Cenvat credit on operational support services was allowed where the services had a clear nexus with manufacturing activity.

Cenvat credit was held admissible on services used for housekeeping, canteen cleaning, plant maintenance, paper collection, internal delivery, recording and sorting, and conveyance hiring because they had a sufficient nexus with manufacturing operations. The disallowance was found unsustainable where the lower authority had rejected credit on a broad view without examining the services' relevance, integrality, or indispensability to the business activity. Services connected with canteen upkeep required under factory law and maintenance of the drum plant were treated as operational inputs, and in the absence of cogent evidence that the services were not essential, denial of credit was not justified.

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Issues: Whether Cenvat credit was admissible on the services used for housekeeping, canteen cleaning, maintenance of plant, paper collection, internal delivery, recording and sorting, and conveyance hiring.

Analysis: The credit was disallowed by the lower authority on a bald view that the services were not input services, without examining their relevancy, integrity or indispensability to the manufacturing activity. The services were found to have a sufficient connection with the appellant's operations, including canteen upkeep under the Factories Act requirements and maintenance of the drum plant. In the absence of cogent evidence showing that the services were not essential inputs, the denial of credit was not justified.

Conclusion: Cenvat credit on the disputed services was admissible and the disallowance was not sustainable.

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