Cenvat credit on business, catering, courier and input transfer upheld where services supported operations and invoices were valid.

Cenvat credit was recognised on banking and other financial services used for business, outdoor catering for statutory canteen obligations, and courier services integrally connected with operations, on the basis that each qualified as input service under Rule 2(l) of the Cenvat Credit Rules, 2004. Credit also could not be denied to the recipient merely because the job worker's service tax on business auxiliary services was later disputed, where valid invoices existed and the tax had been accepted by the department. Transfer of input credit from a DTA unit to an EOU unit was held permissible, as departmental restrictions were confined to capital goods and did not extend to inputs.

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Issues: (i) whether cenvat credit was admissible on banking and other financial services used for business purposes; (ii) whether cenvat credit was admissible on outdoor catering service used for statutory canteen facilities; (iii) whether cenvat credit was admissible on courier service used in the course of business; (iv) whether cenvat credit could be denied at the recipient end on the ground that service tax paid by job workers on business auxiliary services was not payable; and (v) whether input credit availed in a DTA unit could be transferred to an EOU unit.

Issue (i): whether cenvat credit was admissible on banking and other financial services used for business purposes

Analysis: Banking and other financial services fall within the inclusive limb of the definition of input service under the head financing. Where such services are used for accomplishing the business of the manufacturer or service provider, the service tax paid thereon is available as cenvat credit under Rule 2(l) of the Cenvat Credit Rules, 2004.

Conclusion: Cenvat credit was admissible on banking and other financial services.

Issue (ii): whether cenvat credit was admissible on outdoor catering service used for statutory canteen facilities

Analysis: Outdoor catering was used for providing canteen facilities to employees as required by Section 46 of the Factories Act. Such canteen service was treated as a condition of service and an onerous legal obligation linked to the cost of production, so it qualified as input service.

Conclusion: Cenvat credit was admissible on outdoor catering service.

Issue (iii): whether cenvat credit was admissible on courier service used in the course of business

Analysis: Courier service was treated as integrally connected with the business of the manufacturer or service provider. The credit had already been allowed by the appellate authority on the basis of binding and persuasive Tribunal precedent, and no infirmity was found in that view.

Conclusion: Cenvat credit was admissible on courier service.

Issue (iv): whether cenvat credit could be denied at the recipient end on the ground that service tax paid by job workers on business auxiliary services was not payable

Analysis: The service providers were registered with the Service Tax Department and the tax was accepted and retained by the jurisdictional authorities. Credit taken on the strength of valid invoices evidencing payment of service tax could not be denied to the recipient merely on the ground that the service might not have been liable to tax in the hands of the provider.

Conclusion: Cenvat credit could not be denied at the recipient end on that ground.

Issue (v): whether input credit availed in a DTA unit could be transferred to an EOU unit

Analysis: The restriction placed by departmental instructions was confined to transfer of credit on capital goods from a DTA unit to an EOU unit. It did not extend to credit availed on inputs.

Conclusion: Transfer of input credit from the DTA unit to the EOU unit was permissible.

Final Conclusion: The impugned appellate order was sustained on all the disputed services and on the transfer of credit, so the Revenue failed to establish any ground for interference.

Ratio Decidendi: Credit under the input service definition cannot be denied where the service is used in the business of manufacture or is statutorily required for operations, and credit supported by valid invoices is not defeated merely because tax may not have been payable by the service provider.

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