2026 (1) TMI 386 - AT - Central Excise

Service tax on technical inspections and outward couriering for project goods treated as Rule 2(l) input services; credit restored.

The dominant issue was whether service tax paid on technical inspection services and outward courier services qualified as 'input service' under Rule 2(l) ... Eligibility of the appellant to avail Cenvat credit of service tax paid - technical inspection services - outward courier services - HELD THAT:- Perusal of Rule 2(l) of Cenvat Credit Rules, 2004 shows that the legislature has used both the words in the said definition that is ‘means’ and ‘includes’. Therefore the definition is exhaustive. Any services rendered directly or indirectly in the manufacture of final product and clearance thereof, the inclusive definition sets out various services and further enlarge the scope by showing that all activities relating to business constitute the input services. No doubt the product in question is HDPE pipes which is very much different from a pharmaceutical product as was in consideration in the case of Cadila Healthcare Ltd. [2013 (1) TMI 304 - GUJARAT HIGH COURT]. However, it is an admitted fact that the appellant had manufactured those pipes for a government project of water supply distribution system of Roorkee awarded to M/s. NCC Ltd. Admittedly the project was funded by Asian Development Bank under a loan agreement between Government of India and the said bank. The scheme was to be implemented by Urban Development Department of Uttarakhand. These admissions falsify the plea of department that the services of technical inspection were not required by the appellant. In the light of discussion about meaning of input services under rule 2(l) of Cenvat Credit Rules, 2004, the said service is also held to have been availed in relation to the manufacturing process/business of the appellant. Hence it is held that these were also eligible input services qua which the appellant was entitled to avail the Cenvat credit - it is held that Commissioner (Appeals) though had dropped the major demand of excise duty as well as that of service tax but has committed an error while confirming the demand/reversal of Cenvat credit availed by the appellant. With these observations, the order under challenge confirming the reversal of Cenvat credit amounting to Rs.93,662/-is hereby set aside. Appeal allowed. Issues: Whether Cenvat credit of service tax paid on technical inspection services (BIS) and outward courier services is admissible as input services under Rule 2(l) of Cenvat Credit Rules, 2004, when such services were availed by the manufacturer prior to clearance of HDPE pipes to a government agency.Analysis: Rule 2(l) of Cenvat Credit Rules, 2004 defines 'input service' using both 'means' and 'includes', thereby covering services rendered directly or indirectly in relation to manufacture and clearance of final products and further enlarging scope by treating activities relating to business as input services. The services in question were availed by the manufacturer in relation to manufacture and prior to clearance to the government agency for a funded public project; no evidence was produced to show the services served any other purpose. The admitted facts that technical inspection was obtained before supply to the government agency and that the services related to the appellant's business satisfy the statutory test of being availed in relation to manufacture/clearance. Denial of such credit would impose additional business burden on the manufacturer.Conclusion: Cenvat credit of service tax paid on technical inspection services and outward courier services is admissible as input services under Rule 2(l) of Cenvat Credit Rules, 2004; the reversal/demand of Rs.93,662/- confirmed by the Commissioner (Appeals) is set aside and the appeal is allowed in favour of the assessee.