CENVAT input service credit extends to ammonia storage tank services outside the factory when integral to manufacture.

CENVAT credit of service tax paid on services used for setting up and operating ammonia storage tanks outside the factory was admissible because input service credit is not confined to services physically received inside the factory. Rule 3(1) distinguishes between inputs or capital goods, which must be received in the factory, and input services, which need only be received by the manufacturer. Rule 2(l) defines input service broadly to cover services used directly or indirectly in or in relation to manufacture, and its inclusive limb is not limited to procurement or inward transportation. As storage and use of ammonia formed an integral part of manufacture, the Tribunal erred in denying credit solely because the tanks were located outside the factory.

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Issues: Whether CENVAT credit of service tax paid on services used for setting up and operating ammonia storage tanks located outside the factory was admissible as input service credit.

Analysis: Rule 3(1) distinguishes between input or capital goods, which must be received in the factory, and input services, for which the only requirement is that they be received by the manufacturer. Rule 2(l) defines input service broadly to include services used directly or indirectly, in or in relation to manufacture, and its inclusive part does not confine credit only to procurement or inward transportation of inputs. The storage and use of ammonia formed an intrinsic part of the manufacturing process, and the services used for the storage tanks were therefore covered by the statutory definition.

Conclusion: The credit was admissible, and the Tribunal was wrong in denying CENVAT credit on the ground that the storage tanks were situated outside the factory.

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