FOR destination sales and outward freight: buyer's premises may be the place of removal for Cenvat credit eligibility.

In FOR destination sales, outward freight for delivery of excisable goods at the buyer's premises was treated as eligible for Cenvat credit where the manufacturer bore the freight and contractual terms showed that ownership and risk passed only on delivery. The buyer's premises were taken as the place of removal, making transportation integral to the sale. The Board circular supported this position, and the amendment to the definition of input services did not change the result for such sales. On that reasoning, Cenvat credit of Service Tax paid on outward freight was admissible and denial of credit was unsustainable.

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Issues: Whether Cenvat credit of Service Tax paid on outward freight for goods delivered at the buyer's premises was admissible in case of FOR destination sales.

Analysis: The dispute concerned freight incurred for delivery of excisable goods at the customer's premises. The governing principle applied was that where the contract is for delivery at the buyer's premises and freight is borne by the manufacturer, the place of removal extends to the buyer's premises. The Board's circular was also relied upon, and the amendment to the definition of input services did not alter the position for FOR sales. The sale terms showed that ownership and risk passed only on delivery at the buyer's premises, making the outward transportation integrally connected with the sale.

Conclusion: Cenvat credit of Service Tax paid on outward freight was admissible, and denial of credit was unsustainable.

Ratio Decidendi: In FOR destination sales, where freight is borne by the manufacturer and delivery is made at the buyer's premises, the buyer's premises constitute the place of removal for the purpose of Cenvat credit on outward transportation.

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