Cenvat credit can be used for service tax on output transport service, and manufacturer status alone cannot bar utilisation.

Rule 3(4) of the Cenvat Credit Rules, 2004 permits utilisation of Cenvat credit for payment of excise duty and service tax on output service. Where transport service is treated as an output service, manufacturers of excisable goods cannot be denied use of service tax credit merely because of their status as manufacturers. The statutory scheme imposes no restriction preventing such utilisation, and the contrary view was held unsustainable. Accordingly, service tax credit could be used to pay service tax on the transport service.

---

---

Issues: Whether service tax credit could be utilized for payment of service tax on transport service treated as output service, and whether manufacturers could be denied such utilization merely because they were manufacturers of excisable goods.

Analysis: Rule 3(4) of the Cenvat Credit Rules, 2004 permits utilization of Cenvat credit for payment of excise duty as well as service tax on output service. The transport service in question was treated as an output service, and the statutory scheme did not impose the restriction assumed in the impugned order. The conclusion was also supported by the Tribunal's earlier view that there is no restriction on using service tax credit for payment of service tax or excise duty.

Conclusion: The credit could be utilized for payment of service tax on the transport service, and the contrary view was unsustainable.

---