The interpretation of the definition of 'input service' under Rule 2(l) of the Cenvat Credit Rules, 2004 and its application to outdoor catering services and outward freight services.

R. Sudhakar, J.

1. This Civil Miscellaneous Appeal filed by the Revenue as against the order of the Customs, Excise and Service Tax Appellate Tribunal allowing the appeal filed by the assessee granting the benefit of Cenvat credit on the service tax paid on outdoor catering services provided in the factory for employees of the factory and outward freight services was admitted by this Court on the following substantial questions of law:

“1. In the facts and circumstances of the case, whether the first respondent can avail CENVAT Credit of Service Tax paid on canteen service treating them as as “Input Service” and Service Tax paid on outward freight treating them as 'Input Service', when those services are not in relation to the manufacture of final products?

2. Whether the second respondent was correct in law in applying the ratio of the Larger Bench of the Tribunal's decision in the case of CCE , Mumbai v. GTC Industries Ltd., (2008 (12) STR, 468 (TR-LB) and ABB Ltd., Vs. CCe Bangalore as reported in 2009 (15) STR 23 (Tri-LB) when these were appealed before the Hon'ble High Court, Bombau on 02.06.2009 with a Central Excise Appeal Lodging No.34 of 2009 and before Hon'ble High Court of Karnataka with a Central Excise Appeal (CEA) No.121 of 2009?"

2. The brief facts are as follows:

The assessee in this case availed credit of service tax paid for transportation and delivery of goods to their customers and also service tax paid for providing food and beverage at the factory production to their staff and labourers and that was objected to by the Department stating that outdoor catering services and outward freight do not fall within the ambit of definition 'input service', specified under Rule 2(l) of the Cenvat Credit Rules, 2004. The Department was of the view that catering/canteen services and outward freight services were neither used in or in relation to the manufacture or clearance of final product nor it could be said to be an activity relating to business and proceed to disallow the cenvat credit. The Adjudicating Authority vide order-in-original, supported the view of the Department and disallowed the cenvat credit. Aggrieved by the Order-in-Original, the assessee pursued the matter before the Commissioner (Appeals), who allowed the credit with respect to the canteen services and disallowed the credit with respect to freight. As against the said order of the Commissioner (Appeals), the Department as well as the assessee went before the Tribunal.

3. The Tribunal following the Larger Bench decision of the Tribunal in the case of Commissioner of Central Excise, Mumbai V. GTC Industries Ltd. reported in 2008 (12) STR 468 (Tri.-LB) and ABB Ltd., Vs. CCe Bangalore as reported in 2009 (15) STR 23 (Tri-LB) dismissed the appeal filed by the Department and allowed the appeal filed by the assessee holding that Cenvat credit is admissible on 'outdoor catering service' as well as 'outward freight service' as the same are input service relating to business.

4. Being aggrieved by the orders of the Tribunal, the Revenue has filed the present appeal before this Court.

5. Heard learned Standing Counsel appearing for the Revenue and the learned counsel appearing for the assessee and perused the materials placed before this Court.

6. The core issue involved in this appeal is whether the assessee can utilise the cenvat credit facilities in respect of outdoor catering services, provided in the factory for its employees and outward freight service as input service.

7. In an identical circumstance, this Court dealt with the issue with regard to outdoor catering service, in a batch of appeals in C.M.A.Nos.2 of 2010 batch and vide judgment dated 13.02.2015 held in favour of the assessee by following the decision of the Bombay High Court in the case of CCE V. Ultratech Cement Ltd. reported in 2010 -TIOL - 745 - HC- MUM - ST, wherein all the contentions raised by the Revenue has been considered in extenso including the definition of 'input service'