2002 (3) TMI 96 - AT - Central Excise

Summary

Issues Involved:
1. Determination of the "place of removal" for the purpose of including freight and transit insurance in the normal value u/s 4 of the Central Excise Act, 1944.
2. Application of the legal principles from previous Tribunal decisions, particularly in the cases of Escorts JCB Ltd. and Prabhat Zarda Factory Ltd.

Summary:

Issue 1: Determination of the "Place of Removal"
The primary issue was whether the "place of removal" for the purpose of including freight and transit insurance in the normal value u/s 4 of the Central Excise Act, 1944, was the factory gate or the buyer's premises.

- Associated Strips Ltd. v. CCE, New Delhi:
- The original authority and appellate authority included freight and transit insurance in the normal value, considering the property in the goods passed at the buyer's premises.
- The appellant contended that the facts were different from the cases of Escorts JCB Ltd. and Prabhat Zarda Factory Ltd., where no separate agreements for sale and transportation existed, and the ownership remained with the seller until delivery at the buyer's premises.
- The Tribunal found that the goods were inspected, approved, and marked with the buyer's name at the factory before being handed over to the transporter, with the buyer shown as consignee. Thus, the property in the goods passed at the factory gate.

- Mauria Udyog Ltd. v. CCE, New Delhi:
- Similar to Associated Strips Ltd., the assessing and appellate authorities included transport costs in the assessable value, relying on the decisions in Escorts JCB Ltd. and Prabhat Zarda Factory Ltd.
- The appellant argued that the ownership transferred at the factory gate, as the goods were inspected, marked, and handed over to the transporter with the buyer as consignee. The Tribunal agreed, noting that the seller did not retain insurable interest, and the buyer could re-route the goods.

Issue 2: Application of Legal Principles from Previous Tribunal Decisions
The Tribunal examined whether the facts in the present cases were comparable to those in Escorts JCB Ltd. and Prabhat Zarda Factory Ltd.

- Escorts JCB Ltd.:
- The Tribunal in Escorts JCB Ltd. held that the property in the goods did not pass to the buyer until it reached the buyer's premises, as the seller insured the goods during transit.
- The Tribunal in the present cases found that the facts were different, as there were separate contracts for transportation and insurance, and the property passed at the factory gate.

- Prabhat Zarda Factory Ltd.:
- In Prabhat Zarda, the ownership remained with the manufacturer until delivery at the buyer's premises, with no factory gate sale.
- The Tribunal found that the present cases involved factory gate sales with separate agreements for transportation and insurance, distinguishing them from Prabhat Zarda.

Conclusion:
The Tribunal concluded that the sale of goods occurred at the factory gate, and the property in the goods passed to the buyer when the goods were handed over to the transporter. Therefore, the element of freight and transit insurance should not be included in the normal value of the goods. The orders impugned were set aside, and the appeals were allowed with consequential reliefs to the appellants.