Cenvat credit on factory services upheld for canteen, management selection and ash removal, but denied for union room renovation.

Cenvat credit was examined on several factory-related services, with canteen-related services treated as eligible because the employer had a statutory canteen obligation under the Factories Act and the services were connected with manufacture. Professional fees for selecting a manager and services for shifting burnt blade ash outside the factory were also treated as admissible input services because they were linked to factory operations and manufacturing activity. By contrast, renovation of a separate union room in the recreation area was held not to be used in or in relation to manufacture and therefore did not qualify for credit. The penalty was set aside.

---

---

Issues: (i) whether Cenvat credit was admissible on canteen-related input services, including cooking, washing and allied services, (ii) whether credit was admissible on professional fee paid for selection of a manager and on services used for shifting burnt blade ash outside the factory, and (iii) whether credit was rightly denied on renovation work undertaken in the recreation room for a separate union room.

Issue (i): whether Cenvat credit was admissible on canteen-related input services, including cooking, washing and allied services.

Analysis: The appellant was under a statutory obligation to maintain a canteen under Section 46 of the Factories Act, 1948. The services used for providing food and maintaining the worker's canteen were treated as input services connected with the business of manufacture. The issue was covered by the cited Tribunal decisions recognizing credit on canteen services.

Conclusion: Credit on canteen-related input services was admissible and the denial was unsustainable.

Issue (ii): whether credit was admissible on professional fee paid for selection of a manager and on services used for shifting burnt blade ash outside the factory.

Analysis: The professional fee for selection of a manager was treated as an eligible input service on the basis of the cited Tribunal precedents. Likewise, the activity of shifting burnt blade ash outside the factory premises was held to be covered by earlier decisions, as it was a necessary activity connected with the manufacturing process and factory operations.

Conclusion: Credit on these services was admissible and the denial was set aside.

Issue (iii): whether credit was rightly denied on renovation work undertaken in the recreation room for a separate union room.

Analysis: The renovation of the union room was held not to fall within the inclusive part of the definition of input service. It was not treated as a service used in or in relation to the manufacture of the final product, and therefore did not qualify for credit.

Conclusion: Denial of credit on the renovation of the union room was upheld.

Final Conclusion: The order was modified by allowing Cenvat credit on the eligible input services and by sustaining only the denial relating to renovation of the separate union room, with the penalty set aside.

Ratio Decidendi: Services integrally connected with statutory canteen obligations or with the manufacturing and factory operations qualify as input services for Cenvat credit, but renovation of a union room not used in or in relation to manufacture does not.

---