Cenvat credit on outward freight depends on the place of removal and sale terms before eligibility is decided.

Cenvat credit on service tax paid on outward transportation of finished goods is admissible only if the transport service is used up to the place of removal. Where credit is claimed on the basis that sale occurs at the destination, the contractual terms between seller and buyer must be examined, including transfer of ownership, risk during transit, and whether freight forms part of the sale price. Eligibility under the input service definition therefore depends on the factual sale matrix in each case. The matter was not finally decided on merits and required factual reconsideration by the appellate authority.

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Issues: Whether Cenvat credit on service tax paid on outward transportation of finished goods to customers' premises was admissible without first ascertaining the factual terms of sale and the place of removal.

Analysis: The admissibility of credit on transportation services depends on whether the transportation is up to the place of removal and, where the claim is that sale takes place at the destination point, on the terms of the contract between seller and buyer, including ownership, risk during transit, and whether freight forms part of the sale price. The factual matrix must therefore be examined in each case before deciding eligibility under the definition of input service.

Conclusion: The issue was not finally adjudicated on merits and the matter required factual reconsideration by the appellate authority.

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