Cenvat credit on mandatory canteen services is admissible where the catering supports a statutory obligation linked to manufacture.

Cenvat credit on outdoor catering services used to run a mandatory canteen under the Factories Act, 1948 was treated as admissible because the service had a direct nexus with manufacture and was used to discharge a statutory obligation. The remaining issue was factual only: whether the catering expenditure formed part of the cost of production. A Cost Accountant's certificate was produced for the first time, so limited verification by the lower authority was required on that point. The legal position on admissibility of credit for such statutory canteen services was treated as settled in favour of the assessee, subject only to that factual check.

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Issues: Whether Cenvat credit was admissible on outdoor catering services used for providing mandatory canteen facilities, and whether the matter required limited verification of inclusion of such expenditure in the cost of production.

Analysis: The canteen facility was mandatorily required under the Factories Act, 1948, and the outdoor caterer was engaged only to fulfil that statutory obligation. On that basis, the service had nexus and integral connection with the manufacture of the final product, and the issue of admissibility of credit on outdoor catering services was treated as settled in favour of the assessee. The only surviving factual aspect was whether the outdoor catering expenditure formed part of the cost of production, for which a Cost Accountant's certificate was produced for the first time and required examination by the lower authority.

Conclusion: Cenvat credit on outdoor catering services was held admissible in principle in favour of the assessee, and the matter was remanded only for limited verification of cost of production.

Ratio Decidendi: Services used to comply with a statutory canteen obligation under the Factories Act, 1948 have the requisite nexus with manufacture for Cenvat credit purposes.

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