FOR destination sales: freight up to buyer's premises qualifies as input service for Cenvat credit

Service tax paid on freight for transport of finished goods to the buyer's premises was admissible as input service where the sale was on a FOR destination basis. Because the seller bore freight and transit risk, title passed only on delivery, and freight formed part of the sale price, the buyer's premises was treated as the place of removal. Transportation up to that point had the requisite nexus with clearance of the final product, so Cenvat credit was correctly allowed.

---

---

Issues: Whether service tax paid on freight charges for transportation of finished goods up to the buyer's premises is admissible as input service for Cenvat credit where the sale is on FOR destination basis and the price includes freight and insurance.

Analysis: The definition of input service under Rule 2(l) of the Cenvat Credit Rules, 2004 includes clearance of final products up to the place of removal. On the facts, the goods were delivered at the buyer's premises, the respondent bore the freight and transit risk, the title in the goods passed only on delivery, and the freight formed part of the sale price. In these circumstances, the buyer's premises constituted the place of removal within the meaning of Section 4(3)(c) of the Central Excise Act, 1944, and the transportation service up to that point had the requisite nexus with clearance of the final product.

Conclusion: Service tax paid on freight for transportation up to the buyer's premises was admissible as input service and Cenvat credit was correctly allowed in favour of the assessee.

Ratio Decidendi: Where a sale is on FOR destination basis and ownership, risk, and freight burden remain with the seller until delivery at the buyer's premises, the buyer's premises constitutes the place of removal and freight incurred up to that point qualifies as input service for Cenvat credit.

---