Cenvat credit on factory canteen, green belt maintenance and cycle stand services held admissible under manufacturing nexus principles

Cenvat credit was held admissible on outdoor catering for a factory canteen, manpower supply for maintenance of lawns and green belt, and maintenance of a cycle stand for workers. The canteen service was treated as eligible because the canteen was a statutory requirement for a factory employing more than 250 workers and no amount was recovered from employees. Services for lawn and green belt maintenance were found to have a nexus with manufacture because they were obtained to comply with pollution control directions and were necessary for carrying on manufacturing operations. The cycle stand service was also treated as creditable on the basis of similar matters. Denial of credit was therefore unsustainable.

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Issues: Whether Cenvat credit was admissible on outdoor catering service for the factory canteen, manpower supply for maintenance of lawns and green belt, and maintenance of the cycle stand for workers.

Analysis: The canteen facility was a statutory requirement for a factory employing more than 250 workers, and no recovery was made from workers for the facility. The outdoor catering service was therefore treated as a service used in or in relation to manufacture. The services for maintaining lawns and green belt were obtained to comply with pollution control directions requiring tree plantation over a substantial part of the factory premises, and without maintaining the green belt the manufacturing operations could not be carried on. Those services were accordingly held to have nexus with manufacture. The cycle stand service was also treated as eligible on the basis of the view already taken in similar matters.

Conclusion: Cenvat credit on all the disputed services was admissible and the denial of credit was unsustainable.

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