M/S. Tata Motors Ltd vs C.C.E. & S.T. Lucknow

[Arising out of Order-in-Original No.35/Commr/Lko/ST/2011-12 dated 27.03.2012 by the Commissioner of Central Excise (Appeals), Lucknow].

For approval and signature:

Honble Mr Ashok Jindal, 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 Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

M/s. Tata Motors Ltd. .Appellants

Vs.

C.C.E. & S.T. Lucknow .Respondent

Appearance:

Shri H. Bajaj, Advocate for the Appellants

Ms. Ranjana Jha, DR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Date of Hearing: 21.01.2015

FINAL ORDER NO.50262/2015-EX(SM)

Per Ashok Jindal:

The appellant is in appeal against the impugned order wherein input services credit was denied on outdoor catering services to the extent amount recovered from the employees towards providing canteen services during the period March 2006-Aug 2010 along with interest and equivalent amount of penalty.

2. The brief facts of the case are that the appellant availed input service credit on outdoor catering services during the impugned period. The appellant also recovered certain amount from the employees for providing subsidized food. Initially a show cause notice was issued to the appellant to deny input service credit on outdoor catering services holding that same is not an input service as per Rule 2 of the Cenvat Credit Rules, 2004. During the course of the adjudication relying on the decision of Honble High Court of Bombay in the case of C.C.E. Nagpur Vs. Ultratech Cement Ltd. -2010 (20) S.T.R. 577 (Bom), the adjudicating authority confirmed the demand to the extent of the amount recovered by the appellant for providing subsidized food to their employees. Interest is also demanded and penalty equivalent to the duty was also imposed. The said order was confirmed by the adjudicating authority. Aggrieved from the said order appellant is before me.

3. Ld. Counsel for the appellant submits that he is not disputing that they are required to reverse the Cenvat Credit attributable to the amount recovered from the employees for providing subsidized food. He submits that in this case show cause notice has been issued by invoking extended period of limitation, as there was divergent views of judicial pronouncement during that period. Therefore, the demands confirmed by invoking extended period of limitation are not sustainable. Consequently penalty is also not imposable. He also submits that as the amount attributable to recovery from the employees towards subsidized food was lying unutilized in their Cenvat Credit account. Therefore, they are not liable to pay interest also. To support his contention he relied on the decisions of the following:

(i) C.C.E. Mumbai Vs. GTC Industries Ltd.-2008 (12) S.T.R. 468 (Tri-LB)

(ii) C.C.E. Vs. Wonderax Laboratories, I.P.L.-2010 (255) E.L.T. 60 (Del) which has been affirmed by the Honble Supreme Court in 2010 (255) E.L.T. A16 (SC).

(iii) M/s. Gurmehar Construction Vs. C.C.E. Raipur-2014-TIOL-1205-CESTAT-DEL.

4. On the other hand Ld. AR submits that as the appellant has not declared their availment of Cenvat Credit on outdoor catering services, therefore, extended period of limitation is rightly invoked. Consequently, demands are required to be confirmed by invoking extended period of limitation and penalty is imposable. She further submits that in the light of the decision in the case of UOI Vs. Indswift Laboratories Ltd. 2011 (265) E.L.T. 0003 (SC). Therefore interest is payable.

5. Heard the parties. Considered the submissions.

6. In this case it is admitted position as decided by the Honble High Court of Bombay in the case of Ultratech Cement Ltd. (Supra) vide order dated 25.10.2010, the appellant is not entitled to take Cenvat Credit on the amount recovered from the employees for providing subsidized food under the category of outdoor catering services. Before that there was a decision of the larger bench of this Tribunal in the case of GTC Industries Ltd (Supra) wherein it was held that irrespective of the fact whether the appellant has recovered any amount towards providing subsidized food to the employees, the appellant is entitled to take Cenvat Credit. As there was divergent views and same has been settled by the Honble High Court of Bombay in the case of Ultratech Cement Ltd. (Supra) on 25.10.2010. Therefore, I hold that in this case extended period of limitation is not invokable as held by the Honble High Court of Delhi in the case of Wonderax Laboratories (supra) which has been affirmed by the Honble Apex Court. As the extended period of limitation is not invokable, therefore penalty under section 11(AC) of the Act is also not imposable.

7. With regard to the interest, I find that this Tribunal in the case of Gurmehar Construction (supra) after structure for considering the decision of the Honble High Court of Karnataka in the case of Bill Forge Pvt. Ltd. Vs. C.C.E. & S.T. Bangalore-2012 (279) E.L.T. 209 (Kar) and considering the decision of the Apex Court in the case of Indswift Laboratories Ltd. (Supra) it was has held that if Cenvat Credit is taken wrongfully but remain unutilized, in that case interest is not payable. The fact whether the Cenvat Credit in dispute is lying in their Cenvat Credit account and has not been unutilized is required to be verified by the Adjudicating Authority.

8. Further, I find that the denial of amount recovered from the employees is calculated on the basis of net amount recovered from the employees towards subsidized food. In fact, the said amount is considered as gross amount inclusive of all taxes. Therefore, the calculation of the actual amount on Cenvat Credit is also required to be computed. In these circumstances, I set aside the impugned order and remand the matter back to the Adjudicating Authority only for quantification purpose and for verification of the fact whether the amount which is to be reversed by the appellant have been reversed and unutilized. If same has been utilized the liability of the interest has to be confirmed against the appellant. With these terms appeal is disposed off.

(Dictated and pronounced in the open court)

(Ashok Jindal) Member (Judicial)

Bhanu

2

E/1645/2012-EX(SM)