Cenvat credit on outward freight allowed where transport to buyers' premises formed part of clearance from place of removal.

Cenvat credit on outward freight for transport of goods from the factory gate to customers' premises was held admissible where the service was actually received, service tax had been paid, and the applicable definition of input service covered clearance of final products from the place of removal. On the facts, the factory gate was treated as the place of removal, so the transportation formed part of the eligible input service chain. The belated taking of credit was treated as a procedural lapse caused by delayed accounting entry and did not justify denial of the substantive credit benefit. The denial of credit was therefore unsustainable.

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Issues: Whether cenvat credit on outward freight for transportation of goods from the factory to customers' premises was admissible when service tax had been paid on the transportation service and the credit was taken belatedly.

Analysis: The transportation service was undisputedly received during the relevant period and service tax had been paid on it. The definition of input service applicable at the material time included clearance of final products from the place of removal. On the facts, the place of removal was the factory gate, and the goods were cleared from there to the buyers' premises. The delay in taking credit was treated as a procedural lapse arising from an accounting entry not being made at the appropriate time, which did not justify denial of the substantive credit benefit.

Conclusion: The appellant was entitled to cenvat credit on the outward transportation service and the denial of credit was unsustainable.

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