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TMI Blog2015 (8) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... aying the duty on the price at which the said transformers are sold to the Electricity Boards. However, the Revenue wants that while arriving at the price of the said goods, transportation cost and transit insurance cost be also included to arrive at the correct transaction value in terms of Section 4(3)(d) of the Act. 2) Since the assessee was not including the transportation and transit insurance cost, a show cause notice was issued on 24.07.2001 proposing to recover a sum of Rs. 1,17,36,766/-on account of short excise duty paid for the period 28.09.1996 to 31.12.2000. In this show cause notice, it was, inter alia, alleged that the transit insurance policies reveal that the assessee had been keeping the custody of the goods with it during the transit. Further, the agreement with various customers nowhere suggested that the transporter was to take the delivery of goods on behalf of the customers. The transit insurance from the assessee's works upto the stores sites where the goods were to be delivered at the buyer's premises under the contract, was on assessee's account. On that basis, the show cause notice contended that the transaction value would include the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce to the value of those goods. Section 4 of the Act deals with the valuation of such goods for the purpose of levying excise duty as the excise duty is to be levied on the 'transaction value' that has to be arrived at in the manner prescribed in the said provision as well as the rules framed thereunder. 7) As pointed out above, show-cause notice in the instant case covers the period from 28.09.1996 to 31.12.2000. Section 4 was different prior to 01.07.2000. Section 4 was substituted by new Section 4 with effect from 01.07.2000 by Section 94 of the Finance Act, 2000, whereby the concept of 'transaction value' was introduced. From the same day, the Central Excise (Valuation) Rules, 1975 were also substituted by the Central Excise (Determination of Prices of Excisable Goods) Rules, 2000. Therefore, the period from 28.09.1996 to 30.06.2000 shall be covered by the old provisions and the period of show-cause notice from 01.07.2000 to 31.12.2000 shall be covered by the amended provisions. Section 4, as it stood prior to amendment, reads as under: "Section 4. Valuation of excisable goods for purposes of charging of duty of excise. - (1) Where under this Act, the duty of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout payment of duty; (iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory; from where such goods are removed; xx xx xx (d) "transaction value" means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods." 9) It follows from the above that whereas under old Section 4, the basis of value was the normal price at which the goods were ordinarily sold in the course of wholesale trade, under the new provision, the basis of the valuation is the transaction value for each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s aspect which was gone into by this Court in the case of Escorts JCB Ltd. (supra). That was a case where question of including insurance charges came up for consideration. It was found as a fact that the goods were cleared at the factory gate. On these facts, this Court held that insurance charges, or for that matter, transport charges would not be included even if the assessee had arranged for the transit insurance. The Court found that the terms and conditions of sale clearly stipulated that it was ex-works at the factory gate of the assessee. The payment was to be made before discharge of the goods from the factory premises. In the opinion of the Court, the machinery which was handed over to the career/transporter on receiving the payment was as good as delivery to the buyer in terms of Section 39 of the Sale of Goods Act and, therefore, possession of the sold goods was handed over to the buyer at the factory gate. In this manner, the transaction was full and complete and nothing remained to be done after the goods left the factory premises. On these facts, provisions of Section 4 of the Act, which deals with valuation of excisable goods for the purposes of charging of duty of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the goods at the time the loss occurs, provided that it appears from the terms of the policy that it was intended to cover their interest. Also a buyer will have an insurable interest in goods if they are at his risk, whether or not the property has passed to him". From the above passage it is clear that ownership in the property may not have any relevance in so far insurance of goods sold during transit is concerned. It would therefore not be lawful to draw an inference of retention of ownership in the property sold by the seller merely by reason of the fact that the seller had insured such goods during transit to buyer. It is not necessary that insurance of the goods and the ownership of the property insured must always go together. It may be depending upon various facts and circumstances of a particular transaction and terms and conditions of sale. A reference has also been made to Colinvauz's Law of Insurance, Sixth Edition by Robert Merkin to indicate that there may be insurance to cover the interest of others that is to say not necessarily the person insuring the interest must be the owner of the property. In one of the cases referred to and reported in 1983 E.L.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (2015) 5 SCALE 470, the position in law was summarized in the following manner: "12) The principle of law, thus, is crystal clear. It is to be seen as to whether as to at what point of time sale is effected namely whether it is on factory gate or at a later point of time i.e. when the delivery of the goods is effected to the buyer at his premises. This aspect is to be seen in the light of provisions of the Sale of Goods Act by applying the same to the facts of each case to determine as to when the ownership in the goods is transferred from the seller to the buyer. The charges which are to be added have put up to the stage of the transfer of that ownership inasmuch as once the ownership in goods stands transferred to the buyer, any expenditure incurred thereafter has to be on buyer's account and cannot be a component which would be included while ascertaining the valuation of the goods manufactured by the buyer. That is the plain meaning which has to be assigned to Section 4 read with Valuation Rules." 15) Having stated the legal position, we now revert to the facts of the present case. 16) The Commissioner, Central Excise while deciding that the transportation charges as w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CB Ltd. Vs. Collector of Central Excise [2002 (146) ELT 31 (SC)]. Being bound by the same, this order impugned cannot be restrained and is to be set aside and appeal allowed." 18) The perfunctory manner in which the appeal of the assessee is allowed, cannot be countenanced. If the Tribunal was confirming the decision of the Authority below, may be detailed discussion was not required as the reasons given in detail could be found in the order appealed against, though even in such a case brief reasons are to be given by the Tribunal, in particular, to meet the arguments which are advanced by the appellant while challenging such an order. However, in the instant case, we find that there is a detailed discussion in the order of the Commissioner on the facts of the case. Those facts are not adverted to or dealt with. The decision of the Commissioner is overruled with single observation that the case is covered by the judgment in Escorts JCB Ltd., without discussing as to how it was so covered. This is notwithstanding the fact that the decision as to which is the 'place of removal' depends upon the facts of each case. 19) The consequence of the aforesaid discussion would be to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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