Cenvat credit on factory cleaning and maintenance services is admissible when used to meet statutory cleanliness duties.

Cenvat credit on service tax paid for cleaning and maintenance services used to keep a factory clean is admissible when the services are undertaken to satisfy the employer's statutory duty under the Factories Act, 1948. The Tribunal reasoned that section 11 imposes a legal responsibility to maintain factory cleanliness, and denying credit for tax paid on services used to discharge that obligation would be inconsistent with the credit scheme's purpose. It also noted that an earlier decision had taken the same view. The credit claim was therefore allowed in favour of the assessee.

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Issues: Whether Cenvat credit of service tax paid on cleaning and maintenance services used for keeping the factory clean is admissible when such activity is undertaken to comply with the statutory obligation under the Factories Act, 1948.

Analysis: Section 11 of the Factories Act, 1948 casts a statutory responsibility on the employer to keep the factory clean. Where services are used to discharge that legal obligation, denial of credit on the tax paid for such services would be inconsistent with the purpose of the credit scheme. The Tribunal also noted that a similar view had already been taken in an earlier decision on the same question.

Conclusion: Cenvat credit on the service tax paid for cleaning and maintaining the factory is admissible. The issue is decided in favour of the assessee.

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