Service Tax Paid our Outwards Freight

[Zala Jaydeep]

As Paid Service Tax on Outward Freight then CENVAT Credit allowed or not.

[CA Rachit Agarwal]

Cenvat Credit is allowed only for input service and not output service. Carriange Outward is an output service.

Hence in our opinion the credit is not allowed.

Further since the place of removal is your factor/ godown/ depot, hence the freight paid for the movement of goods from the place of removal upto the destination is an output service.

[Snehal Kulkarni]

As per CBE&C Circular No 97/8/2007-ST dated 23-08-2007, Cenvat Credit on freight will be admissible if the supply is on FOR basis where the sale takes place at the premises of the buyer and possession of goods does not pass on from manufacturer to buyer till goods reach the destination.

 

You may rely on Tribunal decision in ABB Ltd vs Commissioner ( 2009(15)STR 23 (Tri-LB)) and High Court ruling in Coca Cola India Pvt Ltd vs. Commissioner [ 2009 (15) STR 657(Bom)]

[Brijesh Verma]

I agree with Mr. Lokre and strictly differ with Mr. Agarwal. 

Outward Transportation would never mean an OUTPUT Service for any manufacturer as he never provides the transport service. It basically depends on the type of contract as correctly mentioned by Mr. Lokre. If FOR Destination, then my opinion is clearly affirmative in this regard that CENVAT would be readily available in the present case. 

AI Summary

Cenvat credit on freight - admissible where sale is on FOR/destination basis; otherwise treated as output service.
Cenvat Credit on freight is disputed: one position holds outward carriage is an output service and not creditable when place of removal is the manufacturer's premises. The contrary position, supported by an administrative circular and tribunal/high court rulings, allows credit where the sale is on a FOR/destination basis so that freight is an input service and creditable.