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M/s. Meghalaya Sova Ispat Alloys Ltd. Versus Commissioner of Central Excise, Shillong

2016 (10) TMI 38 - CESTAT KOLKATA

Area based exemption - refund of duty paid - inclusion of freight from the factory gate to the place of delivery for payment of duty - contracts for goods are FOR destination - appellant is selling the goods at the factory gate but showing the sale as FOR destination and pay more duty, by including freight from the factory gate to the place of delivery, to get more refund under Notification No.32/99-CE - Held that:- the freight is included in the agreed upon prices but actual freight incurred is .....

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ant to establish the point of sale with documentary evidences to stake claim for exemption and refund under Notification No.32/99-CE. Inspite of the specific directions from the bench appellant has not been able to bring on record that ownership of the goods, till their delivery at the doorsteps of the buyers, lies with them and that insurance of goods in transit is borne by the appellant. Hence, the appellant is not able to establish that the sales/clearances effected by them are on FOR destina .....

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wahati as First Appellate Authority. First Appellate Authority under this OIA dt. 11.09.2007 upheld the Order-in-Original dated 30.03.2007, passed by the Adjudicating Authority, by passing following one paragraph order: I have gone through the case records and considered the averments made in the appeal. The only short question involved in the appeal is whether it was open to the appellants to pay duty on the prices, which were inclusive of freight and the expenses incurred on the freight were k .....

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.32/1999. Regarding time-bar the lower authority has held that the appellants had failed to adduce any evidence of duty. No such evidence has been adduced in the appeal and accordingly the plea has to be rejected. In view of the above, the impugned order is upheld and the appeal is rejected. 2. Shri K.K.Banerjee (Advocate) appearing on behalf of the appellant argued that appellant is manufacturing various categories of Ferro-Alloys falling under Central Excise Tariff Heading (CETH) 7202.00 and a .....

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ated 27.04.2005 was confirmed to the extent of ₹ 15,07,995/- with interest and equivalent amount of penalty was also imposed under OIO dated 30.03.2007. 2.1. Learned Advocate argued that case of the Revenue is based on the premises that appellant is selling the goods at the factory gate but showing the sale as FOR destination and pay more duty, by including freight from the factory gate to the place of delivery, to get more refund under Notification No.32/99-CE. That as per the purchase or .....

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&K.[2014(304) E.L.T. 446(Tri.-Del.). (ii) Hard Castle Petrofer Pvt. Ltd.-vs.-Commr.of C.Ex., Jammu(J&K).[2014(304) E.L.T.576(Tri.-Del.). (iii) Krishi Rasayan Exports Pvt. Ltd.-vs.-Commr.of C.Ex., J&K.[2015(326)E.L.T.375(Tri.-Del.). (iv) Uflex Ltd.-vs.-Commr. Of C.Ex. & Cus., Jammu. (v) Commr. Of Customs and Central Excise, Nagpur-vs.- M/s. Ispat Industries Ltd.[2015-TIOL-238-SC-CX] 2.2. Learned Advocate also relied upon certain purchase orders to argue the price agreed upon is FO .....

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ng documentary evidence. 3. Shri S.Mukhopadhyay, Suptd.(AR) appearing on behalf of the Revenue argued that sale of the goods in the present proceedings is taking place at the factory gate of the appellant as sales tax is paid at the factory gate. Learned AR also brought to the notice of the bench Purchase Order No.PO/0011 and PO/0020 both dated 04.08.2003, received by the appellant from M/s. Oswal Minerals, which convey that insurance of goods is on account of the buyer. That all the payments ag .....

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case law of Associated Strips Ltd.-vs.-Commr. Of C.Ex., New Delhi[2002(143)E.L.T.131(Tri.-Del.) by reading out paragraph-17 of the relied upon case law. He also relied upon the following case law where non-inclusion of freight was decided when assessee M/s. Guwahati Carbon Ltd. was also availing area based exemption Notification No.32/99-CE, CCE-vs.-Guwahati Carbon Ltd.[2009(243) E.L.T. 307(Tri.-Kolkata)] 3.1. Learned AR thus strongly defended the OIA dated 11.09.2007 passed by the First Appell .....

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re reproduced below: SECTION 4. Valuation of excisable goods for purposes of charging of duty of excise.-(1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to their value, then, on each removal of the goods, such value shall- (a) in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale be the trans .....

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ds are removed. 4.1.1. Section 4(3) (C)(iii) of the Central Excise Act, 1944 was inserted with effect from 14.05.2003 by Section 136 of the Finance Act, 2003. The period involved in the present proceedings is 2003-2004 and 2004-2005 as per facts stated in the OIO dated 30.03.2007. 5. The moot point for determination in the present proceedings is as to what is the point of sale. Whether point of sale is the factory gate of the appellant or the doorsteps of the customers. Appellant has provided co .....

