Input service credit for depot-bound transport upheld where goods were sold from the principal's depots after job work.

Transportation of goods from a job worker's premises to the principal's depots qualified as an input service for CENVAT credit because the goods were ultimately sold from the depots and the transport formed part of the credit chain up to depot sale. The distinction between duty valuation and credit eligibility did not affect entitlement, and depot ownership was not decisive. On that basis, service tax paid on the transport service was held admissible as input service and the credit claim was upheld.

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Issues: Whether service tax paid on goods transport services used for transporting goods from the job worker's premises to the principal's depots qualified as input service for CENVAT credit.

Analysis: The goods were manufactured by the respondent as a job worker, but the duty was paid on clearance and the goods were ultimately sold from the depots of the principal. The Board's clarification stated that valuation for duty and availment of credit are distinct matters and that credit of service tax paid up to the depot is admissible in depot-sale situations, irrespective of whether duty is charged at specific or ad valorem rates. Applying that rationale, the ownership of the depot was not decisive, and the transport service used up to the depots fell within the credit chain.

Conclusion: The service tax paid on transportation up to the depots was an eligible input service and CENVAT credit was correctly allowed.

Final Conclusion: The departmental challenge failed and the order allowing credit in favour of the respondent was upheld.

Ratio Decidendi: Where goods are ultimately sold from the principal's depots, transportation services used up to the depot are eligible as input services for CENVAT credit, and the fact that the goods were manufactured on job work basis does not, by itself, alter that entitlement.

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