Cenvat credit on outward freight is confined up to the place of removal; suppression supports extended limitation and penalty.

Cenvat credit on goods transport agency service for outward transportation from the place of removal to the buyer's premises was held inadmissible because Rule 2(l) confines credit to services used up to the place of removal. The text further states that non-disclosure of such credit to the Department, revealed only on audit, constituted suppression of facts and justified invocation of the extended limitation period and penalty. On that basis, the demand, interest, and penalty were sustained and the appeal was rejected.

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Issues: (i) Whether Cenvat credit was admissible on goods transport agency service used for outward transportation of goods from the place of removal to the buyer's premises. (ii) Whether the demand was barred by limitation and whether the extended period and penalty were rightly invoked on the ground of suppression.

Issue (i): Whether Cenvat credit was admissible on goods transport agency service used for outward transportation of goods from the place of removal to the buyer's premises.

Analysis: Rule 2(l) of the Cenvat Credit Rules, 2004, as amended, limits credit to services used in or in relation to manufacture and clearance of final products up to the place of removal. Outward transportation beyond that point is not covered, and the expression "upto" terminates the credit entitlement at the place of removal.

Conclusion: Cenvat credit on outward freight beyond the place of removal was not admissible and the disallowance was sustained.

Issue (ii): Whether the demand was barred by limitation and whether the extended period and penalty were rightly invoked on the ground of suppression.

Analysis: The credit availed on outward freight was not disclosed to the Department and came to light only upon audit. On that footing, the non-disclosure amounted to suppression of relevant facts, justifying invocation of the extended period and penalty under Section 78 of the Central Excise Act, 1944.

Conclusion: The demand was held to be within the extended period and the penalty was upheld.

Final Conclusion: The appeal was rejected and the order confirming denial of credit, recovery of interest, and penalty was sustained.

Ratio Decidendi: Cenvat credit on outward transportation service is confined to transportation up to the place of removal, and suppression of such availment permits invocation of the extended limitation period and penalty.

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