Custom, Excise & Service Tax Tribunal
Affinity Express India Pvt. Ltd vs Cce Pune I on 15 December, 2010
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
COURT NO. II
APPEAL NO. E/968/09 E/1041/09 and E/1029/09 Mum
(Arising out of Order-in-Appeal No. PI/VSK/133/09 dated 26.05.09 passed by the Commissioner of Central Excise (Appeals), Pune I)
For approval and signature:
Honble Shri Ashok Jindal, 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 :
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?
Affinity Express India Pvt. Ltd.
:
Appellant
(in Appeals No. E/968 and 1041/09)
CCE Pune I
(in Appeal No. E/1029/09)
Versus
CCE Pune I Respondent
Affinity Express India Pvt. Ltd Appearance Shri Prasad Paranjape, Advocate for appellant Shri V.K. Singh, SDR for Respondents CORAM:
Shri. Ashok Jindal, Member (Judicial) Date of Hearing : 02.12.10 Date of Decision : ORDER NO.
The Appeals No. E/968/09 and E/1041/09 have been filed by the assessee and the Appeal No. E/1029/09 has been filed by the Revenue. The controversy, in this case, has been arisen due to the rejection of refund claim of the assessee by the lower authorities for the input services availed by them on the local travel and medical insurance which accumulated due to export of services by them. The Revenue is disputing the allowances of the refund claim for the outdoor catering and meal coupons.
2. The facts of the case are that the assessee filed a refund claim for the period starting from April 2006. As the assessee being an exporter of Business Auxiliary Services to their foreign clients and they have availed various input services in the course of their business. As the said input service credit could not be utilised by them, they filed a refund claim under Rule 5 of the CENVAT Credit Rules, 2004. The adjudicating authority has allowed the refund claim but the lower appellate authority has rejected the claim for local travel and medical insurance. The Revenue is disputing the allowances of the input credit service claimed for the outdoor canteen/meal coupons services.
3. The learned Advocate for the assessee submits that they have taken these services which have been denied in course of their business in terms of Rule 2(l) of the CENVAT Credit Rules, 2004 and are eligible for input service credit. He relied on the decision of the Honble Bombay High Court in the case of Ultratech Cement 2010-TIOL-745-H.C and also relied on the decision of Stanzen Toyotetsu India Pvt. Ltd. vs. CCE 2009 (14) S.T.R. 316 (Tri.- Bang.) and H.E.G. Ltd. vs. CCE Nagpur 2010 (17) S.T.R. 178 (Tri. Del). With regard to outdoor catering and meal service, he relied on GTC Industries Ltd. as reported in 2008 (12) S.T.R. 468 (Tri. L.B.) wherein it was held that the input service credit on outdoor catering service is available to the assessee in case the cost of food has been borne by the employer. He also submitted that the denial of refund claim to them is beyond the scope of the show-cause notice. He also submitted that the appellants have taken due credit of input service in their account and filed their returns accordingly and the same has been accepted by the appellant without any dispute. He further submits that there should not be two yard sticks as while taking the credit, no dispute was raised but while sanctioning of refund claim by holding that the assessee is not entitled for credit of these input service in terms of Rule 2(l) of the CENVAT Credit Rules, 2004. He also submitted that prior to 1.5.2006, the assessee was providing the service to their foreign clients under the head of Business Auxiliary Service, hence the assessee has correctly taken the credit and is entitled for refund claim under Rule 5 of CENVAT Credit Rules, 2004.
4. On the other hand the learned DR submitted that the services which the assessee are exporting have come under the service tax net with effect from 01.05.2006. In that event, any input service credit availed by them prior to 01.05.06 is not eligible for credit. He clarified that the services were not taxable which the assessee were exporting in the month of April 2006. Hence the credit of any input service accumulated in the month of April 2006, the assessee is not entitled to claim the refund of the same. With regard to services of local travel and medical insurance claim he relied on the decision of Vikram Ispat vs. CCE 2010 (19) STR 52 (Tri- Mum). With regard to outdoor catering services he relied on the decision of the Honble Bombay High Court in the case of Ultratech Cement (supra). Finally he submitted that the input service credit refund by the assessee on the meal coupon service is not eligible as the same are not covered by the outdoor catering service.
5. Heard and considered the submissions made by both the sides.
6. On careful examination of the show-cause notice, I find that the allegation against the assessee for denial of their refund claim is that the services provided by the assessee does not cover under Business Auxiliary Services as the same is non-taxable service and has become taxable only w.e.f May 2006. The adjudicating authority in his findings has held that the services provided by the appellant is covered under Business Auxiliary Services which was not taxable prior to 01.05.2006 hence the credit availed on input service in the month of April 2006 is not available to the assessee.
6.1. The input service credit is also denied on local travel and medical insurance on the ground that they are not covered under Rule 2(l) of the CENVAT Credit Rules, 2004.
7. With regard to the issue No.1, there is no dispute that the assessee has availed input service credit on the services availed in April 2006. In the impugned order it is clearly held by the lower appellate authority that no export of service has taken place during April 2006, hence the assessee is not entitled to take the credit of input service availed in April 2006. As per CENVAT Credit Rules, 2004 an assessee is entitled to take credit on input service at the time of availment of service not at the time of providing the services. In view of these findings, the observation of the lower authorities is totally irrelevant )as the assessee has not exported the services in the month of April 2006 the assessee is not entitled to claim credit on input services availed in April 2006). Hence, it is concluded that the assessee is entitled to avail input service credit of the services availed by them in the month of April 2006 also.
7.1. With regard to the input service credit on local travel and medical insurance, the decision of the Honble High Court of Bombay in the case of Ultratech Cement 2010-TIOL-745-HC is squarely applicable wherein it has been held that any input service availed by the assessee in course of their business is entitled for input service credit. It is not disputed by the lower authorities that these services are availed by the assessee in the course of their business, hence denial of input service on these two above services is not sustainable. The impugned order denying the input service credit on local travel and medical insurance and on input service availed on April 2006 is set aside and the appeals of the assessee are allowed with consequential relief.
8. With regard to the appeal of the Revenue wherein the dispute has been raised for meal coupons and outdoor catering, it has been clarified that these meal coupons are given to the employees to take meal from the factory canteen free of charge. As the cost of food against these meal coupons has been borne by the assessee, the assessee is entitle to claim input service credit arising out of meal coupons as held by the Honble High Court in the case of Ultratech Cement (supra).
8.1. Now come to the dispute arising on outdoor catering service, as held by the Honble High Court of Bombay in the case of Ultratech Cement (supra) the assessee is not entitled for input service credit for the charges recovered by them against the subsidised food from their employees. Accordingly, the credit availed by the assessee on the amount recovered by them from their employees against the canteen services is denied. Therefore, the appeal of the Revenue is partly allowed by way of remand to the original adjudicating authority to quantify the amount recovered by the assessee from their employees for providing subsidised food after giving reasonable opportunity of hearing to the assessee to produce the documents for quantification.
9. In the facts and circumstances of these cases and as discussed above no penalty is warranted as the issue involved is interpretation of statue. With these observations all three appeals are disposed of.
(Pronounced in Court on 15.12.10) (Ashok Jindal) Member (Judicial) nsk 6