Delivered Duty Paid export sales limit CENVAT credit on courier and transport services beyond the place of removal.

For export clearances made on Delivered Duty Paid terms, where the seller retains ownership and transit risk until delivery abroad and freight forms part of the price, courier and transportation services used beyond the factory gate were treated as outside the place of removal. On that footing, CENVAT credit of service tax on those services was held inadmissible, and the earlier view allowing credit was found unsustainable. The denial of the credit claim was restored in favour of the Revenue.

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Issues: Whether CENVAT credit of service tax paid on courier and transportation services used for export consignments beyond the factory gate was admissible, where the goods were sold on Delivered Duty Paid basis and the ownership and risk remained with the seller till delivery at the foreign buyer's premises.

Analysis: The appeal turned on the place of removal for export clearances and the applicability of the relevant CBEC circulars. The Tribunal noted that the circular dealing with exports and place of removal was not decisive on the facts because the goods were sold on Delivered Duty Paid basis, under which the seller bore the costs and risks up to destination and retained ownership till delivery. The Tribunal also applied the conditions earlier recognised in the cited precedent: ownership and property remaining with the seller till delivery, seller bearing transit risk, and freight forming part of the price. On that footing, the earlier appellate order allowing credit was found unsustainable.

Conclusion: CENVAT credit was held inadmissible on the facts of the case and the Revenue's appeal succeeded.

Final Conclusion: The impugned order allowing credit was set aside, and the denial of the credit claim was restored in favour of the Revenue.

Ratio Decidendi: Where export sales are made on Delivered Duty Paid basis and the seller retains ownership and transit risk up to delivery abroad, courier and transportation services used beyond the factory gate do not qualify for CENVAT credit as input services on the same footing as services used up to the place of removal.

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