Input service credit for outward transportation from the place of removal was upheld under the CENVAT Credit Rules, 2004.

Service tax credit on goods transportation was held admissible where the freight related to inward movement and outward movement of final products from the place of removal. Applying the Larger Bench ruling in ABB Ltd., the Tribunal interpreted "input service" broadly under the CENVAT Credit Rules, 2004 and rejected a narrow restriction to transport only up to the factory gate. Outward transportation from the place of removal was treated as covered by the credit scheme, making the denial of credit unsustainable and the impugned order liable to be set aside.

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Issues: Whether service tax paid on transportation of goods by road used for inward transportation and for outward transportation from the factory to branches and other units was admissible as input service credit under the CENVAT Credit Rules, 2004.

Analysis: The credit was denied on the view that transportation beyond the factory gate was not admissible. The Tribunal relied on the Larger Bench ruling in ABB Ltd., which held that the expression "input service" must be interpreted in the context of business requirements and cannot be confined narrowly to transport only up to the factory or depot. It further held that outward transportation of final products from the place of removal falls within input service under Rule 2(1)(ii) of the CENVAT Credit Rules, 2004.

Conclusion: The denial of credit was not sustainable, and the service tax credit on outward transportation from the place of removal was admissible.

Final Conclusion: The impugned order was set aside and both appeals were allowed.

Ratio Decidendi: Transportation services used for outward movement of final products from the place of removal qualify as input service credit under the CENVAT credit scheme.

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