Custom, Excise & Service Tax Tribunal
Cce, Mysore vs M/S. J.K. Tyre & Industries Ltd on 30 December, 2011
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench - SMB
Court I
Date of Hearing:30/12/2011
Date of decision:30/12/2011
Appeal No.E/144/2010
(Arising out of Order-in-Appeal No.432/2009 dt. 22/10/2009
passed by CCE(Appeals), Mangalore)
For approval and signature:
Honble Mr. P.G. Chacko, 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?
CCE, Mysore
..Appellant(s)
Vs.
M/s. J.K. Tyre & Industries Ltd.
..Respondent(s)
Appearance Mr. M.M. Ravi Rajendran, Dy. Commissioner (Authorised Representative) for the Revenue.
Mr. Dattaray D. Bhat, Authorised Representative for the respondent.
Coram:
Honble Mr. P.G. Chacko, Member(Judicial) FINAL ORDER No._______________________2011 The short question to be considered in this case is whether the respondent is entitled to claim CENVAT credit on outdoor catering service used by them for supply of food to their employees during the period from September, 2006 to October, 2007. This case pertains to Truck Radial Plant of the respondent-company. In respect of another plant of the same company viz. Vikrant Tyre Plant, this Bench had occasion to consider identical issue for a later period. The final order passed by this Bench on 28/09/2011 is reproduced below:
In the appeals filed by the department, the short question arising for consideration is whether CENVAT credit of the Service Tax paid on outdoor catering service availed by the respondent for supply of food in the factory canteen to the factory workers/employees is admissible to them in terms of Rule 2 (l) read with Rule 3 of the CENVAT Credit Rules, 2004 for the period of dispute (the month of November 2008). The learned Commissioner (Appeals) granted the benefit to the respondent in view of the Tribunals Larger Bench decision in CCE, Mumbai Vs. GTC Industries Ltd. - 2008 (12) STR 468 (Tri.-LB). The respondent has filed counter to each appeal, styled as Cross Objections.
2. Heard both sides. At this stage, it is not in dispute that respondent can claim CENVAT credit on the above service provided they had employed more than 250 workers in each factory and had not recovered any amount from their workers towards cost of the service. This consensus is based on the Honble High Courts judgment in CCE, Nagpur Vs. Ultatech Cement Ltd. - 2010 (260) ELT 369 (Bomb.) wherein the use of outdoor catering service by the company for supply of food to factory workers/employees was held to be integrally connected with the business of manufacturing excisable goods and credit of Service Tax paid on such service was held to be allowable. The Honble High Court also acknowledged the fact that the assessee carrying on the business of manufacturing cement by employing more than 250 workers was mandatorily required under the provisions of the Factories Act, 1948 to provide canteen facilities to the workers and that failure to do so entailed penal consequences under the said Act. It is also significant to note that the Honble High Court itself agreed with the Tribunals decision in GTC Industries Ltd. (supra) that the credit of Service Tax would be allowable to the manufacturer even in cases where the cost of the food was borne by the workers. The High Court took the view that the benefit of CENVAT credit could be allowed only if the proportionate credit to the extent embedded in cost of food recovered from the employees / workers was reversed.
3. Learned DR has therefore suggested that the matter be remanded to the original authority for proper verification of the relevant facts. The authorized representative of the respondent has no objection. Therefore, while sustaining the appellate Commissioners decision in principle, I dispose of these appeals with a direction to the original authority to grant the benefit of CENVAT credit on outdoor catering service to the respondent for the month of November 2008 in respect of the factories concerned if they produce evidence of (a) strength of the factory workers being above 250 in each factory and (b) no recovery from workers towards cost of service. Needless to say that, a reasonable opportunity of adducing such evidences and also of being personally heard shall be given to the party.
2. Following the above precedent, I dispose of the present appeal with a direction to the original authority to allow the benefit of CENVAT credit on outdoor catering service to the respondent for the aforesaid period in respect of Truck Radial Plant if they produce evidence of (a) strength of factory workers above 250 and (b) no recovery from the employees towards cost of service. Needless to say that a reasonable opportunity for presenting their case and being personally heard shall be given to the party.
( Pronounced and dictated in open court ) ( P.G. CHACKO ) MEMBER (JUDICIAL) Nr 4