M/S. Gujarat State Fertilizers & ... vs Commissioner Of Central Excise & S.T., ...

(Arising out of OIA-BC/31/SURAT-II/2011 dated 23.03.2011, passed by Commissioner (Appeals) Central Excise, & S.T., Surat)

M/s. Gujarat State Fertilizers & Chemicals Limited : Appellant (s)

VERSUS

Commissioner of Central Excise & S.T., Surat : Respondent (s)

Represented by :

For Appellant (s) : Written Submission (Shri Amit Laddha, Advocate) For Respondent (s) : Shri S.K. Shukla, Authorised Representative

For approval and signature :

Mr. P.K. Das, Honble Member (Judicial)

1 Whether Press Reporter 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 CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

No 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

CORAM :

Mr. P.K. Das, Honble Member (Judicial)

Date of Hearing / Decision : 18.09.2015

ORDER No. A/11329/2015 Dated 18.09.2015

Per : Mr. P.K. Das;

The relevant facts of the case, in brief, are that the appellant was engaged in the manufacture of excisable goods under Chapter 39 and 54 of the Schedule to the Central Excise Tariff Act, 1985. A show cause notice dated 09.4.2010 was issued proposing to deny CENVAT credit of service tax on input service erroneously taken Canteen/Food Coupon to the tune of Rs. 34,792/- along with interest and penalty for the period April 2005 to February 2010. The adjudicating authority disallowed CENVAT credit of Rs. 34,792.00 along with interest and imposed penalty of equal amount. By the impugned order, Commissioner (Appeals) upheld the Adjudication order.

2. Shri Amit Laddha, Advocate on behalf of the appellant submitted written submission and requested to decide the appeal on merits in their absence. Learned Authorised Representative on behalf of the Revenue reiterates the findings of the Commissioner (Appeals).

3. After hearing the learned Authorised Representative and on perusal of the record, I find that the appellant had taken input service credit on service tax paid by M/s. Accor Radhakrishna Corporate Services Limited pertaining to food coupons. The stand of the appellant is that they provided the kind of canteen allowance at a fixed amount per month to its employees so as to enable them to buy food grains from authorised shops against exchange of such coupons. The learned Advocate in his written submission stated that the distribution of food coupons to the employees for meals is not only a part of Companys obligation to provide canteen/ food facilities to the employees but it is also a part of direct wages and salaries paid/ payable to the employees and forming part and parcel of the cost of production as per CAS-4 standards. Therefore, when subsidized food provision is a part of manufacturing cost, it is also a part of manufacturing activity. That apart, the service tax paid on such activity will form necessarily a part of cost of final products and consequently the assessee will be eligible to avail CENVAT credit of the service tax so paid.

4. The Commissioner (Appeals) observed that it is not clear whether such food grains bought through in exchange of Food Coupons were consumed exclusively by the employees only.

5. There is no dispute by a series of decisions of the Hon'ble High Court and the Tribunal that service tax on input services of outdoor catering is eligible for CENVAT credit. In the instant case, the Outdoor Caterers have not provided service to the employees of the appellant. There is no material available on record that the Food Coupons issued by M/s. Accor Radhakrishna Corporate Services Limited are in the name of Appellant Company. It appears that the employees had purchased food coupons from M/s. Accor Radhakrishna Corporate Services Limited. It cannot be said that the said Company had provided service to the appellant Company. So, I do not find any force in the submissions of the appellant on merits.

6. But, there is force in the submission of the learned Advocate that it is a clear case of interpretation of Cenvat Credit Rules and therefore, extended period of limitation cannot be invoked. The appellant had disclosed availment of CENVAT credit in their ER-1 returns. The Commissioner (Appeals) observed that the appellant have not disclosed service in their returns. In the case of CCE vs. Pushp Enterprises  2011 (22) STR 299 (T), the Tribunal held as under

10. In these cases, that there is no dispute about the fact that the ER-1 Returns had disclosed the availment of CENVAT credit but since there is no requirement for enclosing the invoices or giving the details of such credit or neither such details were given nor the invoices were enclosed. However, once ER-1 return is filed, even though it is filed under self-assessment system, the officers are supposed to scrutinize the same. Just because the Respondent had taken CENVAT credit in respect of certain input services, which according to the department was not admissible to them, it cannot be concluded that the credit had been taken knowing very well that the same was not admissible, unless there is some evidence in this regard. Moreover when the quantum of service tax credit availed had been disclosed, the officers were always free to inquire from the Respondent about details of the same and satisfy themselves about its correctness.

7. The learned Advocate relied upon various decisions on this issue as under:-

(a) Swastik Engineering vs. CCE  2010 (255) ELT 261 (Tri.)

(b) CCE vs. Medicaps Limited  2011 (24) STR 572 (Tri.)

(c) SDL Auto Pvt. Limited vs. CCE  2013 (294) ELT 577 (Tri)

(d) CCE vs. ITC Limited  2013 (291) ELT 377 (Tri.)

(e) CCE vs. Triveni Engineering & Industries Limited  2015 (317) ELT 408 (All.)

8. In view of the above discussion, the impugned order is modified to the extent the demand of service tax alongwith interest for the extended period of limitation is set-aside. The demand of service tax along with interest for the normal period of limitation is upheld. As the issue involved is interpretation of statute, the penalty is set-aside. The appeal filed by the appellant is disposed of in above terms.

(Order dictated and pronounced in the Court)

(P.K. Das) Member (Judicial) .KL

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