Cenvat credit on transportation services depends on contract terms, delivery point, and verification of supporting documents.

Cenvat credit on transportation services was treated as available in principle where inward freight related to receipt of raw materials at the factory and outward freight formed part of CIF supplies delivered at the customer's premises. After the amendment to the input service definition, outward transportation credit was confined to the place of removal, so entitlement depended on the contractual delivery terms and supporting documents. Because the purchase orders and transport records required further verification, the matter was remanded for examination before final grant of credit.

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Issues: (i) whether Cenvat credit was admissible on service tax paid on inward transportation of raw materials; (ii) whether Cenvat credit was admissible on service tax paid on outward transportation of finished goods where the supplies were on CIF basis and delivery was at the customer's premises.

Issue (i): whether Cenvat credit was admissible on service tax paid on inward transportation of raw materials.

Analysis: The transportation documents produced indicated that the services related to receipt of raw materials at the factory and, on that basis, the services fell within the nature of input services on which service tax had been paid. Since the supporting particulars had not been fully verified earlier, further verification by the original authority was necessary before final allowance of credit.

Conclusion: Cenvat credit on inward transportation was held to be admissible in principle, subject to verification on remand.

Issue (ii): whether Cenvat credit was admissible on service tax paid on outward transportation of finished goods where the supplies were on CIF basis and delivery was at the customer's premises.

Analysis: After the amendment to the definition of input service, credit on outward transportation was available only up to the place of removal. The purchase order produced showed CIF terms and delivery at the customer's premises, which supported the claim that the freight formed part of the service eligible for credit. As the remaining purchase orders also required verification to confirm similar terms, the matter had to be remanded.

Conclusion: Cenvat credit on outward transportation was held to be admissible in principle, subject to verification on remand.

Final Conclusion: The appeal succeeded to the extent that the disputed credits were found prima facie allowable, and the matter was sent back for verification of the relevant documents and contractual terms before grant of relief.

Ratio Decidendi: Where transportation services are shown to be integrally connected with receipt of raw materials or with delivery terms placing freight within the contractual supply arrangement, Cenvat credit may be allowable, but entitlement must be verified on the basis of supporting documents and contract terms after the relevant amendment to the input-service definition.

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