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Refund of Cenvat credit — Export of business auxiliary service — Service was taxable after May 2006 — Assessee entitled to take credit at the time of availment — Even prior to May 2006. Refund of Cenvat credit — Export of business auxiliary service — Service tax paid on local travel and medical insurance services, outdoor catering and meal coupons — Credit admissible.
Facts:
The appellants had filed a refund claim of Cenvat credit availed on input services used for export of business auxiliary service, for the period starting from April 2006. However, the claim for local travel and medical insurance was rejected by the lower authorities and the claim for outdoor canteen/meal coupons was allowed. Thereby, the appellants and the Revenue both were in appeal for disallowance and allowance of refund claim by the lower authorities.
The Revenue submitted that the services exported by the appellants had come under Service tax net with effect from 01-05-2006, therefore, any input service availed before 1-5-2006 is not eligible for credit.
However, as per the Cenvat Credit Rules, the appellants were entitled to take credit at the time of availment and not at the time of provision of service. This means that the appellants were entitled to avail the input service credit of services availed in the month of April 2006.
In support of availment of credit on local travel and medical insurance, reliance was placed on the Bombay High Court’s decision in case of Ultratech Cement, 2010 (20) STR 577 (Bom.) wherein it was held that the input service availed by the assessee in the course of business is entitled for Cenvat credit.
Apart from this, with regard to outdoor catering and meal service, the appellants stated that credit on outdoor catering service is available if the cost of food is borne by the employer. However, the appellants were denied credit on the amount recovered from employees against subsidised food.
Held:
The appeal was allowed to the appellants in respect of availment of credit for the month of April 2006 and for availment of credit of Service tax paid on local travel and medical insurance. On the other hand, the Revenue’s appeal was partly allowed by denying credit of Service tax paid on outdoor catering and meal service, for the amount which was recovered by the assessee from the employees.
