FOR destination freight credit allowed where seller bore transit risk and insurance until delivery.

Where a sale is on FOR destination basis and the seller bears transportation and insurance until delivery at the buyer's site, service tax paid on outward freight forms part of the transaction up to delivery and is eligible as CENVAT credit. The Tribunal relied on the purchase order, invoices and transporter documents to conclude that the vendor retained the freight and insurance burden, and it applied the Board's circular supporting credit in FOR destination supplies. The denial of credit was therefore unsustainable, and the demand, interest and penalty did not survive.

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Issues: Whether CENVAT credit of service tax paid on outward freight was admissible where the supply was on FOR basis and the seller bore insurance and transportation charges till delivery at the buyer's site.

Analysis: The purchase order showed a FOR-NFCL site basis, with insurance to be borne by the vendor and dispatch by road. The invoices and transporter bill supported the conclusion that transportation and insurance were borne by the appellant. In such a factual setting, the outward freight formed part of the transaction up to delivery, and the Board's circular on FOR destination supplies supported admissibility of credit. The Tribunal also applied the principle reflected in earlier decisions that credit cannot be denied where ownership and risk in transit remain with the seller till delivery.

Conclusion: The credit on outward freight was admissible and the impugned denial was unsustainable.

Final Conclusion: The appeal succeeded and the demand, interest and penalty did not survive.

Ratio Decidendi: Where a sale is on FOR destination basis and the seller retains risk and bears transportation and insurance up to delivery, service tax paid on outward freight is eligible as CENVAT credit.

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