Cenvat credit on FOR sales and export CHA services is admissible when freight and delivery risk extend beyond the factory gate.

Cenvat credit is admissible on outward Goods Transport Agency service where clearances are on FOR terms, freight is included in the assessable value, and the seller bears delivery risk until destination, because the place of removal is not confined to the factory gate. For export clearances, Custom House Agent service used up to the port of export is also credit-eligible, as services used up to that point relate to the place of removal. The denial of credit on both services was therefore unsustainable on the stated reasoning.

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Issues: (i) Whether Cenvat credit was admissible on Goods Transport Agency service for clearances made on FOR basis where freight formed part of the assessable value. (ii) Whether Cenvat credit was admissible on Custom House Agent service used for export of goods up to the port of export.

Issue (i): Whether Cenvat credit was admissible on Goods Transport Agency service for clearances made on FOR basis where freight formed part of the assessable value.

Analysis: The relevant facts showed that the goods were supplied on FOR basis, freight was included in the assessable value, and excise duty was paid on that value. In such a case, the point of sale and the place of removal are not confined to the factory gate merely because the goods were dispatched from there. Where delivery is contracted on FOR terms and the seller bears transportation risk till delivery, credit on outward transportation is available.

Conclusion: Cenvat credit on Goods Transport Agency service was admissible and the finding against the assessee was unsustainable.

Issue (ii): Whether Cenvat credit was admissible on Custom House Agent service used for export of goods up to the port of export.

Analysis: For export clearances, the place of removal extends to the port of export, and services used up to that point fall within the ambit of credit-eligible input services. Custom House Agent service used for export facilitation was therefore treated as a service used up to the place of removal.

Conclusion: Cenvat credit on Custom House Agent service was admissible and the denial of credit was incorrect.

Final Conclusion: The denial of Cenvat credit on both services was set aside and the assessee succeeded on the merits of the dispute.

Ratio Decidendi: Where goods are cleared on FOR basis with freight included in value and delivery risk remains with the seller till destination, outward transport credit is admissible; similarly, services used for export up to the port of export are credit-eligible as they relate to the place of removal.

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