The Madras High Court has upheld the eligibility of CENVAT credit on outward transportation services availed prior to April 1, 2008.
The bench of Dr. Justice G. Jayachandran and Justice R.Sakthivel has observed that prior to April 1, 2008, the definition of “input service” explicitly included services used “from the place of removal.” This interpretation extended the benefit of CENVAT credit to outward transportation of goods from the place of removal up to the first point of delivery, such as a stockist or customer.
The case arose from an appeal filed by the Commissioner of Central Excise, Salem, challenging an order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai, which had ruled in favour of the assessee, The India Cements Ltd.. The dispute centered around whether service tax paid on Goods Transport Agency (GTA) services for outward transportation of goods beyond the place of removal could be claimed as “input service” under the CENVAT Credit Rules, 2004.
The Department had denied the credit on the ground that such outward transportation fell outside the ambit of input services, particularly when the cost of freight was not included in the assessable value of the goods. However, the Tribunal had allowed the credit, prompting the Revenue to approach the High Court.
At the time of admission, the High Court framed multiple substantial questions of law, including the interpretation of the term “input service” under Rule 2(l) of the CENVAT Credit Rules, 2004, and the impact of the 2008 amendment which substituted the phrase “from the place of removal” with “up to the place of removal.”
During the course of hearing, both sides acknowledged that the issue was no longer res integra in light of authoritative rulings of the Supreme Court in cases such as Commissioner of Central Excise, Belgaum v. Vasavadatta Cements Ltd. and Commissioner of Customs, Central Excise and Service Tax v. Andhra Sugars Ltd. These judgments had conclusively interpreted the scope of input services under the pre-amended CENVAT regime.
The Court clarified that this legal position had been settled by the Supreme Court, which held that GTA services used for outward transportation during the relevant period qualified as input services under the CENVAT scheme. Consequently, the Tribunal’s decision allowing credit to the assessee was found to be legally sound.
The bench dismissed the Revenue’s appeal and upheld the order passed by the CESTAT. The Court held that no interference was warranted, thereby affirming the assessee’s entitlement to CENVAT credit on outward freight for the period prior to the 2008 amendment.
Case Details
Case Title: Commissioner of Central Excise, Salem Versus M/s The India Cements Ltd
Citation: JURISHOUR-1074-HC-2026(MAD)
Case No.: C.M.A.No.1735 of 2012
Date: 15.04.2026
Counsel For Petitioner: Revathi Manivannan, Sr.St.C
Counsel For Respondent: R.Anish Kumar
