Mandatory factory canteen services qualify as input service for CENVAT credit where they support manufacture and business operations.

Outdoor canteen or caterer services used for a factory canteen were treated as input service for CENVAT credit because they had a nexus with, and an integral connection to, the manufacture of final products and the business of manufacture. The factory canteen was mandatory under the Factories Act and operated as a welfare measure for workers, which supported the manufacturing activity. An objection that workers bore part of the service cost was not part of the original departmental case and did not change the credit eligibility. The denial of CENVAT credit was therefore unjustified, and the order allowing credit was sustained.

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Issues: Whether service tax paid on outdoor canteen or caterer services used for factory canteen facility qualified as input service for CENVAT credit.

Analysis: The service qualified if it had nexus or an integral connection with the manufacture of final products or with the business of manufacture. Canteen facility in the factory was mandatory under the Factories Act and served as a welfare measure for workers, thereby furthering manufacture. The additional objection that part of the service cost was borne by workers was not part of the original departmental proceedings and did not alter the character of the service for credit eligibility.

Conclusion: The canteen or caterer service was an input service under Rule 2(l) of the Cenvat Credit Rules, 2004, and the denial of credit was not justified.

Final Conclusion: The order granting CENVAT credit was sustained and the Revenue's challenge failed.

Ratio Decidendi: Services having nexus or integral connection with the manufacture of final products or the business of manufacture qualify as input service under Rule 2(l) of the Cenvat Credit Rules, 2004, including mandatory factory canteen services.

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