Statutory factory medical services qualify as input services for Cenvat credit where they are required for compliance and operations.

Statutorily mandated medical and welfare services required for factory under the Factories Act, 1948 and the Gujarat Factories Rules, 1963 were treated as input services for Cenvat credit purposes. The Tribunal held that first-aid, ambulance and trained medical staff obligations are integral to factory compliance and cannot be characterised as unrelated to manufacture merely because the services also support the staff colony. In the absence of documentary proof that the services were confined only to residential use, credit on the male nurse and medical facility services was admissible.

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Issues: Whether Cenvat credit was admissible on male nurse and medical facility services provided in the factory and staff colony, where such services were required to be maintained under the factories law as services used in or in relation to manufacture.

Analysis: The denial of credit was based on the view that the nursing services had no nexus with manufacture. The Tribunal found no documentary basis to hold that the services were confined only to the residential colony. It further held that Section 45 of the Factories Act, 1948, read with the Gujarat Factories Rules, 1963, makes it obligatory to maintain first-aid appliances, ambulance facilities and trained medical staff. A service statutorily required for running the factory cannot be treated as unrelated to manufacture. The Tribunal also relied on the principle that services indispensable to statutory compliance and factory operations fall within the broad and inclusive scope of input service.

Conclusion: Cenvat credit on the disputed medical and nursing services was admissible and the assessee's appeal succeeded.

Final Conclusion: Statutorily mandated welfare and medical services necessary for operating the factory are treated as input services connected with manufacture for Cenvat credit purposes.

Ratio Decidendi: Services that a manufacturer is legally obliged to provide for running the factory and complying with factories law are used in relation to manufacture and qualify as input services under the Cenvat Credit Rules.

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