Cenvat credit on courier service allowed where buyer's premises was the place of removal and CST did not prove factory-gate sale.

Cenvat credit on courier service was admissible where goods were dispatched to the buyer through courier, the seller retained ownership until delivery, and undelivered goods could be returned if refused. On those facts, the buyer's premises constituted the place of removal, and charging CST on an inter-State sale did not by itself show that the sale took place at the factory gate. The circular relied upon supported this position. Credit was therefore allowed and the denial of Cenvat credit was unsustainable.

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Issues: Whether Cenvat credit on courier service is admissible where the goods are sent through courier to the buyer and the goods may be returned if delivery is refused, and whether charging CST necessarily shows that the sale took place at the factory gate.

Analysis: The entitlement to credit depended on the place of removal in the facts of the case. Charging CST on an inter-State sale did not, by itself, establish that the goods were sold at the factory gate. Since the goods were sent through courier and the appellant retained ownership until delivery to the buyer, with a return obligation if delivery was refused, the buyer's place constituted the place of removal. The circular relied upon supported this understanding of the place of removal for such transactions.

Conclusion: The appellant was entitled to Cenvat credit on courier service, and the denial of credit was unsustainable.

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