TMI Blog2002 (10) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... of the property. In view of the discussion held above in our view the Commissioner of Central Excise and the CEGAT erred in drawing an inference that the ownership in the property continued to be retained by the assessee till it was delivered to the buyer for the reason that the assessee had arranged for the transport and the transit insurance. Such a conclusion is not sustainable. - 7230 of 1999 - - - Dated:- 24-10-2002 - S.N. Variava and Brijesh Kumar, JJ. [Judgment per : Brijesh Kumar, J.]. - The appeals indicated above, arise out of judgment and order dated 24-8-1999 passed by the Customs Excise and Gold (Control) Appellate Tribunal (For short 'CEGAT'), operative part of which reads as under : "In the result we dispose of this appeal by confirming the order of the Commissioner imposing a duty of Rs. 29,65,532/- under Rule 9(2) of the Central Excise Rules, 1944 read with Section 11A of the Act, set aside that part of the order which imposed duty amount to Rs. 98,219/- and reduce the penalty to Rs.10 lakhs under Section 11AC of the Act". Escorts JCB Ltd., the appellant in Civil Appeal No. 7230/99 and respondent in Civil Appeal No. 1163/2000 (hereinafter to be ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpleted at the factory gate was not found acceptable and contrary to Section 2(h) of the Central Excise Act. The appellate authority namely CEGAT upheld the view taken by the Commissioner, Central Excise in so far it related to completion of the transaction of sale at the buyer's place which is the main question for consideration in this appeal before us. 4. Shri Andhyarujina, learned senior counsel appearing for the assessee submits that the whole basis of the impugned decision that "transit insurance" by the assessee in itself would show that the rights in the property had not passed on to the buyer during transit but only on delivery of goods at the buyer's place, is unsustainable. It is submitted that the assessees manufacture Excavators Loaders at its factory at Ballabgarh, Faridabad, which are sold to various buyers. All sales are made at the factory gate. Some buyers arrange for the transportation of the goods as well as for transit insurance themselves but some require the appellant to arrange for transportation and transit insurance, in latter case the assessee recovers the freight charges and "insurance charges" from the buyers. Our attention has been drawn to various c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, 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, whether named by the buyer or not, for the purpose of transmission to the buyer, or delivery of the goods to wharfinger for sale custody, is prima facie deemed to be a delivery of the goods to the buyer. (2) Unless otherwise authorized by the buyer, the seller shall make 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 warfinger, the buyer may 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 give such notice to the buyer as may enable him to insure them during their sea transit, and if the seller fails to do, the goods shall be deemed to be at hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for the buyer and charging the amount expended for the purpose from him separately. In connection with the proposition that insurance can be taken by a third person on behalf of another, reliance has been placed by the assessee on "Chitty on Contracts" Twenty-Eight Edition Vol. 2 Special Contracts P. 978 Chap. 41 Note 007 under the heading "Insurance of Another's interest". It is indicated that in varied facts and circumstances and subject to the statutory provisions of contract, it is possible to ensure the interest of another. Referring to a decision reported in [1947] K.B. 685 - Prudential Staff Union v. Hall, it is observed that a seller in possession of the goods when the property and risks have passed may insure his buyer's interest. Referring to a decision reported in Hepburn v. A. Tomlinson (Hauliers) Ltd. - H.L. (E) 1966 451, it has been submitted on behalf of the assessee that a bailee apart from its interest may also insure the interest of the owner of the property. There may be floating insurance policy covering not only the limited interest but the whole interest of the ownership of the customers in the normal course. 9. To substantiate the point further, a referen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It will be noted that advertisement expenses, marketing and selling organization expenses and after sale service promote the marketability of the article and enter into its value in the trade. Where the sale in the course of wholesale trade is effected by the assessee through its sales organisation at a place or places outside the factory gate, the expenses incurred by the assessee upto the date of delivery under the aforesaid heads cannot on the same grounds be deducted. But the assessee will be entitled to a deduction on account of the cost of transportation of the excisable article from the factory gate to the place or places where it is sold. The cost of transportation will include the cost of insurance on the freight for transportation of the goods from the factory gate to the place or places of delivery". 12. The assessee also referred to a decision reported in 2002 (49) RLT 506 - Associated Strips Ltd. Anr. v. CCE, New Delhi. It is a decision of CEGAT. Considering several decisions of different Courts and the terms of the contract between the parties, it was held that sale of goods had taken place at the factory gate and therefore the place of removal was not the premise ..... X X X X Extracts X X X X X X X X Extracts X X X X
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