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(DELIVERED BY R.SUDHAKAR, J.) This Civil Miscellaneous Appeal filed by the Revenue as against the order of the Customs, Excise and Service Tax Appellate Tribunal allowing the appeal filed by the assessee granting the benefit of Cenvat credit on the service tax paid on outdoor catering services provided in the factory for employees of the factory and outward freight services was admitted by this Court on the following substantial questions of law:

1. In the facts and circumstances of the case, whether the first respondent can avail CENVAT Credit of Service Tax paid on canteen service treating them as as Input Service and Service Tax paid on outward freight treating them as 'Input Service', when those services are not in relation to the manufacture of final products?

2. The brief facts are as follows:

The assessee in this case availed credit of service tax paid for transportation and delivery of goods to their customers and also service tax paid for providing food and beverage at the factory production to their staff and labourers and that was objected to by the Department stating that outdoor catering services and outward freight do not fall within the ambit of definition 'input service', specified under Rule 2(l) of the Cenvat Credit Rules, 2004. The Department was of the view that catering/canteen services and outward freight services were neither used in or in relation to the manufacture or clearance of final product nor it could be said to be an activity relating to business and proceed to disallow the cenvat credit. The Adjudicating Authority vide order-in-original, supported the view of the Department and disallowed the cenvat credit. Aggrieved by the Order-in-Original, the assessee pursued the matter before the Commissioner (Appeals), who allowed the credit with respect to the canteen services and disallowed the credit with respect to freight. As against the said order of the Commissioner (Appeals), the Department as well as the assessee went before the Tribunal.

32. As rightly contended by Shri Shridharan, learned Counsel for the respondent - assessee, in the present case, the assessee carrying on the business of manufacturing cement by employing more than 250 workers is mandatorily required under the provisions of the Factories Act, 1948 to provide canteen facilities to the workers. Failure to do so entails penal consequences under the Factories Act, 1948. To comply with the above statutory provision, the assessee had engaged the services of a outdoor caterer. Thus, in the facts of the present case, use of the services of an outdoor caterer has nexus or integral connection with the business of manufacturing the final product namely, cement. Hence, in our opinion, the Tribunal was justified in following the Larger Bench decision of the Tribunal in the case of GTC Industries Ltd. (supra) and holding that the assessee is entitled to the credit of service tax paid on outdoor catering service.

34. Therefore, the definition of input service read as a whole makes it clear that the said definition not only covers services, which are used directly or indirectly in or in relation to the manufacture of final product, but also includes other services, which have direct nexus or which are integrally connected with the business of manufacturing the final product. In the facts of the present case, use of the outdoor catering services is integrally connected with the business of manufacturing cement and therefore, credit of service tax paid on outdoor catering services would be allowable.