2023 (2) TMI 663 - HC - Central Excise

Rebate of Excise Duty - rebate sought included post removal charges from the factory gate to the Port of Export - point of sale/place of removal should be considered as the factory gate or the Port of Export? - HELD THAT - The provisions of Sale of Goods Act, 1930 would govern the issue. The determinative factor as to when ownership of the goods is transferred from seller to buyer has to be considered in light of the provisions of the Act of 1930 as held by Hon ble Supreme Court in the case of Commissioner, Customs and Central Excise, Aurangabad vs. Roofit Industries Limited 2015 (4) TMI 857 - SUPREME COURT - As per the facts prevailing in the case at hand, the goods in question were exported from a port. Thus, unquestionably, ownership of the goods would be transferred to the buyer, moment the shipping bill is filed and the goods are handed over to the shipping line. At any point of time before this transaction, the manufacturer would have the option to retain/ call back or to deal with the goods in any other manner desired. Thus, the export order/ sale would fructify/be fulfilled only when the goods are handed over to the shipping line whereafter, the exporter would have no control thereupon. The issue has been duly clarified by the Central Board of Excise Customs at para No.6 of the circular dated 28.02.2015 - The contention of Shri Saraswat (respondent) that this circular only deals with the CENVAT Credit and thus, the same has no application in cases of excise claim, has no merit whatsoever because in either of situations, the crucial factor for determining entitlement of the manufacturer exporter be it of CENVAT Credit or Excise Duty Rebate would be the point of sale. The controversy at hand is squarely covered by following observations made by Hon ble the Supreme Court in the case of Commissioner, Customs and Central Excise, Aurangabad vs. Roofit Industries Limited 2015 (4) TMI 857 - SUPREME COURT . It is precisely in light of the aforesaid judgment that the Board issued the circular dated 08.06.2018. The contention of Shri Saraswat (respondent) that the petitioner is not entitled to the relief claimed for in view of the circular dated 08.06.2018 is sans merit because in the said circular, the general principles for determination of place of removal have been highlighted with the exceptions being marked at para No.4 which deals with the case of export. The present one is also a case of export of goods. There cannot be two views on the aspect that in case of export, sale would be completed once the goods are handed over to the shipping line because the transaction would not be completed till that point of time. Thus, the observations made by the Commissioner (Appeals) clarifying that the circular dated 28.02.2015 is not restricted for availment of CENVAT Credit and would also be applicable on rebate of excise duty is the correct interpretation on facts and law. Thus, the order passed by the Revisionary Authority dated 19.12.2019 does not stand to scrutiny and is hereby reversed and set aside - petition allowed.

Summary

Issues:
Determining the place of removal in the case of exported goods for claiming excise duty rebate.

Analysis:
The petitioner, a company exporting man-made yarn, sought a rebate of excise duty on consignments exported in 2016, including post-removal charges to the Port of Export. The bone of contention was whether the place of removal should be the factory gate or the Port of Export. The Assistant Commissioner accepted the rebate claims based on a previous order. The Department appealed, but the Appellate Authority and Revisionary Authority upheld the Port of Export as the place of removal for exports. The petitioner challenged the Revisionary Authority's order in a writ petition.

The petitioner argued that ownership transfer occurs at the port during export, citing the Sale of Goods Act and a Supreme Court judgment. The Department contended that the factory gate is the place of removal, opposing the circulars cited by the petitioner. The Court considered the arguments, the orders, circulars, and the Supreme Court judgment.

The Court determined that ownership transfer in exports happens at the port when goods are handed over to the shipping line. The circulars clarified this point, emphasizing that the exporter loses control after handing over the goods. The Supreme Court's stance on ownership transfer and valuation was reiterated. The Court found the Department's arguments lacking merit, as the circulars applied to both CENVAT Credit and excise duty rebate claims.

Based on the Sale of Goods Act, the Supreme Court judgment, and the circulars, the Court reversed the Revisionary Authority's order. It affirmed the Adjudicating Authority's and Commissioner (Appeals) orders, ruling in favor of the petitioner. The writ petition was allowed, with no costs imposed.

In conclusion, the Court clarified that in export cases, the place of removal is the Port of Export, aligning with the Sale of Goods Act, Supreme Court precedent, and relevant circulars, thereby granting the excise duty rebate to the petitioner.