Cenvat credit on export freight up to the port of shipment is allowable where FOB or CIF terms make the port the removal point.

Cenvat credit was treated as available on service tax paid for outward transportation of exported goods up to the port of shipment where exports were made on FOB or CIF terms. On those facts, the port was regarded as the place of removal because the seller's responsibility extended to that point, and outward freight to the port fell within input service coverage. The Tribunal followed its earlier view on export freight and noted that the stay of the Larger Bench decision in ABB Ltd. did not change that position. As a result, credit on freight up to the port of shipment was considered admissible.

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Issues: Whether Cenvat credit of service tax paid on outward transportation of exported goods is admissible where the goods are sold on FOB/CIF basis and the port of shipment is treated as the place of removal.

Analysis: The dispute concerned eligibility to Cenvat credit on GTA service tax paid for outward freight from the factory to the port in respect of export clearances. The relevant facts showed that the exports were made on FOB/CIF basis and that the seller's responsibility extended up to the port of shipment. On those facts, the port constituted the place of removal for the exported consignments. The Tribunal followed its earlier view that outward freight up to the port in export cases falls within the ambit of input service, and the stay of the Larger Bench decision in ABB Ltd. did not alter that position.

Conclusion: Cenvat credit on service tax paid for outward transportation up to the port of shipment was admissible, and the Revenue's appeal was rejected.

Final Conclusion: Export freight incurred up to the port of shipment was treated as covered by the credit entitlement, so the assessee's claim succeeded.

Ratio Decidendi: Where exported goods are sold on FOB or CIF terms and the seller's responsibility extends to the port of shipment, the port is the place of removal and Cenvat credit on outward transportation up to that point is allowable.

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