Input services nexus for factory cleaning services justifies waiver of pre-deposit and stay of recovery in appeal.

Housekeeping and cleaning services used to remove waste, sludge and spills generated in the manufacturing process were treated as prima facie input services under Rule 2(l) of the Cenvat Credit Rules, 2004, because they had a direct nexus with factory operations and supported the cleanliness requirement under Section 11 of the Factories Act, 1948. Prior decisions were followed, and the 01-04-2011 amendment to the definition of input services was held not to change that position at the interim stage. Accordingly, pre-deposit was waived and recovery of the disputed service tax demand was stayed pending appeal.

---

---

Issues: Whether the appellant was entitled to waiver of pre-deposit and stay of recovery in respect of the disputed service tax demand on housekeeping/cleaning services, on the ground that such services constituted input services under Rule 2(l) of the Cenvat Credit Rules, 2004.

Analysis: The disputed services were used for cleaning waste, sludge and spills arising during the manufacturing process in the factory. The statutory requirement of cleanliness under Section 11 of the Factories Act, 1948 supported the nexus between the activity and manufacture. The Tribunal noted prior decisions holding such activities to be input services and held that the 01-04-2011 amendment to the definition of input services did not alter that position prima facie.

Conclusion: The requirement of pre-deposit was waived and recovery of the dues covered by the impugned order was stayed during pendency of the appeals, in favour of the appellant.

---