TMI Blog2016 (12) TMI 1385X X X X Extracts X X X X X X X X Extracts X X X X ..... 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' as possible place of removal. Thus it was possible to consider any place other that factory or a ware house (where goods are permitted to be stored without payment of duty) as 'place of removal'. Hon Supreme Court in the case of ISPAT INDUSTRIES LTD [2015 (10) TMI 613 - SUPREME COURT] has observed that 'the buyer's premises in law, be “a place of removal" under the said Section'. This categorical observation leaves no scope for any interpretation. The allegation that the buyers premises are the place of removal cannot, therefore, be sustained in view of these observations - appeal which relates to period prior to 1/7/2000 dismissed. Appeal disposed off - decided partly in favor of assessee. - APPEAL No.E/3026/02 & E/3359/03 - ORDER No.A/87958-87959/16/EB - Dated:- 14-6-2016 - Mr. Ramesh Nair, Member (Judicial) And Mr. Raju, Member (Technical) Shri. Prakash Shah Advocate with Shri Arun Jain, Advocate for appellant Shri. Ajay Kumar, Jt. Comm. (AR), for respondent Per: Raju 1. This appeal has been filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oved the goods without determining the proper rate of Central Excise duty thereby contravening the provisions of Rule 173F of Central Excise Rules, 1944 (now Rule 6 of Central Excise (No.2) Rules, 2001). d) they have removed the goods without debiting appropriate amount of Central Excise duty through PLA or Cenvat account and thereby contravened the provisions of Rule 173G of Central Excise Rules, 1944 (now Rule 8 of Central Excise (No.2) Rules, 2001. 1.2 The said demand was confirmed by both the lower authorities. The Tribunal vide Order No. C-II/282/WZB/04 dated 2.1.2004 set aside the confirmation of demand. Following the said order, in another case for subsequent period, the Tribunal rejected the appeal filed by the Revenue. The matter was agitated before the Hon'ble Supreme Court. The Hon'ble Supreme Court vide order in the Civil Appeal No. 3418 of 2004, reported in 2015 (322) ELT 394 (SC), remanded the matter back to Tribunal. While remanding the matter, the Hon'ble Supreme Court had made the following observations: 10. It is significant to point out that the definition of 'place of removal' virtually remains the same, except that clause (3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sporter 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 excise was taken note of and analysed, holding that the aforesaid charges could not be included for the purpose of arriving at valuation of excisable goods. The Court found fault with the orders passed by the authorities as well as CEGAT in the following manner: A perusal of the orders passed by the authorities and the CEGAT show that since transit insurance was arranged by the assessee, therefore, it was inferred and h that the ownership of the goods was retained by the assessee until it was delivered to the buyer on the reasoning that otherwise there would be no occasion for the seller namely, the assessee to take risk of any kind of damage to the goods during transportation. To us, the whole reasoning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty 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 (14) E.L.T. 1896 (S.C.) - Union of India and Others etc. etc. v. Bombay Tyre International Ltd etc. etc. the question involved was regarding deduction of transportation charges along with cost of insurance. It was held as follows: Therefore, the expenses incurred on account of the several factors which have contributed to its value upto the date of sale, which apparently would be the date of delivery, are liable to be included. Consequently, where the sale is effected at the factory gate, expenses incurred by the assessee upto the date of delivery on account of storage charges, outward handling charges, interest on inventories (stocks carried by the manufacturer after clearance), charges for ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave 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 well as transit insurance charges are to be included for fixing the transaction value. The order reveals that the Commissioner had scanned through the agreements entered into between the assessee and with various customers and other documents on the basis of which the Commissioner concluded that the property in goods was passed on to the customers only at the destination. According to him, there was a specific condition in the contracts that the goods will be dispatched from freight pre-paid by road and up to the destination of the customers. It was also stated that material should be di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 set aside the order of the Tribunal and remit the case to it for fresh consideration after looking into the facts of the present case, namely, the terms and conditions of the sale with the buyer and determination on that basis as to which was the place of removal, that is whether it was the factory gate of the assessee or the place of delivery. We may record that as per the Commissioner, place of removal was the place of delivery at the buyer's premises. However, since no documents are produced before us, we are not in a position to comment as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of M/s Emco in his statement recorded under Section 14 of the Central Excise Act, 1944 on 5.3.2001 has, inter alia, stated that the responsibility of goods lies on M/s Emco till delivery of the said goods to the customer's premises and therefore, freight and transit insurance charges were recovered from the customers for covering the transit risk they had taken out transit insurance policy and whenever there was a loss or damage to the