Cenvat credit exclusion for factory canteen catering under amended input service rules applies despite statutory canteen obligation.

After the 1 April 2011 amendment to Rule 2(l) of the Cenvat Credit Rules, outdoor catering for a factory canteen fell within the express exclusion for services used primarily for employees' personal use or consumption. Even though the canteen was maintained under the Factories Act, 1948 and the expense formed part of manufacturing cost, the amended wording was applied strictly and not expanded by implication. Earlier authorities were treated as confined to the pre-amendment regime. The result was that outdoor catering services used for the statutory canteen were not eligible input services for Cenvat credit under the amended rule.

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Issues: Whether outdoor catering services used for a factory canteen mandated under the Factories Act, 1948 qualified as input service for Cenvat credit after the amendment to Rule 2(l) of the Cenvat Credit Rules, 2004 with effect from 1 April 2011.

Analysis: The disputed period was after 1 April 2011, when Rule 2(l) was amended to include an exclusion clause. That clause specifically excluded services provided in relation to outdoor catering when used primarily for personal use or consumption of employees. Although the canteen was maintained pursuant to the statutory obligation under Section 46 of the Factories Act, 1948 and the expenditure formed part of manufacturing cost, the Court held that a taxing statute must be strictly construed and nothing can be read into the provision by implication. The earlier decisions relied upon by the assessee were distinguished as relating to the pre-amendment regime.

Conclusion: Outdoor catering services after 1 April 2011 were not eligible input services for Cenvat credit, and the question was answered against the assessee and in favour of the revenue.

Final Conclusion: The statutory exclusion in the amended Cenvat Credit Rules governed the claim, so the orders disallowing credit and the dismissal of the assessee's challenge were upheld.

Ratio Decidendi: After the 1 April 2011 amendment, outdoor catering services used for employee canteens fall within the express exclusion in Rule 2(l) of the Cenvat Credit Rules, 2004, and a taxing provision cannot be expanded beyond its clear words by reference to statutory obligation or business necessity.

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