The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the demand of cenvat credit of service tax paid on outdoor catering service for normal period.
The appellants, Hawkins Cookers, herein are manufacturer of pressure cooker and for payment of central excise duty they are holding Central Excise registration with the jurisdictional Commissionerate. The appellants are also holding Service Tax registration for payment of service tax under reverse charge mechanism in respect of various services such as Goods Transport Operator, Rent-a-Cab service and Security services.
The issue in dispute is in respect of Cenvat Credit taken by the appellants in respect of canteen facilities provided to their employees and staff, during shifts and office timings, and availing of service tax paid thereon in respect of services provided by an ‘outdoor caterer’ as eligible ‘input service’.
The Department has contended that in terms of Rule 2(l) of the Cenvat Credit Rules, 2004, ‘outdoor catering service’ has been excluded from the definition of input service for availing Cenvat Credit under the said Rules. Hence, show-cause proceedings were initiated for denying the inadmissible Cenvat Credit amounting to Rs.11,14,751/- for the period January, 2016 to June, 2017 under the provisions of Rule 14 ibid and for recovery of such tax along with interest under Section 73(1), 75 of the Finance Act, 1994 besides imposition of penalty.
The Advocate for the appellant submitted that in similar issue on availment of Cenvat Credit in respect of input services for the earlier period in their own case, the Tribunal had allowed their appeal and remanded the case for verification and passing of fresh order vide Order No. A/90989/17 dated 29.11.2017. Thus, he claimed that the Department was well aware of the issue of taking Cenvat Credit on input service in respect of outdoor catering service by the appellants, and therefore, they cannot now invoke extended period for demand of service tax and for imposition of penalty.
A Single Bench of the Tribunal comprising M.M. Parthiban, Member (Technical) observed that “I find that the demand of Cenvat Credit of Service Tax paid on outdoor catering service for the normal period alone is sustainable. However, the demand of interest for extended period is not sustainable as Department was aware of the issue as evidenced by the order of the Tribunal dated 29.11.2017 and as the issue was agitated in the highest Court by various appellate authorities as discussed in detail in paragraphs 8.1 to 9 above. Therefore, I set aside the interest and penalty imposed/confirmed in the impugned order by upholding the Order-in-Original dated 27.06.2019 and the matter is remanded back to the original authority to re-quantify the demand for the normal period with regard to impugned outdoor catering service on which Cenvat Credit was taken by the appellants.”
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