FOR-sale outward freight can qualify for Cenvat credit when freight is included in assessable value and risk stays with the seller.

Cenvat credit on GTA service used for outward transportation was treated as admissible where goods were sold on FOR basis, freight was borne by the assessee, and the freight element formed part of the assessable value on which excise duty had been paid. On those facts, delivery to the buyer's premises was treated as the relevant point of sale, so outward freight up to that stage was connected with clearance up to the place of removal. The commentary also notes that the extended period could not be invoked because the issue was under dispute and judicial clarification was still evolving, leaving no basis to attribute mala fide intent.

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Issues: (i) whether Cenvat credit was admissible on GTA service used for outward transportation when the goods were sold on FOR basis and freight formed part of the assessable value; (ii) whether the demand could survive for the extended period in the facts of the case.

Issue (i): whether Cenvat credit was admissible on GTA service used for outward transportation when the goods were sold on FOR basis and freight formed part of the assessable value.

Analysis: The sale was on FOR basis, freight was borne by the assessee, and the freight element was included in the assessable value on which excise duty had been paid. On these facts, the point of sale was treated as the customer's doorstep and the outward transportation formed part of the assessee's obligation till delivery. The reasoning followed the settled approach that, where ownership and transit risk remain with the seller till delivery and the sale is completed at the buyer's premises, outward freight is connected with clearance up to the place of removal and qualifies for credit. The Tribunal also relied on the contemporaneous departmental circular and the earlier coordinate bench view applying the same legal position.

Conclusion: Cenvat credit on outward GTA service was admissible in respect of the FOR sales, and the finding was in favour of the assessee.

Issue (ii): whether the demand could survive for the extended period in the facts of the case.

Analysis: The issue of credit on outward GTA had remained under dispute and was subject to evolving judicial clarification. In such circumstances, the Tribunal held that the matter was not free from doubt and no mala fide intent could be attributed to the assessee for invoking the extended period.

Conclusion: The extended period demand was not sustainable.

Final Conclusion: The impugned orders were set aside and the appeals were allowed on the merits of admissibility of credit and the limitation objection.

Ratio Decidendi: Where goods are sold on FOR basis and the seller bears freight and transit risk till delivery, outward transportation up to the buyer's doorstep is part of the transaction connected with the place of removal and credit on such service is allowable.

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