FOB export transport credit allows refund where goods move to port of shipment as part of export transaction.

Refund of unutilised Cenvat credit was held admissible for service tax paid on GTA services used to transport exported goods from the factory to the port of shipment where the exports were on FOB terms. The export documents, including the shipping bill and invoice, showed that the place of removal extended up to the port of shipment, so the outward transportation formed part of the export transaction. On those facts, the GTA service qualified as eligible input service credit under Rule 5 of the Cenvat Credit Rules, 2004, and denial of refund was unsustainable.

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Issues: Whether refund of unutilized Cenvat credit was admissible on service tax paid on GTA services used for transporting exported goods up to the port of shipment where the export was on FOB terms.

Analysis: The export documents showed that the goods were exported on FOB basis and the shipping bill and invoice supported that the place of removal extended up to the port of shipment. On those facts, the transportation from the factory to the port formed part of the export transaction and the GTA service used for such outward transportation qualified for refund under Rule 5 of the Cenvat Credit Rules, 2004.

Conclusion: The refund was admissible and the denial of refund was unsustainable.

Final Conclusion: The assessee was entitled to refund of the disputed Cenvat credit claim relating to outward transportation up to the port of shipment.

Ratio Decidendi: Where exported goods are sold on FOB terms and the documents establish that the place of removal is the port of shipment, service tax paid on GTA transportation from the factory to that port is eligible for refund as input service credit.

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