The Chennai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that CENVAT credit on Goods Transport Agency (GTA) services, insurance services for transportation of goods, and outward courier services cannot be denied where the sale of goods is on a FOR destination basis and the buyer’s premises constitutes the “place of removal.” 

The bench of M. Ajit Kumar (Technical Member) has observed that the appellant had consistently maintained that the goods were sold on FOR destination basis; freight charges formed part of the assessable value; and transfer of property occurred only at the buyer’s premises. Importantly, the department had not disproved these assertions.

The dispute arose after the department alleged wrongful availment of input service credit on services such as Security Service, Rent-a-Cab Service, GTA outward transportation, outward courier service for dispatch of goods, and insurance service for transportation of goods. Seven show cause notices were issued proposing recovery of total CENVAT credit amounting to Rs. 8,78,146. 

After adjudication, the original authority confirmed demand of Rs. 8,27,006 relating to outward transportation, outward courier and insurance services, along with penalty under Rule 15(1) of the CENVAT Credit Rules, 2004. Credit on security service and rent-a-cab service was however allowed. 

Before the Tribunal, the assessee argued that the goods were transported on FOR destination basis and that the customer’s premises constituted the place of removal. It was contended that freight charges formed an integral part of the invoice value and the risk in transit remained with the appellant till delivery at the buyer’s premises. 

The appellant also relied on earlier decisions in its own case as well as the Tribunal’s ruling in Ramco Cements Ltd. dated 16.10.2024. 

The department relied heavily on the Supreme Court judgment in Commissioner of Central Excise and S.T. Vs Ultra Tech Cement Ltd. [2018 (9) GSTL 337 (SC)], contending that CENVAT credit on outward transportation from the place of removal to buyer’s premises was not admissible. 

However, the Tribunal observed that the issue had subsequently been examined by a Larger Bench in Ramco Cements Ltd. Vs Commissioner of Central Excise, Pondicherry, wherein it was clarified that in cases involving FOR destination contracts, authorities are required to ascertain the “place of removal” by applying the principles laid down in the Supreme Court decisions in Emco, Roofit Industries, as well as the Karnataka High Court ruling in Bharat Fritz Werner Ltd., along with CBIC Circular dated 08.06.2018. 

The Tribunal noted that where the buyer’s premises is determined to be the place of removal, the assessee would be eligible for CENVAT credit on outward transportation services up to such place. 

The Bench further noted that in the assessee’s earlier case under its previous name, the Tribunal had already held that where goods were delivered at the customer’s place, CENVAT credit on GTA services could not be denied. 

The Tribunal held that there was no evidence to show that the earlier decisions in favour of the assessee had been stayed, varied or overturned by any higher forum. Accordingly, it ruled that service tax paid on freight and insurance services used for transportation of goods from factory gate to buyer’s premises was admissible for CENVAT credit. 

On outward courier services, the Tribunal held that such services were used directly or indirectly in relation to manufacture and dispatch of goods and therefore qualified as “input services” under the CENVAT Credit Rules. 

Setting aside the impugned order, the Tribunal allowed the appeal with consequential relief to the assessee. 

Case Details

Case Title: M/s. Kingfa Science & Technology India Ltd.  Versus Commissioner of GST & Central Excise 

Citation: JURISHOUR-1127-CES-2026(CHE) 

Case No.: Excise Appeal No. 42294 of 2017

Date: 06.05.2026

Counsel For  Appellant: V. Arunachalesh, Advocate

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