FOR destination sales make outward freight eligible for Cenvat credit where ownership and risk pass at delivery.

Outward freight used to deliver goods sold on FOR basis was treated as an eligible input service for Cenvat credit because ownership and transit risk remained with the manufacturer until delivery at the customer's premises. On that contractual footing, the place of removal was the customer's doorstep rather than the factory gate, applying the Sale of Goods Act and the terms of sale. The Tribunal also relied on the departmental circular recognising that FOR destination sales stand on a different footing from factory-gate sales and distinguished the authority cited by the department. Denial of Cenvat credit was therefore unsustainable.

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Issues: Whether outward freight service used for delivery of goods sold on FOR basis up to the customer's premises qualifies as an eligible input service for Cenvat credit, and whether the place of removal in such a transaction is the customer's doorstep.

Analysis: The goods were sold on FOR basis and the documents relied upon showed that ownership and risk in transit continued with the manufacturer until delivery at the customer's premises. On those facts, the point of sale was not the factory gate but the customer's doorstep. Applying the principle that the time and place of transfer of property in goods must be determined under the contract and the Sale of Goods Act, the relevant place of removal was the customer's premises. The Tribunal also followed the departmental circular recognising that FOR destination sales stand on a different footing from sales where ownership passes at the factory gate, and distinguished the decision relied upon by the department.

Conclusion: Outward freight incurred for delivery under FOR sales was held to be eligible input service, and the denial of Cenvat credit was held unsustainable.

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