CENVAT credit on outward transportation was admissible for pre-amendment periods up to the first destination.

For the period before 01.04.2008, CENVAT credit on service tax paid for outward transportation from the factory gate to the customer's premises was admissible where the transport formed part of movement up to the place of removal or first destination. The pre-amendment scope of "input service" under the CENVAT Credit Rules, 2004 was understood consistently with Supreme Court interpretation, and the later amendment effective from 01.04.2008 marked a change in the statutory position rather than the governing law for the earlier period. The disallowance was therefore unsustainable, and consequential relief followed.

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Issues: Whether Cenvat credit of service tax paid on outward transportation from the factory gate to the customer's premises was admissible for the period prior to 01.04.2008.

Analysis: The eligibility of credit depended on the scope of "input service" under the CENVAT Credit Rules, 2004, as it stood before the 01.04.2008 amendment. The governing interpretation had already been settled by the Supreme Court, which held that outward transportation from the place of removal up to the first destination, including the customer's premises where applicable, fell within the admissible scope for the pre-amendment period. The later amendment by Notification No. 10/2008-C.E. (N.T.) dated 01.03.2008 confirmed the change in the statutory position from 01.04.2008 onwards.

Conclusion: The credit on outward transportation for the disputed period prior to 01.04.2008 was admissible, and the disallowance was unsustainable.

Final Conclusion: The appeal succeeded and the assessee obtained consequential relief under law.

Ratio Decidendi: For the period prior to the 01.04.2008 amendment, outward transportation of final products from the place of removal to the first destination formed part of admissible input service credit under the CENVAT Credit Rules, 2004.

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