CENVAT credit nexus test under Rule 2(l) upheld where business linkage was shown and exclusions were not proved.

CENVAT credit on services such as software, servicing, interior and civil works, professional services, catering, insurance, security, housekeeping, club membership and rent-a-cab was examined under Rule 2(l) of the CENVAT Credit Rules, 2004. The governing test was whether the services had a real and sufficient nexus with the business or output service, and after 01.04.2011 whether they fell within the amended exclusions, including services used primarily for employees' personal use or consumption. The appellant showed business linkage and reversed inadmissible credits where identified, while the Department failed to prove lack of nexus or applicability of the exclusions. The disallowance was therefore held unsustainable and credit was allowed with consequential relief.

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Issues: Whether the denial of CENVAT credit on the disputed input services was sustainable under Rule 2(l) of the CENVAT Credit Rules, 2004, including the effect of the 01.04.2011 amendment and the Department's burden to disprove nexus with the appellant's business.

Analysis: The dispute related to multiple services such as car booking software, vehicle and aircraft servicing, interior and civil works, demerger-related professional services, catering, insurance, security, housekeeping, immovable property-related services, club membership, rent-a-cab and marine insurance. The governing test under Rule 2(l) was whether the service had a real and sufficient nexus with the business or output service, and after 01.04.2011 whether it fell within the amended exclusions, including services used primarily for personal use or consumption of employees. The appellant showed that the disputed credits were linked to business operations and that inadmissible credits had already been reversed where identified. The Department did not discharge the burden of proving, by satisfactory material, that the services lacked the requisite nexus or were hit by the exclusions.

Conclusion: The disallowance of CENVAT credit was unsustainable and the appellant was entitled to the credit claimed, with consequential relief.

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