Input service credit on freight for empty export containers accepted as linked to manufacture and clearance.

Cenvat credit of service tax paid on freight for empty containers used in export packing was treated as admissible under Rule 2(l) of the Cenvat Credit Rules, 2004. The expression "input service" was applied broadly to services used directly or indirectly in or in relation to manufacture and clearance of final products, and empty containers were regarded as part of the packing and clearance process connected with the manufactured goods. On that basis, freight incurred for calling such containers was linked to the manufacture and export of the final products, supporting credit eligibility.

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Issues: Whether Cenvat credit of service tax paid on freight for empty containers called for export was admissible as an input service under Rule 2(l) of the Cenvat Credit Rules, 2004.

Analysis: The expression "input service" under Rule 2(l) covers services used by a manufacturer, directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal. Empty containers used for packing the final products form part of the process connected with manufacture and clearance, and the freight paid for such containers was therefore treated as relating to the manufacture of the final products.

Conclusion: Cenvat credit of the service tax paid on freight for containers called for export of goods was admissible to the assessee.

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