2001 (9) TMI 154 - AT - Central Excise

Summary

Issues:
Denial of Modvat credit on 28 invoices due to disagreement on the definition of 'sale' under Section 2(h) of the Act.

Analysis:
The appeals involved a dispute regarding the denial of Modvat credit on 28 invoices issued under Rule 57G of Central Excise Rules, 1944 by two companies registered as dealers in respect of excisable goods. The issue revolved around the interpretation of the term 'sale' under Section 2(h) of the Act. The appellants argued that for a transaction to qualify as a sale, there must be a transfer of possession of goods, regardless of a change in ownership. They cited previous Tribunal decisions to support their contention that transfer of possession constitutes a sale, even if no cash payment is involved. On the contrary, the Revenue contended that a sale requires valuable consideration and that the authorities were correct in disallowing the credit as there was no sale of goods, only a transfer for conversion work.

The Member (J) carefully considered the arguments presented. The lower authorities had disallowed the Modvat credit on the grounds that there was no sale involved in the transactions, as ownership of the raw materials remained with the supplying companies. The Member noted that the essence of a sale is the transfer of possession of goods, supported by valuable consideration. Emphasizing that the transfer of possession must be accompanied by payment, the Member found that the issue had not been thoroughly examined from this perspective. Consequently, the matter was remanded to the original adjudicating authority for a detailed re-examination to determine if the transfer of possession of goods in the transactions was in line with the definition of 'sale' under Section 2(h) of the Act and if it was supported by valuable consideration.

In conclusion, all appeals were disposed of by remanding the matter to the adjudicating authority for a fresh examination to ensure compliance with the legal provisions and the opportunity for the parties to present their case adequately.