Hazardous waste disposal services qualify as input service credit when disposal is a necessary part of manufacturing.

Service tax paid on hazardous waste disposal services used in the manufacturing process was treated as eligible input service credit because disposal of waste generated during manufacture was a statutory and necessary part of continuing production. The waste arose during manufacture, and its collection, treatment, recycling, reprocessing, storage, or disposal through authorised facilities was directly connected with the manufacturing activity rather than a mere post-manufacturing step. Cenvat credit was therefore admissible to the assessee.

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Issues: Whether service tax paid on services used for disposal of hazardous waste generated during manufacture was eligible for Cenvat credit as an input service.

Analysis: Disposal of hazardous waste generated in the course of manufacture was treated as a mandatory activity connected with the manufacturing process. The requirement to collect, treat, recycle, reprocess, store or dispose of such waste only through authorized facilities showed that the manufacturer had a statutory obligation to ensure proper disposal. Since the waste arose during manufacture and its disposal was necessary for continuation of the manufacturing activity, the services used for such disposal had a direct nexus with manufacture and could not be treated as a mere post-manufacturing activity.

Conclusion: The service used for hazardous waste disposal was held to be an input service, and Cenvat credit was admissible in favour of the assessee.

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