Input service credit for effluent treatment upheld where pollution-control compliance makes waste disposal integral to manufacturing.

Waste treatment service used for treatment and disposal of industrial effluents generated during manufacture is an admissible input service where pollution control compliance makes such treatment mandatory. The service is not a post-manufacture activity divorced from production; it is treated as an essential and integral part of the manufacturing process because it has a direct nexus with the running of the factory and uninterrupted manufacture. On that basis, credit cannot be denied in respect of such effluent-treatment services.

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Issues: Whether waste treatment service received for treatment of factory waste is admissible as input service used in or in relation to the manufacture of excisable goods.

Analysis: The service was obtained for treatment and disposal of industrial effluents generated during manufacture and was mandated by pollution control requirements. The decision relied on the settled principle that where a manufacturing unit is legally required to undertake effluent treatment, such treatment is not a post-manufacture activity divorced from production but forms an essential and integral part of the manufacturing process. It further followed prior decisions holding that services connected with effluent treatment are input services because they bear a direct nexus with the running of the factory and uninterrupted manufacture.

Conclusion: The waste treatment service is an admissible input service and credit cannot be denied.

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