Cenvat credit on cement and steel for output services remains admissible despite the later exclusion, for service providers.

Cenvat credit on cement and steel used for providing Commercial and Industrial Construction Services was treated as admissible because the definition of "input" under the Cenvat Credit Rules distinguished goods used in manufacture from goods used for providing output service. The exclusion introduced by Notification No. 16/2009-CE (N.T.) was read as applying in the manufacture context for a manufacturer, not as limiting a service provider's entitlement for goods used in output services. As cement and steel were vital inputs for the taxable service rendered, credit could not be denied on that basis, and the disallowance was set aside in favour of the assessee.

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Issues: Whether Cenvat credit on cement and steel used in providing Commercial and Industrial Construction Services was admissible, and whether the exclusion introduced by Notification No. 16/2009-CE (N.T.) applied to a service provider.

Analysis: The relevant definition of "input" under the Cenvat Credit Rules distinguished between goods used in manufacture and goods used for providing output service. The exclusion inserted in Explanation 2 was read as operating in the context of manufacture by a manufacturer, and not as controlling the entitlement of a service provider under the clause dealing with goods used for providing output service. Cement and steel were treated as vital inputs for the taxable output service rendered, and the amendment could not be used to deny credit on that basis.

Conclusion: Cenvat credit on cement and steel used for providing the output service was held admissible, and the denial of credit was set aside in favour of the assessee.

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