Cenvat credit on outward transportation fails where freight is excluded from assessable value and required conditions are unmet.

Cenvat credit on outward goods transportation service is not admissible unless the transportation charges form part of the assessable value and the prescribed conditions for outward transportation credit are satisfied. The applicable circular requires, among other things, that the assessee retain ownership of the goods and bear insurance and related charges. As the transportation charges were not included in the assessable value of the goods sold, the essential condition for credit was not met, and denial of Cenvat credit was upheld.

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Issues: Whether Cenvat credit was admissible on outward goods transportation service where the transportation charges were not included in the assessable value of the goods supplied to buyers.

Analysis: The claim for credit was examined in the light of Circular No. 97/8/2007-S.T. dated 23-8-2007, which contemplates credit on outward transportation only where the prescribed conditions are satisfied. These conditions include that the transportation charges form an integral part of the assessable value, that ownership of the goods remains with the assessee, and that insurance and allied charges are borne by the assessee. On the admitted facts, the transportation charges were not included in the assessable value of the goods sold, and therefore the essential condition for availment of credit was not met.

Conclusion: Cenvat credit on outward transportation service was not admissible, and the denial of credit was upheld.

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