Cenvat credit on outward freight allowed for FOR destination sales where freight formed part of assessable value and risk stayed with seller.

Cenvat credit on outward GTA service was admissible where goods were sold on FOR destination terms, freight formed part of the assessable value, and the manufacturer bore the transportation cost. The documentary record showed that excise duty was paid on the full assessable value, there was no separate freight component, and property and transit risk remained with the seller until delivery at the buyer's premises. On that basis, transportation up to the place of removal was treated as an input service, and the denial of credit was unsustainable.

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Issues: Whether Cenvat credit of service tax paid on outward transportation of goods was admissible when the goods were sold on FOR destination basis and the freight formed part of the assessable value.

Analysis: The purchase orders and invoices showed that the freight element was borne by the manufacturer, the price basis was FOR destination, excise duty had been discharged on the full assessable value, and there was no separate freight component. The standard invoice endorsement regarding transit risk did not displace the documentary position that property in the goods passed at the buyer's premises. The applicable circular clarified that credit on transportation up to the place of removal is admissible where ownership and risk remain with the seller till delivery and freight is an integral part of price.

Conclusion: Cenvat credit on the outward GTA service was admissible and the denial of credit was unsustainable.

Final Conclusion: The appeal succeeded and the impugned order was set aside, resulting in relief to the assessee.

Ratio Decidendi: Where outward freight is included in the sale price on FOR destination terms and the seller retains ownership and transit risk till delivery, transportation up to the buyer's premises constitutes an input service up to the place of removal.

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