Cenvat credit on outward transportation where freight is included in assessable value requires fresh adjudication in light of changed administrative guidance.

Cenvat credit on service tax paid for outward transportation is addressed where sales are on FOR basis and freight is included in the assessable value; subsequent administrative guidance and later decisions treating freight included in assessable value as eligible for credit alter the earlier position. The document concludes that the matter requires re-examination of factual records against the Board circular and later case law, and directs fresh adjudication by the Adjudicating Authority to apply the changed legal position, with the earlier orders set aside and remanded for reconsideration in favour of the assessee.

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Issues: Whether Cenvat credit is admissible on service tax paid for outward transportation of excisable goods where sales are on FOR basis and the transportation charges are included in the assessable value on which excise duty was paid.

Analysis: The question turns on the character of the sale and treatment of transportation charges in assessable value. Relevant authority and administrative guidance subsequent to the adjudication (including decisions holding that where freight is included in assessable value for FOR sales and duty is paid thereon, credit is allowable, and a Board circular addressing the issue) have altered the legal position after the original orders. Given the change in law and the need to verify factual records against the applicability of the Board circular and cited decisions, the matter requires fresh consideration by the Adjudicating Authority with opportunity to examine records and apply the later developments.

Conclusion: The impugned orders are set aside and the matter is remanded to the Adjudicating Authority for fresh adjudication; this outcome is favourable to the assessee.

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