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Delhi convey the price is subject to freight variations and buyer can seek deductions on account of actual freight incurred. This clause in the purchase order indicate that sale is at the factory gate as appellant can stake claim on the excess freight if recovered by the buyer from the payments already made. The entire payment is made by the buyers in advance. Purchase order dated 07.05.2004 from M/s. HBR sales Pvt. Ltd. convey that agreed rates are inclusive of sales tax. It is not clear whethe .....

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. (iii) CST will have to be paid at the point of sale by the appellant which in case of FOR sales will be the doorsteps of the buyers and not the factory gate of the appellant. 6. In the present proceedings before us prima-facie the freight is included in the agreed upon prices but actual freight incurred is also known to the appellant and the buyer. That is why some of the buyers have a specific clause in purchase order that adjustment on account of freight charged and actually incurred has to .....

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not been able to bring on record that ownership of the goods, till their delivery at the doorsteps of the buyers, lies with them and that insurance of goods in transit is borne by the appellant. 7. In the case of Associated Strips Ltd.-vs.-Commr. C.Ex., New Delhi (Supra), CESTAT bench sitting at Delhi held as follows in paras 13,17, 19 and 26 : 13.The primary question that has to be considered is whether the facts of Escorts JCB and Prabhat Zarda are different from the appellants case as contend .....

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er, that the sale of the goods took place at the factory gate was considered in the above decision, there is no reference to the terms of the contract between the parties. It is not seen contended that as per the terms of the contract the seller was duty bound to insure the goods in transit thus retaining insurable interest in the goods even though title to the goods had already been passed to the buyer at the factory gate. In the absence of any of these contentions it is seen that the Tribunal .....

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re delivered to the buyer, what would be the place of removal for the purpose of Clause (iii) of Section 4(4)(b) of the Central Excise Act. In Paragraph 8 of the order it is noted that it was an admitted position that there was no factory gate sale in the concerned case. The goods were transported on account of M/s. Prabhat Zarda Factory Ltd. the manufacturer to the destination of the buyer through the transport agency. The goods were stored on behalf of the seller in the godown of the transport .....

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legal title in the goods was passed on to him. It was therefore held that the ownership of the goods remained with the seller, that the goods were actually sold at such place from where delivery was effected to the buyers which is to be treated as the place of removal. 17.Now we are to consider the facts of the present case as to find out when did the transfer of possession of the goods to the buyer occur or when did the property in the goods pass from the seller to the buyer. Is it at the facto .....

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to the terms of the contract, the conduct of the parties and the circumstances of the case. Unless a different intention appears; the rules contained in Sections 20 to 24 are provisions for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer. Section 23 provides that where there is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally app .....

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oses of transmission to the buyer, and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract. 19.We may also refer to the provisions contained under Section 39 of the Sale of Goods Act which refers to the legal effect of delivery of the goods to a carrier by the seller. It is provided that where, in pursuance of a contract of sale, the seller is authorized or required to send the goods to the buyer, delivery of the goods to a carrier, .....

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lier, the only contention raised is that since the insurance of the goods in transit has been taken by the seller, the seller is deemed to hold the title to the goods in transit. At this juncture we may point out that in the case of Mauria Udyog Ltd. there is no insurance taken by the seller. 26.In the light of the terms and conditions of the contract between the parties in the present appeals we come to the conclusion that sale of the goods has taken place at the factory gate and therefore, eve .....

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T.377(Tri.-Kolkata)] relied upon by the Revenue is not applicable as the period involved in this case was 28.09.1996 to 30.09.2000 i.e. prior to Section -4(3)(c)(iii) insertion effective from 14.05.2002. However, case law of this bench Commr. C.Ex., Shillong vs.-Guwahati Carbon Ltd. (Supra) relied upon by the Revenue was after amendment where following observations and order was passed by the Kolkata Bench in paragraphs 7 and 8: 7. In view of the above, the argument of the learned Advocate for t .....

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he view that the reliance placed by the learned Advocate for the Respondents on - (i) Yamaha Motors India Pvt. Ltd. v. CCE, Delhi-IV - 2008 (231) E.L.T. 677 (Tri.-Del.); (ii) CCE, Jaipur v. Rajasthan Spg. & Wvg. Mills Ltd. - 2007 (218) E.L.T. 641 (S.C.); (iii) Indian Oil Corporation Limited v. CCE, Kolkata-II - 2007 (217) E.L.T. 134 (Tri.-Kolkata). is entirely misplaced and not relevant to the case at hand. In our view, the ratio of the Hon ble Supreme Court s decision of the Three Judges Be .....

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