goods M/s Emco claims the same from the insurance company .. The possession of the goods is transferred only at the premises of the buyers/ customers . Shriv Ravindra Mahadeo Kankonkar, General Manager of M/s Emco in his statement recorded on 27.4.2001 under Section 14 of the Central Excise Act, 1944 confirmed the statement of Shri D.K. Bhattacharya recorded on 5.3.2001. The Commissioner in the said order also confirmed the demand for the period after 1.7.2000 when the definition of place of removal was amended, by observed as follows: 58. Now I come to the clearances effected from 1.7.2000. I find that Section 4 of the Central Excise Act, 1944 was amended w.e.f. 1.7.2000 by Section 94 of the Finance Act, 1994, 2000 (10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry is different from the place of removal. He specially relied on the para 24 of the decision of the Supreme Court in the case of CCE, Nagpur Vs. Ispat Industries Ltd., - 2015 (324) ELT 670 (SC) held as follows: 24. It will thus be seen that, in. law, it is clear that for the period from 28-9-1996 up to 1-7-2000, the place of removal has reference only to places from which goods are to be sold by the manufacturer, and has no reference to the place of delivery which may be either the buyer's premises or such other premises as the buyer may direct the manufacturer to send his goods. As a matter of law therefore, the Commissioner's order and Revenue's argument based on that order that freight charges must be included as the sale in the present facts took place at the buyer's premises is incorrect. Further, for the period 1-7-2000 to 31-3-2003 there will be no extended place of removal, the factory remises or the warehouse in the circumstances mentioned in the Section), alone being place of removal. Under no circumstances can the buyer s premises, therefore, be the place of removal for the purpose of Section 4 on the facts of the present case. (emphasis suppli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he buyer with the assent of the seller, the property in the goods thereupon handed over to the buyer. He further argued that in the light of the provisions contained. in Section 23 of the Sale of Goods Act, the goods are unconditionally appropriated to the contract when the goods are inspected and approved by the buyer and the goods are thereafter handed over to the carrier thus passing on the property in the goods to the buyer at the appellant's factory gate. He argued that the appellant do not reserve any right of disposal in the transit. Neither the contract nor any other circumstances indicate that the appellant reserve the right of disposal in the transit. He also relied on the following decision to support his assertion: (i) Commre of C.Ex., Noida vs. Accurate Meters Ltd. [2009 (235) ELT 581 (S.C.)] (ii) Associated Strips Ltd. vs. Commr. of C.Ex., New Delhi [2002 (143) ELT 131] (iii) Himalayan Pipe Industries vs. Commr. of C.Ex, Chandigarh [2003 (151) ELT 574 (Tri.- Del.)] 2.4 He further argued that the goods are cleared from the factory on payment of CST/ VAT, indicating that the goods were sold at factory gate. He argued that the factum of payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Co. (P) Ltd vs. Commr. of C.Ex, Chandigarh [2013 (295) ELT 260 (Tr.- Del.)] (iv) Commr. of C.Ex, Nagpur vs. Vijaylaxami Electricals Pvt. Ltd. (2012 (280) ELT 142 (Tri.- Mumbai)] (v) Blue Star Ltd. vs. Commr. of C.Ex, vapi [2008 (224) ELT 258 (Tri.- Ahmd.)] (vi) Commr. of C.Ex, Nashik vs. Garware Enterprises Ltd. [2014 (301) ELT 349 (Tri.- Mumbai)] (vii) Majestic Auto Ltd. vs. Commr. of C.Ex, Meerut [2003 (160) ELT 541 (Tribunal)] 2.5 He argued that the statement of Shri Bhattacharya and Mr. Kankonkar does not get relief, in view of the Hon'ble Apex Court decision in the case of Ispat (supra) . He further argued that during the period 01/07/2000 to 31/10/2001 only the factory premises can never be the place of removal. He argued that for the period 01/07/2000 to 31/03/2003 except for the factory premises or warehouse, there was no provision to the extended place of removal. 3. The learned AR for the Revenue relies on the impugned order. He argued that transportation and transit insurance charges on the goods paid by the assessee upto the customers destination should be included in the assessable value of the goods as in case of any damage during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or premises wherein the excisable goods have been permitted to be deposited without 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 and, from where such goods are removed; with effect from 1/7/2000 the definition was revised to (c) place of removal means - (i) a factory or any other place or premises of production or manufacture of the excisable goods; (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty, from where such goods are removed; In effect the clause (iii) of the definition was deleted. Thus it can be seen that after 1/7/2000 there was no provision for considering any place, other than factory or any other place or premises of production or manufacture of the excisable goods or a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty, as 'place of removal'. In these circumstances there is no ease for considering any other place like the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, defines sale and purchase are as 'any transfer of the possession of goods by one person to another in the ordinary course of trade or business for cash or deferred payment or other valuable consideration'. Thus it can be seen that the meaning of 'sale' in Central excise Act has been linked to 'transfer of Possession' and not to 'transfer of property in goods' as in Sale of Goods Act. 4.3 Section 4 of the Sale of Goods Act 1930 read