Custom, Excise & Service Tax Tribunal
M/S Hindustan Coca Cola Beverages Pvt. ... vs Commissioner Of Central Excise, Nashik on 21 November, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. IV Appeal No. E/89199/13 & E/85728/14 (Arising out of Orders-in-Appeal No. RPS/222/NSK/2013 dated 18.7.2013 and No. NSK-EXCUS-000-APP-329-13-14 dated 27.11.2013 passed by the Commissioner of Customs & Central Excise (Appeals), Nashik). 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? ====================================================== M/s Hindustan Coca Cola Beverages Pvt. Ltd. Appellant Vs. Commissioner of Central Excise, Nashik Respondent Appearance: Shri Prasad Paranjape, Advocate for Appellant Shri Ashutosh Nath, AC (AR) for Respondent CORAM: SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) Date of Hearing: 21.11.2014 Date of Decision: 21.11.2014 ORDER NO. Per: Shri Anil Choudhary
These appeals are directed against two separate Orders-in-Appeal No. RPS/222/NSK/95/2013 dated 18 July 2013 and No. NSK-EXCUS-000-APP-329-13-14 dated 27 November 2013 passed by Commissioner (Appeals), Central Excise & Customs, Nashik. The impugned orders uphold Orders-in-Original passed by the lower authorities by which cenvat credit on outdoor catering services was denied to the Appellant cumulatively for the period December 2011 to December 2012.
2. The Ld. Counsel appearing for the Appellant submits that the only ground on which the lower authorities have rejected the credit is that, as per the definition of input service amended w.e.f 1st April 2011 any input service used for personal use or consumption by any employee is not eligible for credit.
2.1 The Ld. Counsel for the Appellant contends that the above exclusion would apply only where the service is used for personal use or consumption by any employee, whereas in the instant case outdoor catering service is used by the Appellant in relation to carrying out the business of manufacturing excisable goods. It is further submitted that credit is claimed only to the extent the cost of such expenses is borne by the Company, and not recovered from the employees.
2.2 The Ld. Counsel relies on the TRU circular D.O.F.No.334/3/2011-TRU dated 28 February 2011 issued at the time of introduction of the said amendment, wherein it is stated as under:
9.?On the same lines, a service meant primarily for the personal use or consumption of employees will not constitute an input service. A list of specific services has also been given by way of example in the definition. Most of these services constitute a part of the cost-to-company package of the employee and are provided either free of charge or on concessional basis to company employees. 2.3 The Ld. Counsel also relies upon Circular No. 943/4/2011-CX., dated 29 April 2011 which clarifies as under :
S. No. Issue Clarification
2.
Is the credit of only specified goods and services listed in the definition of inputs and input services not allowed such as goods used in a club, outdoor catering etc, or is the list only illustrative?
The list is only illustrative. The principle is that cenvat credit is not allowed when any goods and services are used primarily for personal use or consumption of employees.
2.4 It is submitted that both the above Circulars clarify that outdoor catering service is per se not ineligible input service but it is not eligible for credit only when it is used for personal use or consumption of any employee or a sub-group of employees. Revenue has not produced any evidence to counter submissions of the Appellant, before both the lower authorities, that they have indeed used the services during their normal business operations and not for personal use or consumption or any of their employees, and that they have claimed credit only to the extent of cost borne by the company.
2.5 The Ld. Counsel further submits that deletion of the word activities relating to business from the definition of input service and adding specific clauses of inclusion and exclusion is only to make it explicit what was already implicit. He submits that as per the pre-amendment definition of input service the activities relating to business were eligible for credit, and hence a specific exclusion for service used for personal use or consumption was not required, but it conveyed the same meaning that all the services used for business continue to be eligible for credit unless excluded specifically.
2.6 The Ld Counsel relied on the following decisions of Honble Karnataka high Court in support of their claim for credit:
a. CCE & ST, LTU, Bangalore vs. ACE Designers Ltd. reported in 2011-TIOL-931-HC-KAR-CX b. CCE, Bangalore-III vs. Stanzen Toyotetsu (I)Pvt. Ltd. reported in 2011-TIOL-866-HC-KAR-ST 2.7 Further, Ld. Counsel relied on decision of the Honble Bombay High Court in the case of Coca Cola (I) Pvt. Ltd. vs. CCE, Pune III reported in 2009 (15) STR 657 (Bom.) wherein it is held that the input service forming part of cost of manufacturing will be entitled for credit.
3. The Ld. Assistant Commissioner (AR) for the Revenue reiterates the findings of the lower authorities and submits that since there is a specific exclusion provided in the definition of input service, outdoor catering service which is used or consumed by any employee should not be held to be eligible for credit.
4. I have carefully considered the submissions made by both the sides.
4.1 I find considerable force in the submissions made by the Ld. Counsel for the Appellant, that what is excluded is only the services primarily for personal use or consumption of any employee under clause (C) of Rule 2(l) of the definition of input service. When the Government has specifically used the words such as used primarily for personal use or consumption of any employee, the same has to be given due effect to. In the present case the outdoor catering service is used in relation to business activities of the Appellant and the service is used by all employees in general. Also, the Revenue has not rebutted the contention of the Appellant, that the costs of these input services form part of the cost of final product. I also find that the services covered in clause (B) of the definition are excluded from the ambit of cenvat credit without any such qualification of use of service for personal or official purpose.
4.2 I further find that even the Government while issuing the budget clarification or subsequent circular has clarified that what is not eligible is that service which is meant for personal use or consumption by an employee or the cost of which is included as part of salary of the employee as a cost to company basis. In the present case, the cost of such services, are admittedly borne by the company and not by the employee. Therefore, I hold that the Appellant has correctly claimed the cenvat credit on outdoor catering services. Accordingly, the impugned orders are set aside and the appeals are allowed with consequential relief, if any.
(Pronounced in Court) (Anil Choudhary) Member (Judicial) Sinha 5