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GSC Toughened Glass Pvt. Ltd., Shri Sharanjit Singh Versus CCE, Jammu & Kashmir

2015 (4) TMI 897 - CESTAT NEW DELHI

Demand of differential duty - Valuation of goods - inclusion of freight and transit insurance in the assessable value - Sale on FOR destination basis - Held that:- The appellant have certain quantum of sale on FOR destination basis in respect of which they have paid duty on FOR destination price which included the element of freight and transit insurance. - In the non- FOR sales, the appellant, on the request of the customers arranged the transportation of the goods and while in some cases, they .....

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m their customers as transit insurance.

However, on perusal of some of the invoices issued by the appellant which have been placed on record, it is seen that each invoice mentions that though the appellant take every care for packing and forwarding, but they do not accept liability for any loss, breakage or shortage of the goods once, the goods have left the units and that the goods are always despatched at the buyers risk. This fact is not disputed by the department. The department a .....

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ibility for loss or damage or shortage of the goods after the goods left from the works. The department also does not dispute that in case of loss of goods during transit it is customer who gets the survey done and on the basis of survey report, the appellant receive compensation for the loss of the goods from the insurance company but the entire compensation is passed on to the buyers without retaining any part of the same.

Even though the appellant have taken transit insurance polic .....

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red to the buyer and property of possession of the goods and passed on to the buyer when the goods have been handed over to the transporter and that the assessee arranging for transit insurance would nowhere lead to inference that the assesse had retained the ownership of the goods during transit until delivery of the goods at the buyer s premises. - impugned order is not sustainable - Decided in favour of assessee. - Appeal No. E/1506-1508,1543/2006-EX - Final Order No. 51002-51005/2015 - Dated .....

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te in these appeals is from 1.10.1996 to 31.8.2001. The appellant s certain sales were on FOR destination basis and in respect of such sales, the appellant were paying duty on FOR price which included the freight and transit insurance charges. In cases, where sales were not on FOR basis, only on the request of the Customers, the transportation was being arranged by the appellant. In some cases, freight was paid in full, while in other cases, the appellants were paying freight in part and balance .....

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view that during transit, the appellant were the owners of the goods and in terms of Sale of the Goods Act, ownership of the goods is transferred to the buyers at the buyers/customer s premises only. Accordingly, show cause notice was issued for inclusion of freight and transit insurance in the assessable value and it is on this basis, that differential duty has been demanded by the show cause notice dt.2.11.2001 which is common SCN in respect of three manufacturing units of the appellant factor .....

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confirmed alongwith interest and besides this, penalty of equal amount imposed on the appellant company under section 11AC and penalty of ₹ 2.50 lakh on the director of the appellant company under Rule 209A of the Central Excise Rules, 1944. On appeals being filed by the appellant before the Commissioner (Appeals), the same were dismissed vide Order-in-Appeal dt.10/02/06. Against this order, these appeals have been filed before the Tribunal. 4. Heard both sides. 5. Shri Naveen Mullick, Adv .....

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ng the period of dispute ,invoices were issued by the appellant clearly mentioned that while the appellant have taken every care in packing and forwarding, they do not accept the responsibility for loss, breakage or shortage after the goods have left their units, and that the goods are despatched at the buyers risk, that this shows that the sales were not on FOR basis, and that though the appellant have taken general insurance policy against the loss of the goods during transit to their customer .....

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the goods, the same is passed on to the customers, that the Tribunal in the case of Associated Strips Ltd. Vs.CCE, New Delhi-2002 (143) ELT 131 (Tri.-Del.) has held that just because the goods were insured by the manufacturer during transit at the buyer s instance, it cannot be viewed that there is no transfer of title of property to the buyers at the factory gate, and in this regard, in para 23 of its judgement, the Tribunal, in view of the provisions of section 23 and section 39 of Sale Goods .....

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that ownership of the goods was retained by the assessee untill it was delivered to the buyers and that in view above submissions, the impugned order is not sustainable. 6. The learned Joint DR defended the impugned order by reiterating the findings of the Commissioner (Appeals) in the impugned order and emphasised that the appellant not only arranged the transportation and took responsibility of despatch of goods but also paid freight and the insurance premium for transit insurance which amply .....

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of insurance or who bears the risk are not the relevant consideration to ascertain the place of removal . He pleaded that according to this circular, the place of where sale has taken place or when the property in goods passes from the seller to the buyer is the relevant consideration to determine the place of removal . He pleaded that accordingly, just because as per declaration in the invoices, the appellant were not responsible for damage to the goods or loss of the goods during transit, it .....

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licy is discharged. 7. We have considered the submissions made from both sides and perused the records. 8. The appellant have certain quantum of sale on FOR destination basis in respect of which they have paid duty on FOR destination price which included the element of freight and transit insurance. The dispute in the present case is, in respect of non- FOR sales. In these sale, the appellant, on the request of the customers arranged the transportation of the goods and while in some cases, they .....

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their customers as transit insurance. The department s contention is that since the appellant have taken general insurance policy for the loss of the goods during transit in their name, they have full right to dispose of the goods even after the delivery of the same to the transporter and hence the ownership of the goods is transferred to the customers only at the premises of the customers. It is only on the basis of this allegation, that the department seeks to include freight and transit insu .....

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s not dispute that in case of loss of the goods or damage to the goods during transit, it is the customers who get survey conducted and on the basis of survey report sent by the customers to the appellant, the appellant claim compensation amount from the insurance company for the goods lost/damaged during transit and thereafter pass on the same to the customers. 9. Board in its Circular No.97/8/2007 dt.23.8.2007 in the context of admissibility of cenvat credit of the service tax paid on outward .....

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l part of the price of the goods. 9.1 Board s circular No.988/2014-CX, dated 20.10.2014 has further clarified that place of removal needs to be ascertained in terms of provisions of Central Excise Act, 1944 read with provisions of Sale of Goods Act, 1930 and payment of transport, inclusion of transport charges in value, payment of insurance or who bears the risk are not the relevant considerations to ascertain the place of removal. According to this circular, the place of where the sale has take .....

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the time and place of removal. Place of removal as defined in section 4 (3) (c) included depot, premises of consignment agent or any other place from where excisable goods are to be sold after clearance from the factory. Thus, in the case where after removal of the goods from factory, transfer of property in the goods takes place at the customers premises, it is the customer s premises which would be the place of removal and in that case freight and transit insurance upto the customers premises .....

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value of the goods However, in this case, where the goods were insured by the appellant for loss of goods or damage to the goods during transit and the appellant claimed the compensation in case of loss or damage but passed on the entire compensation amount to the buyers, the Appellant have only arranged transit insurance on behalf of his customers for arranging the transit insurance cannot be treated as owner of the goods during transit. 12. In the present case, it is not disputed that every i .....

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