Mandatory hazardous waste disposal services qualify as input services for Cenvat credit when directly linked to manufacture.

Credit was admissible on outward transportation services used to dispose of hazardous waste generated during manufacture because the expenditure was incurred for mandatory disposal under the pollution control regime, not for removal of excisable goods. That service was treated as part of the manufacturing activity and fell within the main limb of the definition of input service under Rule 2(l) of the Cenvat Credit Rules, 2004. The contrary precedent on removal of excisable goods was held inapplicable on these facts, while the precedent supporting credit for disposal of hazardous waste was followed. Accordingly, the denial of Cenvat credit on such transportation service was unsustainable.

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Issues: Whether credit was admissible on outward transportation services used for disposal of hazardous waste generated during manufacture.

Analysis: The waste was generated in the course of manufacture and had to be disposed of in the manner mandated by the pollution control regime. The transportation expense was incurred for such compulsory disposal, not for removal of excisable goods. On that footing, the service formed part of the manufacturing activity and fell within the main limb of the definition of input service under Rule 2(l) of the Cenvat Credit Rules, 2004. The cited decision concerning removal of excisable goods was held to be inapplicable on the facts. The reasoning adopted in the precedent dealing with disposal of hazardous waste supported admissibility of credit.

Conclusion: Credit on the outward transportation service for disposal of hazardous waste was admissible and the denial was unsustainable.

Ratio Decidendi: Services used for mandatory disposal of hazardous waste generated in the course of manufacture have a direct nexus with manufacturing and qualify as input services for Cenvat credit purposes.

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