Cenvat credit on outward GTA transport allowed where F.O.R. sale placed buyer's premises as the removal point

Cenvat credit on GTA services used for outward transportation of finished goods to the buyer's premises is allowable where the sale is on F.O.R. terms and freight is included in the assessable value. The purchase orders, customer communications, invoices and pricing structure showed that the assessee bore freight and insurance, delivered the goods at the customer's premises, and paid excise duty on a value that embedded freight charges. On that basis, the buyer's premises were treated as the place of removal, so the restriction on credit beyond the place of removal did not apply. The disallowance of credit was therefore set aside.

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Issues: Whether Cenvat credit of service tax paid on GTA services used for outward transportation of finished goods up to the buyer's premises was admissible where the sale was on F.O.R. terms and freight formed part of the assessable value.

Analysis: The purchase orders and customer letters showed that delivery was on F.O.R. basis, the assessee bore the freight and insurance, and the goods were delivered at the customer's premises. The invoices and pricing structure indicated that freight charges were included in the assessable value on which excise duty had been paid. In these circumstances, the buyer's premises constituted the place of removal, and the restriction against credit beyond the place of removal did not apply. The reasoning adopted was consistent with the view that where freight is borne by the assessee and embedded in the assessable value, credit on outward transportation up to the buyer's premises is allowable.

Conclusion: The assessee was entitled to the credit on GTA services up to the buyer's premises.

Final Conclusion: The disallowance of credit was unsustainable, the impugned orders were set aside, and the appeals succeeded with consequential reliefs.

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