Custom, Excise & Service Tax Tribunal
Campco Chocolate Factory vs Commissioner Of Central Excise And ... on 5 June, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/2702/2012-SM, E/2703/2012-SM [Arising out of Order-in-Appeal No. 300/2012 dated 13/07/2012 passed by CCE(Appeals), Mangalore] For approval and signature: HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes CAMPCO CHOCOLATE FACTORY KEMMINJE PUTTUR 574 202 DK KARNATAKA Appellant(s) Versus Commissioner of Central Excise and Service Tax MANGALORE NULL 7TH FLOOR...TRADE CENTRE, BUNTS HOSTEL RD., MANGALORE, - 575003 KARNATAKA Respondent(s)
Appearance:
M.S. NAGARAJA, ADV M/S. T.RAJESWARA SASTRY & ASSOCIATES, NO.48, 11TH MAIN ROAD, BANASHANKARI II STAGE, BANGALORE 560070 For the Appellant Shri N. Jagadish, Superintendent(AR) For the Respondent Date of Hearing: 01/05/2015 Date of Decision: CORAM:
HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER Final Order No. __________________ Per : ARCHANA WADHWA The appellants have been denied the following CENVAT credits:-
CENVAT credit Period Show-cause notice date Rs.3,18,098/-
March 2006 to January 2010 01/04/2011 Rs.1,02,992/-
August 2010 to April 2011 30/11/2011
2. The above credits were denied on outdoor catering service received by the appellant in their factory canteen and used for supplying food to their workers/employees during the material period. The demands are based on the premise that the appellant was entitled to take CENVAT credit only to the extent of 50% of service tax on the total charges paid to the canteen contractor. On this ground, CENVAT credit stands denied in full. On a perusal of the records, I find that it is not in dispute that the food supplied to the workers/employees was subsidized to the extent of 50%. The case of the appellant is that they were entitled to take CENVAT credit on the entire amount of service tax collected from them by the canteen contractor. The case of the Revenue is that the assessees entitlement should be restricted to the cost of service incurred by them. In other words, CENVAT credit could not be claimed by the assessee to the extent the cost of food was collected from the workers/employees. This view is taken by the Department in the light of decision in the case of Commissioner Vs. Ultratech Cement Ltd. [2010(260) ELT 369 (Bom.)]. In these appeals, the assessee has claimed support from the Tribunals Larger Bench decision viz. Commissioner Vs. GTC Industries Ltd. [2008(12) STR 468 (Tri. LB)] wherein subsidy in the matter of serving food to workers by making use of outdoor catering service was held to be immaterial insofar as the manufacturers claim of CENVAT credit on the said service was concerned.
3. The learned counsel appearing for the appellant fairly agrees that the said view of the Larger Bench decision of the Tribunal was modified by the Honble Bombay High Court in the case of Ultratech Cement Ltd. However, he draws my attention to the last paragraph of the said decision wherein the service tax was also collected by the assessee from the employees. It is in this scenario, it was held that the service tax actually paid by the employees cannot be availed as credit by the manufacturer. Learned advocate submits that in the present case, it is the appellant who has paid the service tax even though the cost of the food was recovered from their employees. He submits that the coupons given to the employees for the cost of the food did not include service tax.
4. After carefully considering the above submission, I would like to reproduce para 39 from the Bombay High Court decision:
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.
It stands observed in the above paragraph that service tax was borne by the ultimate consumer of the services. Admittedly when service tax had been borne by the employees, the manufacturer could not have taken the credit of the same. In the present case, it is the contention of the appellant that it is they who have paid the service tax, even though the cost of the food upto the extent of 50% was recovered from the employees. In such a scenario, I am of the view that the service tax actually paid by the appellant would be available as credit to them.
5. Apart from the above, I also find that the Revenue has denied the entire service tax without even granting the benefit of 50% of the same, as the appellants have admittedly borne the cost of food to the extent of 50%.
6. I also find that the first show-cause notice issued for the period from 2006-07 to January 2010 is fully barred by limitation. The credit was availed by the appellant by reflecting the same in the records and the issue was covered by the Larger Bench decision of the Tribunal, in which case the appellant cannot be held to be guilty of any malafides. Accordingly I hold the first show-cause notice to be barred by limitation also.
7. In view of the above, I find that the appellant is entitled to the credit on merits and the demand for the first period is also held to be barred by limitation. Accordingly, the impugned orders are set aside and both the appeals are allowed with consequential relief, if any, to the appellant.
(Pronounced on .) ARCHANA WADHWA JUDICIAL MEMBER Raja..
5