Place of removal on FOR sales: buyer's premises may qualify, making outward GTA transport eligible for CENVAT credit.

On FOR sales where the manufacturer bears transportation risk and the buyer may inspect and reject goods at its premises, the sale is completed only on acceptance there. In that situation, the buyer's premises constitute the place of removal under Rule 2(l) of the CENVAT Credit Rules, 2004 read with Section 4 of the Central Excise Act, 1944, and outward GTA transport up to that point qualifies as input service for CENVAT credit. The document also notes that contractual intention and transfer of property under Section 19 of the Sale of Goods Act, 1930 govern this determination, and that reliance on Ultra Tech Cement was inapplicable on the stated facts.

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Issues: Whether, on sales made on FOR basis with inspection and acceptance at the buyer's premises, the buyer's premises constituted the place of removal so as to make outward GTA transportation an eligible input service for CENVAT credit.

Analysis: Rule 2(l) of the CENVAT Credit Rules, 2004 allows credit for services used by a manufacturer up to the place of removal. Section 4 of the Central Excise Act, 1944 makes the place of removal relevant to determine the limit of admissible input service credit, while Section 19 of the Sale of Goods Act links transfer of property to the intention of the parties and the contractual terms. On the facts, the goods were supplied on FOR terms, the manufacturer bore transportation risk, and the buyer retained the right to inspect and reject the goods at its premises. The sale therefore stood completed only at the buyer's premises, and the buyer's premises, not the factory gate, constituted the place of removal. The contrary reliance on Ultra Tech Cement was held inapplicable on the facts.

Conclusion: The buyer's premises were the place of removal, and the GTA service used for outward transportation up to that place was eligible for CENVAT credit, in favour of the assessee.

Ratio Decidendi: Where goods are cleared on FOR basis and the contractual terms show that sale is completed only after inspection and acceptance at the buyer's premises, the buyer's premises become the place of removal and outward transportation up to that point qualifies as input service.

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