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TMI Blog2002 (10) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... vy of penalty. The Commissioner of Central Excise, appellant in Civil Appeal No. 1163/2000 and respondent in Civil Appeal No. 7230/99 (hereinafter to be referred to as 'The Revenue') is aggrieved by the order reducing the amount of penalty to Rs.10 lakhs as imposed under Section 11AC of the Central Excise Act. 2. The Central Excise officers of Anti Evasion Branch, Faridabad on visit to the premises of the assessee found that the amount of "transit insurance" charges was not added to the value of the goods sold. Hence issued a show cause notice dated 24-3-98 to the assessee saying that an open policy for transit risks in the name of M/s. Escorts JCB Ltd. and their bankers appear in the column for the name of Assured but there is no mention of the buyer or its name in the column for "insured". Notice also indicates that 'freight' and "transit insurance" were charged from the buyers but no central excise duty was paid on these two elements, and by not including above noted elements in the normal price as per Section 4 of the Central Excise Act, 1944 and by mis-declaring the place of removal as factory gate instead of buyer's place where the goods were to be sold after their clearance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicating that the prices are "ex-works" at Ballabgarh exclusive of freight, insurance, octroi etc. The first clause under the heading "Terms of Payment" shows that 30% of the quoted price is payable in advance along with the order and the balance amount against delivery Ex-works Ballabgarh. The next clause under the heading "Delivery" provides that all deliveries are Ex-works Ballabgarh, Haryana. Under the heading 'Transit Risk and Insurance' it is indicated that risk of the goods will be that of the buyer from the time Escorts JCB Ltd. hands over the equipment to the buyer's representative or carrier or from the time goods leave Escorts JCB Ltd. premises. Under the heading 'Mode of Transport', delivery by train is indicated or in the alternative if the buyers so desire, by road, and in such an event, it would be necessary for the buyer to make the payment at Ballabgarh prior to despatch of goods. It is submitted that where the customers so desire or request the transit insurance and transport is arranged by the assessee for which they would separately charge the customer. Our attention has also been drawn to some of the copies of the orders placed indicating that a request was mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the factory gate. The transaction is full and complete and nothing remains to be done after the goods leave the factory premises. The relevant provision in this connection is Section 4 of the Act, as it existed then is quoted 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 value, such value, shall, subject to the other provisions of this section, be deemed to be - (a) the normal price thereof, that is to say the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale. Provided that- (i) …………. (ia) ………… (ii) ………… (iii) ………… (b) …………. (2) ………… (3) ………… (4) For the purpose of this Section (a) ………………… (b) "Place of removal" means: (i) …………………………. (ii) a warehouse or any other place or premises wherein the excisable goods have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, a reference to Para 5-012 at Page 184 of Benjamin's Sale of Goods Fourth Edition has been made which is to the following effect: "Insurance. The passing of property is rarely of relevance to insurance. A person can insure goods to their full value against any loss on behalf of anyone who may be entitled to an interest 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". 10. 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en place at the factory gate and therefore the place of removal was not the premises of the buyer. In view of the provisions of Section 23 and Section 39 of the Sale of Goods Act 1930 it was found that goods to be treated as delivered to buyer and property and possession of the goods passed on to buyer when the goods were handed over to transporter. In such a case element of freight and transit insurance were not to be included in the normal value of the goods. We approve of the view taken by the CEGAT. 13. 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. 14. In the result the Civil Appeal No. 7230/1999 is allowed and judgment and order passed by the Commissioner of Central Excise and the CEGAT imposing duty and penalty is set aside. Consequently, Civil Appeal No. 1163/2000 preferred by the Revenue does not survive any more and is rendered infructuous. It is dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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