Sale of Excisable Goods on FOR Basis: CESTAT allows Cenvat Credit to Ambuja Cements In respect of Service Tax Paid on Outward Transportation under RCM

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has allowed Ambuja Cements to claim CENVAT credit for service tax paid on outward transportation under the reverse charge mechanism (RCM). The case involved the sale of excisable goods on a Free on Road (FOR) basis, where Ambuja Cements had paid service tax on the transportation of goods to customers. The tribunal ruled that the company is entitled to claim CENVAT credit for the service tax paid, as the transportation service is an integral part of the sale of goods. The decision clarifies that the cost of transportation, when included in the sale price, qualifies for CENVAT credit under the CENVAT Credit Rules, 2004. This ruling provides significant relief to businesses engaged in the sale of excisable goods, ensuring that they can claim credit for service tax paid on transportation services. The tribunal’s decision is expected to have a positive impact on the industry, promoting clarity and consistency in the application of CENVAT credit rules.