Cenvat credit on security services and sales commission is admissible where the services have a direct nexus with manufacture and sales promotion.

Cenvat credit was held admissible on security services used for factory protection and on sales commission paid for business auxiliary service because both had a direct nexus with manufacturing activity and sales promotion. Security services were treated as inextricably linked to the manufacturing facility, and sales commission was treated as attributable to services used for promoting sales. On that basis, both services fell within the scope of input service under Rule 2(l) of the Cenvat Credit Rules, 2004, and denial of credit was unsustainable.

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Issues: Whether Cenvat credit was admissible on security services used for the factory and on sales commission paid for business auxiliary service under Rule 2(l) of the Cenvat Credit Rules, 2004.

Analysis: The services were found to have a direct nexus with the manufacturing activity and sales promotion. Security services used for protection of the factory were treated as having an inextricable link with the manufacturing facility, and the commission paid for sales promotion was treated as attributable to the service availed. On this reasoning, the services qualified as input services for credit purposes.

Conclusion: Cenvat credit on both security services and sales commission was admissible, and the denial of credit was unsustainable.

Ratio Decidendi: Cenvat credit cannot be denied on services that have a sufficient nexus with manufacture or sales promotion and fall within the scope of input service under Rule 2(l) of the Cenvat Credit Rules, 2004.

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