The Chennai bench of the CESTAT has held that the employer cannot avail the cenvat credit on the canteen services provided to employee since “outdoor catering service” is not eligible for input service credit post amendment dated 1.4.2011 vide Notification No.3/2011 dated 18.3.2011.
The issue before the Tribunal bench was whether the appellants are eligible to avail cenvat credit on outdoor catering services for the period from March 2016 to June 2017.
The appellant is engaged in the manufacture of Automotive and Industrial chains, Parts and accessories of motor vehicle steel tubes and is registered with the Central Excise Department. Appellant availed cenvat credit on various inputs and input services which are used in the manufacture of the final products. In compliance of provisions of the Factories Act, 1948 and the Tamil Nadu Factories Rules, 1950, the appellant has been providing canteen facilities to its employees working in the factory by engaging third-party caterers. The appellant recovers a nominal sum from its employees towards provision of food in canteens. Such sum is adjusted against the monthly compensation paid to the employees. These facts are not under dispute. The appellant discharged service tax on the consideration paid to the caterer and claimed cenvat credit on the amount so paid.
The Department was of the view that the appellant is not eligible to avail cenvat credit on outdoor catering services as it does not have any nexus to the manufacturing activity.
Ms. Sulekha Beevi C.S., Member (Judicial) relied on the Tribunal’s decision in Wipro Ltd. wherein it was held that “the canteen provided in the company is mainly for the personal consumption of the employee and it cannot be interpreted in any other way. Therefore, once such services are excluded, whether the employer or employee bears the cost partially or fully, has no bearing on the amendment. Therefore, keeping in view above discussions and the various decisions cited by both the parties, we are of the considered view that the “outdoor catering service” is not eligible for input service credit post amendment dated 1.4.2011 vide Notification No.3/2011 dated 18.3.2011.”
“The issue stands covered by the decision of Larger Bench of the Tribunal in Wipro Ltd. (supra). Following the same, I am of the view that appellants do not have case on merits,” the Tribunal said.
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