undisputedly portion of cost of food is borne by the employees. Therefore, ratio of Hon'ble High Court of Bombay is applicable to the case. In these circumstances, I do not find any infirmity in the order passed by the learned Commissioner (Appeals). Therefore, the appeal filed by the appellant is accordingly dismissed.
(Pronounced in Court on .03.2013 )
(S.K. Gaule)
Member (Technical)
Sp/
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