Cenvat credit on outward freight beyond the place of removal was allowed under the wider input service definition.

The Gujarat HC construed "input service" under Rule 2(l) of the Cenvat Credit Rules, 2004 as a wide definition covering services used directly or indirectly in relation to manufacture and in clearance of final products from the place of removal. Outward transportation of finished goods beyond the place of removal to the buyer's premises was treated as a service used for clearance of final products, and the inclusive part of the definition was not read as narrowing the main part. The amended wording effective from 1 April 2008 was noted, but the dispute was decided under the unamended provision. Cenvat credit on the service tax paid was allowed.

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Issues: Whether service tax paid on goods transport agency service used for outward transportation of finished goods beyond the place of removal qualifies as input service under Rule 2(l) of the Cenvat Credit Rules, 2004.

Analysis: The definition of input service was construed as employing the expression "means and includes", and the main part of the definition was held to be wide enough to cover services used directly or indirectly in or in relation to manufacture and in clearance of final products from the place of removal. The outward transportation of finished goods from the place of removal to the purchaser's premises was treated as a service used by the manufacturer for clearance of final products, and the inclusive part of the definition was not read as cutting down the scope of the main part. The amended wording introduced from 1 April 2008 was noticed, but the dispute was decided on the unamended provision applicable to the case.

Conclusion: Service tax paid on outward transportation beyond the place of removal was held to be eligible for Cenvat credit, and the question was answered in favour of the assessee and against the Revenue.

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