Tribunal allows cenvat credit for outdoor catering services essential to factory operations.

The Tribunal dismissed the Revenue's appeal challenging the denial of cenvat credit on outdoor catering services. It was held that the catering services were essential for the factory's operation and compliance with legal requirements under the Factories Act, not primarily for personal use of employees. Therefore, the outdoor catering services for the canteen maintained due to the mandatory requirement were not excluded from the definition of input service, allowing the respondent to avail the credit to the extent of the cost borne by them.

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Issues:
- Denial of cenvat credit on outdoor catering services by Revenue.

Analysis:
The appeal was filed by Revenue challenging the cenvat credit on outdoor catering services allowed by the impugned order. Revenue argued that the catering services provided to employees were not used in or in relation to the manufacture or clearance of final products but were a welfare measure. Revenue contended that even though providing a canteen is mandatory under the Factories Act, the catering activity cannot be considered an input service. Revenue disputed the reliance on previous court decisions related to the definition of input service prior to April 2011.

The respondent, through their counsel, relied on previous Tribunal decisions in their favor and argued that the outdoor catering service was used in the factory premises to maintain the canteen, which is a mandatory requirement under the Factories Act. The respondent highlighted that without the canteen, the factory would not be allowed to operate or would violate the Factories Act. It was emphasized that the outdoor catering service was not primarily for personal use or consumption of employees, as it was essential for the factory's operation and compliance with legal requirements.

Upon examining the definition of input service, it was noted that outdoor catering service primarily used for personal consumption of employees is excluded. However, in this case, where the service was essential for the factory's operation and compliance with legal requirements, it could not be considered primarily for personal use. Therefore, the outdoor catering services availed for the canteen maintained due to the mandatory requirement under the Factories Act were not excluded from the definition of input service. The Tribunal dismissed the appeal, allowing the respondent to avail the credit to the extent that the cost was borne by them.

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