CX - Outdoor Catering Services is a necessity but once said service is excluded, the use of such service, whether statutorily required or otherwise, does not render the services eligible for CENVAT: CESTAT
By TIOL News Service
MUMBAI, JAN 17, 2018: CENVAT credit paid in respect of Outdoor Catering Services was denied by the lower authorities.
The appellant is before the CESTAT and submits that although there is an exclusion of service of "Outdoor Catering Services" under clause (C) of Rule 2(l) of CCR, 2004, the credit is admissible for the reason that expenses for Outdoor Catering Services is borne by the appellant. Further, the exclusion is applicable only when the services are used primarily for personal use or consumption of any employee. That the catering service is required to be provided to the employees because the factory is running in three shifts and maintaining such catering service is mandatory under the Factory Act, 1948. Reliance is placed on the decisions in Hindustan Coca Cola Beverages Pvt. Ltd. 2014-TIOL-2460-CESTAT-MUM , Suzuki Motorcycle India Pvt. Ltd. = 2016-TIOL-2708-CESTAT-CHD & Hindustan Coca Cola Beverages Pvt. Ltd. = 2015-TIOL-3105-HC-MUM-ST.
The AR while reiterating the findings of the impugned order added that Outdoor Catering Services are exclusively provided for personal use and consumption by the employee, therefore, it is clearly covered w.e.f 01.04.2011 under exclusion Clause (C) of Rule 2(l) of CCR, 2004 and service tax paid thereon is not admissible as credit.
Exclusion clause in rule 2(l) of CCR, 2004 w.e.f 01.04.2011 reads –
| (C) Such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, Membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee. |
The Bench adverted to the contents of the exclusion clause (C) and inter alia observed –
+ The fact of the present case is that the Outdoor Catering Services provided in the factory of the appellant is exclusively meant for use by employee of appellant's factory. Therefore, it is clearly covered under the exclusion.
+ Primarily, the service should be first covered under the definition of the input service. Once a service is not covered due to exclusion, irrespective of fact whether the cost of services has been taken as expenditure in the books of account does not render the services as admissible for CENVAT credit.
+ Similarly, the submission that it is necessity for running the factory under three shifts and it is a requirement under the statute of Factory Act, 1948 does not make eligible such services for CENVAT credit when Outdoor Catering Services is excluded from definition of input service.
+ No doubt the Outdoor Catering Services is necessity but once said service is excluded, the use of such service whether statutorily required or otherwise does not render the services eligible for cenvat.
+ In the fact of the present case, there is no dispute the Outdoor Catering Services is exclusively used for the employee of the company, even though the expenses were borne. Therefore, Outdoor Catering Services is for personal use, accordingly clearly covered under the exclusion provided under the Clause (C).
Concluding that the appellant is not eligible for CENVAT on Outdoor Catering Services, the impugned order was upheld and the appeal was dismissed.
In passing: A gastronomic delight – see 2018-TIOL-211-CESTAT-MUM [Reliance Industries Ltd.]
(See 2018-TIOL-228-CESTAT-MUM)
