CENVAT credit on factory cleaning and housekeeping upheld as input service; extended limitation failed due to disclosed returns.

CENVAT credit was allowable on cleaning and housekeeping services used for the factory premises and canteen because maintaining a clean and safe factory environment was treated as an essential statutory requirement integral to manufacturing, bringing the services within the scope of input service. The extended period of limitation was not sustainable because the credit availed was disclosed in regular ER-1 returns, so suppression of facts was not established. On that basis, the demand and penalty failed both on merits and on limitation, and the denial of credit was unjustified.

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Issues: (i) whether CENVAT credit was admissible on cleaning and housekeeping services used for the appellant's canteen and factory premises; (ii) whether the extended period of limitation and the consequential demand and penalty could be sustained.

Issue (i): whether CENVAT credit was admissible on cleaning and housekeeping services used for the appellant's canteen and factory premises.

Analysis: The cleaning of the factory premises and canteen was treated as an essential and statutory requirement for running the factory. The service was held to be connected with the manufacture of final products because the factory, including the canteen and precincts, must be maintained in a clean and safe condition for manufacturing operations to continue. The service was therefore regarded as falling within the scope of input service.

Conclusion: The credit was admissible and the denial of CENVAT credit was not justified.

Issue (ii): whether the extended period of limitation and the consequential demand and penalty could be sustained.

Analysis: The appellant had disclosed the availment of credit in regular ER-1 returns filed for the relevant period. Since the department had knowledge of the credit from those returns, suppression of facts was not established. On that basis, invocation of the extended period was held to be unsustainable.

Conclusion: The extended period of limitation could not be invoked and the demand and penalty failed on limitation as well.

Final Conclusion: The appeal succeeded both on merits and on limitation, and the demand and penalty were set aside.

Ratio Decidendi: Credit is allowable on services used for statutory cleaning and housekeeping of a factory when such services are integral to manufacturing, and the extended period cannot be invoked where the relevant credit is disclosed in periodic returns.

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