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Issues: (i) Whether service tax paid on outward freight for transportation of goods up to the buyers' premises was admissible as CENVAT credit as input service. (ii) Whether the demand was barred by limitation.
Issue (i): Whether service tax paid on outward freight for transportation of goods up to the buyers' premises was admissible as CENVAT credit as input service.
Analysis: The credit was claimed on freight used to deliver goods on door-delivery basis, with the freight cost included in the sale price and not recovered separately. The relevant conditions recognised in the governing precedent were satisfied, namely that delivery was to the customer's premises, the seller retained ownership and risk during transit, and freight formed part of the price. The fact that transit insurance was arranged by the buyers did not alter the position where the purchase terms showed that property passed only on delivery and loss or damage during transit remained the appellant's responsibility.
Conclusion: The credit on outward freight was admissible and the issue was decided in favour of the assessee.
Issue (ii): Whether the demand was barred by limitation.
Analysis: The demand was raised beyond the normal period, while no suppression or misstatement was attributable to the assessee. The record showed that the issue had already been subject to differing views, indicating that the position was debatable. In these circumstances, the assessee's availment of credit could not be treated as wilful or clandestine so as to justify the extended period.
Conclusion: The demand was barred by limitation and this issue was also decided in favour of the assessee.
Final Conclusion: The impugned order was set aside and the appeal succeeded with consequential relief.
Ratio Decidendi: Outward freight qualifies as admissible input service credit where the sale is on door-delivery basis, freight forms part of the price, and ownership and risk remain with the seller until delivery at the buyer's premises; in the absence of suppression or misstatement, the extended limitation period cannot be invoked.
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