M/s. Pepsico India Holdings Pvt. Ltd. Versus Commissioner of GST & Central Excise Chennai South
Central Excise
2019 (1) TMI 559 – CESTAT CHENNAI – TMI
CESTAT CHENNAI – AT
Dated:- 10-1-2019
Appeal No. E/41945/2018 – Final Order No. 40050/2019
Central Excise
Ms. Sulekha Beevi C.S., Member (Judicial)
Shri Raghavan Ramabhadran, Advocate for the Appellant
Shri L. Nandakumar, AC (AR) for the Respondent
ORDER
Brief facts are that the appellants are engaged in the manufacture of aerated water, beverages and fruit pulp or juice based drinks. They are availing the facility of CENVAT credit on various input services. Show cause notice was issued to the appellant proposing to deny CENVAT credit availed by them on canteen services provided to employees and soil filling charges. The appellant accepted the objection in respect of credit availed on soil filling charges and reversed the credit. They defended the disallowance of credit on canteen services. After due process o
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n the definition of input service. The exclusion is applicable only to services relating to personal consumption. In other words, credit is eligible when outdoor catering services are not for personal consumption of the employees.
2.1 The Larger Bench of the Tribunal in the case of Wipro Ltd. Vs. Commissioner of Central Excise, Bangalore – 2018 (4) TMI 149 CESTAT Bangalore has held that outdoor catering services are excluded from the definition of input services with effect from 1.4.2011. This decision proceeds on the basis that outdoor catering services is specifically mentioned in the exclusion clause of the definition and that the intention of the legislature is to deny credit on such services. The ld. counsel argued that as per the definition of input services, the exclusion of outdoor catering is not unqualified. The definition does not exclude all catering services unconditionally. Only such outdoor catering services which are used primarily for personal use or consumption for e
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t stipulated in Workmen's Compensation Act, 1996 which is a beneficial legislation for the welfare of the employees. Since it is a statutory requirement, the Court held that the services cannot be held to be used primarily for personal use or consumption of an employee. Thus, the Hon'ble High Court has laid down a test as to whether the services used to provide certain employee benefit and whether it flows out of statutory requirement of a welfare labour legislation. Such services which are provided under a statutory requirement cannot be said to be used primarily for the personal use or consumption of an employee. He therefore argued that the exclusion clause of the definition will not take away outdoor catering services provided within the factory premises for the benefit of employees as per the statutory requirement.
2.3 He also adverted to the decision in the case of Hindustan Coca-Cola Beverages as reported in 2017 (49) STR 88 (Tri. Hyd.) and argued that the Tribunal in the said
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erpretational in nature involving legal provisions as seen from the fact that the matter was referred to the Larger Bench. The appellant was regularly filing returns and also disclosed the credit availed on outdoor catering service in their ST-3 returns. Therefore, there is no ingredients for imposing penalty and prayed to set aside the penalty.
3. The ld. AR Shri L. Nandakumar supported the findings in the impugned order. He adverted to definition of input service and submitted that after 1.4.2011, the exclusion clause has been added to the definition. As per clause (c) of the definition, the services in relation to outdoor catering, beauty treatment, health services etc. are excluded when such services are primarily for personal use or consumption of an employee. Outdoor catering services are used for consumption of the employees and therefore the authorities below have rightly disallowed the credit. He relied upon the decision of the Larger Bench of the Tribunal in the case of Wipr
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a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal; but excludes services,-
(A) Service portion in the execution of a works contract and construction services including service listed under clause (b) of Section 66E of Finance Act (hereinafter referred as specified services) insofar as they are used for
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to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee;
[Explanation: For the purpose of this clause, sales promotion includes, services by way of sale of dutiable goods on commission basis].'
5.1 Clause (C) of the above definition states that services such as those is provided in relation to outdoor catering when such services are used primarily for personal use or consumption of any employee is not eligible for credit. The Tribunal in the case of Hindustan Coca-Cola Beverages (supra) had observed that if such services are provided as per the statutory requirement, they are eligible for credit. The relevant portion is noted as under:-
“7. The appellants contend that canteen/outdoor catering services is provided within the factory premises in compliance to the provisions of the Factories Act, 1948. It is also submitted that such services are not used primarily for personal use or consu
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employee.”
5.2 The Tribunal thus noted that the outdoor catering services are availed primarily as per requirement of appellant in order to engage in manufacture of finished product and is not for personal consumption or personal use of employee. However, the said decision was referred to the Larger Bench and vide decision in the case of Wipro Ltd. (supra), the Larger Bench of Tribunal held that since outdoor catering services are specifically mentioned in the exclusion clause of the definition, credit is not eligible.
5.3 I do note that the Hon'ble High Court of Madras in the case of Ganesan Builders (supra) has analyzed the issue of eligibility of credit when there is a statutory requirement as per the labor laws to provide such facilities / benefits to the employees. The said decision has analyzed the issue of providing insurance service to the employees. The issue whether outdoor catering services are eligible for credit was decided by the Larger Bench wherein it is held that cr
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