CENVAT credit on mandatory factory canteen catering is admissible when linked to manufacturing operations.

CENVAT credit on outdoor catering service remained admissible after 01.04.2011 where the service was provided inside the factory to meet the mandatory canteen requirement under the Factories Act, 1948. Rule 2(l) of the CENVAT Credit Rules, 2004 excludes outdoor catering only when it is used primarily for personal use or consumption of employees. Because the catering service was integrally connected with manufacture and was provided to satisfy a statutory workplace obligation, it was not treated as primarily for personal consumption. The denial of credit was therefore not sustainable.

---

---

Issues: Whether CENVAT credit on outdoor catering service was admissible after 01.04.2011 when the service was provided to employees in compliance with the mandatory canteen requirement under the Factories Act, 1948.

Analysis: Rule 2(l) of the Cenvat Credit Rules, 2004 excludes outdoor catering service only when it is used primarily for personal use or consumption of employees. The outdoor catering service in question was provided inside the factory to comply with the mandatory requirement under Section 46 of the Factories Act, 1948. Such service was therefore integrally connected with the business of manufacture and was not used primarily for personal consumption. The disallowance of credit on that basis was not sustainable.

Conclusion: CENVAT credit on outdoor catering service was admissible and the denial of credit was not proper.

---