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August 2015

[2015] 58 taxmann.com 94 (Ahmedabad – CESTAT) Cema Electric Lighting Products India (P.) Ltd. vs. Commissioner of Central Excise, Ahmedabad-III

By Puloma Dalal
Jayesh Gogri
Mandar Telang Chartered Accountants
Reading Time 2 mins
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CENVAT credit – Outdoor catering service in factory canteen – Proportionate credit to the extent service tax portion is embedded in recoveries made from employee is not admissible – burden of proof is on assessee to show that incidence of service tax is not passed.

Facts:
The assessee availed of an outdoor catering services for its employees and took CENVAT credit. Department denied credit of service tax proportionate to amount recovered from employees/beneficiaries. The assessee argued that no element of service tax was recovered.

Held:
Relying upon the decision of the Hon’ble High Court of Bombay in the case of Ultratech Cement Ltd. [2010] 29 STT 244, the Tribunal held that once proportionate service tax is borne by the ultimate consumer of the service, namely the worker/beneficiary, the manufacturer cannot take credit of that part of the service tax which is borne by the consumer. Hence, proportionate credit, to the extent it is embedded in the cost of food recovered from the employee/beneficiary, is not admissible to the appellant. It further held that like a concept of unjust enrichment for refunds u/s. 11B of the Central Excise Act, 1944, the onus is on the appellant to establish with documentary evidence that the element of service tax paid by the appellant is not recovered from the beneficiary/employees of the appellant.

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