CENVAT credit on factory canteen catering upheld where canteen costs formed part of production expenditure.

Service tax paid on outdoor catering service used in a factory canteen was treated as admissible CENVAT credit where the factory employed more than 250 workers and the food cost formed part of production expenditure. Applying the larger Bench view, the Tribunal accepted that canteen services integrally affected the cost of production and therefore qualified as input service credit for the relevant period. The Revenue's challenge failed and the assessee's entitlement to CENVAT credit was upheld.

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Issues: Whether service tax paid on outdoor catering service availed in the factory canteen for supplying food to employees was admissible as CENVAT credit during the relevant period.

Analysis: The material facts showed that the factory had more than 250 employees and that the cost of food formed part of the expenditure incurred in the factory and had a bearing on the cost of production of the final product. The Tribunal followed the larger Bench view that, on similar facts, service tax paid on outdoor catering service used in the factory canteen constituted admissible input service credit where the canteen cost entered the cost of production.

Conclusion: The respondent was entitled to avail the CENVAT credit, and the Revenue's challenge failed.

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