Can service tax paid on labour contract service be adjusted

You can avail Cenvat Credit subject to certain condition and maintenance or records. As per Cenvat Credit Rules Cenvat Credit can be availed inputs/input services used for Dutiable products only. Where there are both dutiable and not-dutiable product, a separate registers for cenvat credit is required and you may take credit of input services which is used exclusively in dutiable product. if is not possible as the said worker worked on both products, in that case also you may avail Cenvat Credit but has to pay/reverse specific %age of value of non-dutiable product in terms of Rule 6(3) of CCR. Another option is given in Rule 6(3A) which allow proportionate reversal as per procedure and formula given therein which is somehow lengthy and clumsy.