2026 (2) TMI 229 - AT - Central Excise

Cenvat credit on GTA outward transportation for FOR destination sales; tribunal allows credit where freight formed part of sale value

Admissibility of Cenvat credit on service tax paid for GTA outward transportation where sales are on FOR destination basis: because invoices show freight ... Place of removal - input service - Cenvat credit on GTA service for outward transportation - FOR destination basis - transfer of ownership and risk during transit - admissibility of Cenvat credit where freight is included in assessable value - Whether the appellant is entitled to avail Cenvat credit of service tax paid on GTA service used for outward transportation of finished goods from the factory gate up to the customer’s premises when the sale is on FOR destination basis. - HELD THAT:- It is not disputed by Revenue that the sales were on FOR destination basis. As per the invoices produced it is clear that the freight element was included in the sale value and the excise duty was discharged on the value inclusive of freight. The freight charges borne by the appellant has also not been disputed. Recently the same issue was examined by this Tribunal in the matter of U.B. Stainless Ltd. vs. Commr. CGST & CE; [2025 (1) TMI 1319 - CESTAT MUMBAI] wherein after analyzing the law laid down by the Hon’ble Supreme Court in Ultratech Cement Ltd. [2018 (2) TMI 117 - SUPREME COURT] and the circulars issued by CBEC from time to time upto 2018, it was held where the sale is on FOR destination basis and ownership and risk remain with the seller till delivery, the buyer’s premises constitutes the ‘place of removal’ and not the factory gate. Consequently, the credit of service tax paid on GTA service for outward transportation upto such place of removal was held to be admissible. It is also pertinent to note that none of the aforesaid decisions (supra) have been stayed or set aside by any higher judicial forum. Thus, the customer’s premises constitutes the ‘place of removal’. Accordingly, the GTA service availed for outward transportation of finished goods up to the customer’s premises qualifies as ‘input service’ under Rule 2(l) ibid. The appellant has therefore rightly availed Cenvat credit of service tax paid on GTA services. Accordingly the impugned orders are set aside by allowing the appeals with consequential relief if any, in accordance with law. Issues: Whether Cenvat credit of service tax paid on GTA services for outward transportation of finished goods up to the customer's premises is admissible where sales are on FOR destination basis.Analysis: Where the sale is on FOR destination basis and contractual terms, invoices and related documents show freight borne by the seller and assessable value inclusive of freight, ownership and risk in the goods remain with the seller until delivery at buyer's premises. Rule 2(l) of the Cenvat Credit Rules, 2004 defines 'input service' and requires assessment of the 'place of removal' to determine admissibility of credit up to that place. Relevant authority and administrative guidance, including tribunal and High Court decisions applying the Supreme Court's guidance in Ultratech Cement Ltd. and subsequent CBEC circulars, direct that in FOR destination contracts the buyer's premises can constitute the place of removal. On these facts, GTA services used to transport goods up to the buyer's premises fall within 'input service' under Rule 2(l) and qualify for Cenvat credit.Conclusion: Cenvat credit of service tax paid on GTA services for outward transportation up to the customer's premises is admissible where sales are on FOR destination basis and freight is borne by the seller; the appeals are allowed and the impugned orders setting aside such credit are set aside.