Cenvat credit on outward GTA freight requires proven F.O.R. destination sales and supporting contractual evidence.

Cenvat credit of service tax paid on GTA services for outward transportation of finished goods is available only where sales are on an F.O.R. destination basis and the supporting conditions are met. The relevant conditions are that ownership remains with the manufacturer during transit, the risk of loss or damage continues to rest with the manufacturer, and freight to the customer's premises forms part of the sale price. As the assessee did not produce cogent evidence, such as a supply contract or similar material, to establish these requirements, the credit was held inadmissible and the disallowance was confirmed.

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Issues: Whether Cenvat credit of service tax paid on GTA service used for outward transportation of finished goods from the factory to the customer's premises was admissible when the assessee claimed that sales were on F.O.R. destination basis.

Analysis: Under Board's Circular No. 97/6/2007-S.T. dated 23-8-2007, such credit is available only where the sale is on F.O.R. destination basis and the relevant conditions are satisfied, namely that ownership remains with the manufacturer during transit, the risk of loss or damage remains with the manufacturer, and freight up to the customer's premises forms an integral part of the price. The claim of F.O.R. basis was not supported by cogent evidence such as a supply contract or other material showing that these conditions were met.

Conclusion: The credit was not admissible and the disallowance was /confirmed against the assessee.

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