CENVAT credit on freight services denied where transport costs were excluded from the assessable value for excise duty.

CENVAT credit on goods transport agency services used for delivery to the buyer's premises was not admissible where the assessee had not included freight and insurance charges in the assessable value for central excise duty. Although a freight-on-road arrangement can, in some cases, support inclusion of transportation up to the buyer's premises in the assessable value, the decisive factor here was that the assessee itself excluded those costs from valuation. On that basis, transportation services availed beyond the place of removal were not input services for credit purposes, and the Tribunal's rejection of the credit claim was upheld.

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Issues: Whether CENVAT credit on goods transport agency services used for transporting goods to the buyer's premises under freight on road contracts was admissible when the assessee had not included the freight and insurance charges in the assessable value for central excise duty.

Analysis: The arrangement on freight on road basis may, in an appropriate case, support a view that transportation up to the buyer's premises is connected with the sale and can form part of the assessable value for excise purposes. However, the decisive fact here was that the assessee itself did not include transportation costs in the assessable value for payment of central excise duty. In that situation, the transportation services availed beyond the place of removal could not be treated as input services for claiming credit, since allowing such credit would be inconsistent with the scheme of CENVAT credit.

Conclusion: The claim for CENVAT credit on the goods transport agency services was rejected and the decision of the Tribunal was upheld.

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