Place of removal determines input service entitlement; GTA service credit allowed when sale is FOR destination and seller retains risk.

The note addresses entitlement to Cenvat credit of service tax on GTA services for outward transportation where sales are on a FOR destination basis. It applies the definition of input service under Rule 2(l) and the concept of place of removal (Rule 2(qa)), holding that where contractual terms and documentary evidence show freight borne by the seller, price inclusive of freight, and ownership and risk remain with the seller until delivery at the buyer's premises, the buyer's premises is the place of removal and the GTA service up to that place qualifies as an input service, permitting credit.

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Issues: (i) Whether Cenvat credit of service tax paid on Goods Transport Agency (GTA) services used for outward transportation of finished goods up to the customer's premises is admissible where the sale is on FOR destination basis and ownership and risk remain with the seller until delivery?

Analysis: The issue requires application of the definition of "input service" under Rule 2(l) of the Cenvat Credit Rules, 2004 and the concept of "place of removal" as clarified by the amendment introducing Rule 2(qa). Relevant authorities include the Hon'ble Supreme Court's decision in Ultratech Cement Ltd. concerning limits on credit for outward transportation post amendment, the Board's Circular dated 08.06.2018 directing factual determination of place of removal, and Tribunal decisions (including the Larger Bench in Ramco Cements, subsequent Tribunal rulings such as U.B. Stainless and Varroc Lighting) which apply the tests in Emco and Roofit Industries and examine contractual terms to determine whether the buyer's premises constitute the place of removal. Key factual and legal factors are whether freight is included in the sale price, whether delivery terms in purchase orders/invoices are FOR destination, and whether ownership and risk in transit remain with the seller until delivery. On these facts, where contractual terms and documentary evidence show freight borne by the seller, price inclusive of freight, and retention of ownership and risk until delivery at buyer's premises, the place of removal is the buyer's premises and the GTA service up to that place falls within "input service" under Rule 2(l).

Conclusion: In favour of the assessee. Cenvat credit of service tax paid on GTA services for outward transportation up to the customer's premises is admissible where sale is on FOR destination basis and ownership and risk remain with the seller until delivery.

Ratio Decidendi: Where contractual terms and documentary evidence establish that ownership and risk in the goods remain with the seller until delivery at the buyer's premises (FOR destination sale) and freight is part of the assessable value, the buyer's premises constitute the place of removal and Cenvat credit for GTA services up to that place qualifies as input service under Rule 2(l) of the Cenvat Credit Rules, 2004.

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