as under 4. Sale and agreement to sell,- (1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part-owner and another. (2) A contract of sale may be absolute or conditional (3) Where under a contract of sale the property in the goods in transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell. (4) An agreement to sell becomes a sale when the tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efinition of 'Sale' given in the Central Excise Act is to be adopted. Section 4 of the Central Excise Act needs to be read in the context of the definition of sale given in the same act. Sub-section (1) of Section 4 of the Central Excise Act, read in conjunction with the definition of sale as provided in section 2(h), reads as follows: 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 (i.e. transferred the possession of goods by one person to another in the ordinary course of trade or business for cash or deferred payment or other valuable consideration) 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 transaction value; (b) in any other case, including the case where the goods are not sold (i.e. goods are not sold (i.e. transferred the possession of goods by one perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter their clearance from the factory and, from where such goods are removed; (cc) time of removal , in respect of the excisable goods removed from the place of removal from the place of removal referred to in sub-clause (iii) of clause (c), shall be deemed to be the time at which such goods are cleared from the factory; It can be seen that the context of both the definitions, i.e of 'Place of Removal' and of Time of Removal', is based on the physical movement of goods. The concept of transfer of ownership based definition of 'sale' is alien to the Central Excise Act. 4.6 In the context of the Central Excise Act in general and Section 4 thereof in particular the transfer of title of goods is irrelevant. Thus relying on the provisions of Sale of Goods Act to interpret the provisions of the Central Excise Act in general and Section 4 thereof in particular, does not appear to be correct. 5 The appellants have relied on various decisions on the issue. I find that none of these decisions examines the reasons for discarding the definition of 'Sale' appearing in the Central excise Act and preferring to adopt the definition of ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to carrier.- Where, in pursuance of the contract, the seller delivers the goods 39. Delivery to carrier or wharfinger,- (1) Where, in pursuance of a contract of sale, the seller is authorised or required to send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer, or delivery of the goods to a wharfinger for safe custody, is prima facie deemed to be a delivery of the goods to the buyer. (2) Unless otherwise authorised by the buyer, the seller shall makes such contract with the carrier or wharfinger on behalf of the buyer as may be reasonable having regard to the nature of the goods and the other circumstances of the case. If the seller omits so to do, and the goods are lost or damaged in course of transit or whilst in the custody of the wharfinger, the buyer made decline to treat the delivery to the carrier or wharfinger as a delivery to himself, or may hold the seller responsible in damages. (3) Unless otherwise agreed, where goods are sent by the seller to the buyer by a route involving sea transit, in circumstances in which it is usual to insure, the seller shall gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , you shall ensure, at no cost to BSES, replacement of such items expeditiously, so that it does not affect the project schedule. Terms of payment: 7.01 The terms of payment for transformer and accessories shall be as under: a) 10% of Ex-works price of the total goods to be supplied shall be paid as Interest free advance upon acceptance of letter of award, submission of invoice, submission of bank guarantee towards contract performance security and another bank guarantee covering the advance amount as per BSES format. b) 5% of the Ex-works price of the total goods to be supplied shall be paid against submission and approval of all drawings and foundation load data. c) 75% of the Ex-works price shall be paid progressively along with 100% taxes and duties, on the basis of agreed price break up with in 30 days after delivery of goods. d) Balance 10% shall be paid after completion of Guarantee period. However, this amount can be paid after successful commissioning against submission of a Bank Guarantee for equivalent value, to be kept valid, till the end of Guarantee period as per BSES format. Delivery Location : The equipment will be deli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The clear intent of the aforesaid purchase order was to transfer the property in goods to the buyer at the premises of the buyer when the goods are delivered and by virtue of Section 19 of Sale of Goods Act, the property in goods was transferred at that time only, Section 19 reads as under : 19. Property passed when intended to pass. - (1) Where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. (2) For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the contract, the conduct of the parties and the circumstances of the case. (3) Unless a different intention appears, the rules contained in Sections 20 to 24 are rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer. 15. These are clear finding of facts on the aforesaid lines recorded by the Adjudicating Authority. However, the CESTAT did not take into consideration all these aspects and allowed the appeal of the assessee by merely referring to the judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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