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CENVAT credit of outdoor catering services, cost of which is borne by the assessee, shall be allowed for the period upto 31st March, 2011.
Facts
CENVAT credit was availed on outdoor catering services provided in the factory premises to its employees during the period prior to 1st April, 2011. The department contended that the service could not be treated as “input service” as it was neither used in or in relation to manufacture or clearance of final product nor is an activity relating to business. Adjudicating authority allowed CENVAT credit considering the services to be in relation to manufacture. Following Larger Bench decision in GTC Industries Ltd. 2008 (12) STR 468 (Tri.-LB), the Tribunal in the department’s appeal allowed CENVAT credit considering the services to be relating to business. In some cases, the Tribunal relied upon the Hon’ble Supreme Court’s decision in Maruti Suzuki Ltd. vs. CCE 2009 (240) ELT 641 (SC) and disallowed CENVAT credit. The department argued that Notification No. 3/2011-ST dated 1st March, 2011 has substituted the definition of input service and therefore, should be applied retrospectively and therefore outdoor catering services were excluded from the definition of “input service” even for the period prior to such substitution. Relying upon Bombay High Court’s decision in Ultratech Cement Ltd. 2010 (260) ELT 369 (Bom), the Appellants pleaded that CENVAT credit be allowed on the ground of mandatory statutory requirement to provide canteen facility to employees. It was also argued that the effective date of notification was 1st April, 2011 only and therefore, for prior period, CENVAT credit should be available.
Held
All contentions raised by the revenue have been elaborately considered by the Bombay High Court in case of Ultratech Cement Ltd. (supra), including Hon’ble Supreme Court’s decision of Maruti Suzuki Ltd. (supra), wherein CENVAT credit was allowed except in case the cost of food is borne by the employee. Further the plea of retrospective application of exclusion to definition of “input service” was rejected on account of amendment clearly specifying the date of its enforcement to be 1st April, 2011. Thus, relying on the aforesaid decisions CENVAT credit on outdoor catering services prior to 1st April, 2011 was allowed.
