Input service credit for export freight is admissible up to the port of export where it is the place of removal.

In FOB export transactions, outward transportation of goods up to the port of export may qualify as input service credit where that port is the place of removal. The analysis turned on the meaning of "input service" and "place of removal" under the Cenvat scheme, with the Board circular and the pre-amendment position indicating that freight up to the export destination could fall within credit eligibility when ownership remained with the seller until export. The 2008 amendment was noted as confirming this treatment for the prior regime. Service tax paid on transportation up to the port of export was therefore admissible as Cenvat credit.

---

---

Issues: Whether cenvat credit of service tax paid on outward transportation of exported goods was admissible up to the place of removal.

Analysis: The admissibility of credit turned on the meaning of "input service" and the "place of removal" in export transactions. The facts showed export on FOB basis, with freight included up to the port of export. The place of removal in such a case was treated as the load port, and the Board circular was understood to support extension of the place of removal up to the destination point where ownership and property in the goods remained with the seller till export. The subsequent amendment by Notification No. 10/2008-C.E. (N.T.) dated 01.03.2008 was noted as reinforcing that, prior to the substitution, outward transportation up to the place of removal could be covered within the credit scheme.

Conclusion: Credit of service tax on outward transportation of exported goods up to the port of export, being the place of removal, was admissible.

Final Conclusion: The Revenue's challenge failed, and the assessee's entitlement to input service credit on outward transportation up to the place of removal was upheld.

Ratio Decidendi: In export cases, where the goods are sold on FOB basis and the port of export is the place of removal, service tax paid on outward transportation up to that place qualifies as input service credit under the Cenvat scheme.

---