Input service credit denied for cane cultivation and welfare activities lacking nexus with manufacture under Cenvat rules.

Services used for cane development, cleaning of yard, cane supply work, cane planting by tractor and labour for cane area survey were held not to qualify as input services under Rule 2(l) of the Cenvat Credit Rules, 2004. The Tribunal found that these activities related to welfare of sugarcane growers and cane cultivation, but had no direct or indirect nexus with manufacture of the final products or their clearance. As the requisite manufacturing connection was absent, Cenvat credit was not admissible and the request for waiver of pre-deposit was rejected.

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Issues: Whether services used for cane development, cleaning of yard, cane supply work, cane planting by tractor and labour for cane area survey qualified as input services eligible for credit.

Analysis: The Tribunal held that eligibility to input service credit depends on the service falling within the definition of input service under Rule 2(l) of the Cenvat Credit Rules, 2004. Services rendered for welfare of sugarcane growers or for cane cultivation and related welfare measures were found to have no direct or indirect connection with manufacture of the final products. Such activities were not treated as services having the requisite nexus with manufacture or clearance of final products.

Conclusion: The services were not eligible for input service credit, and the request for waiver of pre-deposit was rejected.

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