Cenvat credit on outdoor catering service is linked to manufacturing nexus, not employee strength or statutory canteen obligation.

Outdoor catering service used to provide food to factory employees was treated as having a direct nexus with manufacture, because the canteen expenditure formed part of production cost and served a business-related welfare function. Statutory obligation under Section 46 of the Factories Act was not a precondition for Cenvat credit. The number of employees in the factory was immaterial to eligibility, so credit on outdoor catering service was stated to be admissible regardless of whether the workforce exceeded 250.

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Issues: Whether Cenvat credit was admissible in respect of outdoor catering service used for providing food to employees in the factory, and whether such credit depended on the number of employees in the factory.

Analysis: Outdoor canteen facilities provided to employees were treated as having a direct nexus with manufacture, because the expenditure formed part of the cost of production and the service was rendered as a welfare measure connected with the business of manufacture. The existence of a statutory obligation under Section 46 of the Factories Act was not held to be a condition precedent for availing credit. The number of employees, whether more than 250 or less, was held to be immaterial for determining eligibility to Cenvat credit on outdoor catering service.

Conclusion: Cenvat credit on outdoor catering service was admissible and the assessee's entitlement did not depend on the factory having more than 250 employees.

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