Cenvat credit on outward freight beyond the place of removal is inadmissible; extended limitation and penalties were set aside.

Cenvat credit on GTA service for outward freight from the factory to the buyer's premises was held inadmissible because, after the amendment to input service, credit is confined to services used up to the place of removal, and the Supreme Court's Ultra Tech Cement ruling controlled the issue. The fact that purchase orders included freight and delivery was to the buyer's premises did not alter that position, so the demand was sustained for the normal period. However, the extended period of limitation and penalties were not sustainable because the record showed divergent legal views and no wilful suppression or intent to evade duty; those additions were set aside.

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Issues: (i) Whether Cenvat credit on Goods Transport Agency service used for transport of finished goods from the factory to the buyer's premises was admissible on the facts of the case; (ii) Whether the extended period of limitation and penalties were sustainable.

Issue (i): Whether Cenvat credit on Goods Transport Agency service used for transport of finished goods from the factory to the buyer's premises was admissible on the facts of the case.

Analysis: The price under the purchase orders included outward freight and the goods were required to be supplied at the buyer's premises, but the governing law after the amendment to the definition of input service confined credit to services used only upto the place of removal. The Supreme Court's ruling in Ultra Tech Cement was treated as settling that credit on GTA service for transport from the place of removal to the buyer's premises is not admissible, and the later Board circular could not override that law.

Conclusion: Credit on outward freight beyond the place of removal was not admissible; the demand for the normal period was upheld.

Issue (ii): Whether the extended period of limitation and penalties were sustainable.

Analysis: The record showed divergent views on the issue during the relevant period, and the circumstances did not establish wilful suppression with intent to evade duty. In the absence of such intent, the penal provisions and the extended limitation could not be applied.

Conclusion: The extended period of limitation and penalties were not sustainable and were set aside.

Final Conclusion: The demand was sustained only to the extent of the normal period with interest, while the remaining demand and all penalties were set aside, resulting in a partial allowance of the appeals.

Ratio Decidendi: Cenvat credit on outward freight is admissible only upto the place of removal, and where divergent legal views exist without wilful suppression or intent to evade, the extended period and penalty provisions cannot be invoked.

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