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TMI Blog2015 (10) TMI 613X X X X Extracts X X X X X X X X Extracts X X X X ..... re prepared at the time of the goods leaving the factory in the name and address of the customers of the respondent. When the goods were handed over to the transporter, the respondent had no right to the disposal of the goods nor did it reserve such rights inasmuch as title had already passed to its customer. On facts, therefore, it is clear that Roofit's judgment is wholly distinguishable. Similarly in Commissioner Central Excise, Mumbai-III v. M/s. Emco Ltd [ 2015 (8) TMI 200 - SUPREME COURT] , this Court re-stated its decision in the Roofit Industries' case [ 2015 (4) TMI 857 - SUPREME COURT] but remanded the case to the Tribunal to determine whether on facts the factory gate of the assessee was the place of removal of excisable goods. This case again is wholly distinguishable on facts on the same lines as the Roofit Industries case. Decided against Revenue. - Civil Appeal No. 637 of 2007 - - - Dated:- 7-10-2015 - A. K. Sikri And R. F. Nariman, JJ. For the Petitioner : Mr. Ashok Kumar Panda, Sr. Adv. Ms. Swarupama Chaturvedi, Adv. Ms. Sunita Rani Singh, Adv. Mr. B. Krishna Prasad, Adv For the Respondent : Mr. S. K. Bagaria, Sr. Adv. Ms. Praveena Ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly in the name of the customers, and the name of the Insurance Company as well as the number of Transit Insurance Policy were both mentioned. Based on the details mentioned in the invoice, the lorry receipt was prepared by the transporter and was in the buyer's name. This receipt carried a caution notice as well a notice to the effect that deliveries were to be made to the buyer alone, and to nobody else. 4. M/s. Ispat further stated that these transactions were entered in their sales register and were booked as sales, the stock or inventory of finished goods being reduced by such sales. In the event that there was an insurance claim, recovery was credited to the customer's ledger account against the recovery due from the customer in respect of the sale of the said goods. Excise invoices were prepared at the time that the goods left the factory in the name and address of the customers, and once the goods were handed over to the transporter, the respondent did not reserve any right of disposal of the goods in any manner. It had no right to divert the goods so handed over to the transporter and meant for a particular customer to anybody else. 5. The learned Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iv) I order recovery of appropriate interest from them under Section 11AB of the Central Excise Act, 1944. 6. On appeal by the respondents herein, CESTAT, by its judgment dated 24.7.2006, reversed the order of the Commissioner holding that, on the facts of the case, this Court's judgment in Escorts JCB Ltd. v. CCE, (2003) 1 SCC 281 concluded the issue in favour of Ispat. CESTAT also relied upon a Board's circular dated 3.3.2003 which acknowledged that the question of ownership of goods in transit cannot be determined solely with reference to an Insurance Policy taken out by the manufacturer. As regards the statement of Shri Dahiwade, according to CESTAT, such statement would not carry the revenue much further as whether the property in the goods passed at the factory gate to the buyer was a question of law which was determined in favour of Ispat by the aforesaid judgment of this Court in Escorts JCB's case. It was further held that at least two of the Commissioner's grounds, namely, that the payment terms were 30 days after receipt of the materials and that the order acceptance form shows that it was the obligation of Ispat to arrange transportation of good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st principle as all the show cause notices and the findings of the Commissioner are based on the fact that in the present case the buyer's premises is the place of removal of goods. He argued that this would involve conceptual confusion inasmuch as the place of removal can never be equated with the place of delivery and the place of removal alone is relevant for the purpose of Section 4 throughout its chequered history. He further argued that on facts his case came within the ratio of Escorts JCB and not within the ratio of two other judgments of this Court, namely, Commissioner Central Excise, Mumbai-III v. M/s. Emco Ltd., dated July 31, 2015 in Civil Appeal 3418 of 2004 and Civil Appeal 8966 of 2011, and CCE Customs v. Roofit Industries Ltd., (2015) 319 E.L.T. 221 (S.C.). He also argued that the learned Commissioner was in error because he had ignored altogether the reply made by the assessee which would show that the assessee's facts are in pari materia with the facts in Escorts JCB and not the facts in either Emco or Roofit Industries, supra. He further supported the Tribunal's judgment by stating that not only did the Commissioner not give any heed to Ispat's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of cash payment thus eliminating the interest involved in wholesale price which gives credit to the wholesale buyer for a period of time and that the price has to be fixed for delivery at the factory gate thereby eliminating freight, octroi and other charges involved in the transport of the articles. [at para 22] 12. By an amendment Act of 1973, which came into force on 1.10.1975, Section 4 was substituted as follows:- 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) Where, in accordance with the normal practice of the wholesale trade in such goods, such goods are sold by the assessee at different prices to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds have been permitted to be deposited without payment of duty, from where such goods are removed. 13. It will be seen that three important changes have been made in the amended Section 4 so far as the present case is concerned. First, the value of excisable goods is deemed to be the normal price thereof that is the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade. Where the goods are sold at different prices to different classes of buyers, each such price shall be deemed to be the normal price. Place of removal has been defined for the first time to mean not only the premises of production or manufacture of excisable goods but also a warehouse or any other place or premises wherein such goods have been permitted to be deposited without payment of duty and from where such goods are ultimately removed. Interestingly, in Section 4(2), which is introduced for the first time, where in relation to excisable goods the price thereof for delivery at the place of removal is not known, and the value is determined with reference to the price for delivery at a place other than the place of removal, the cost of transportation fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds in relation to each such place of removal; Also, for the first time, the place of removal had one more category added to it. Section 4(4)(b)(iii) and 4(4)(ba) state as follows:- (4)(b)(iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory and, (4)(ba) time of removal , in respect of goods removed from the place of removal referred to in sub-clause (iii) of clause (b), shall be deemed to be the time at which such goods are cleared from the factory; 16. It will thus be seen that where the price at which goods are ordinarily sold by the assessee is different for different places of removal, then each such price shall be deemed to be the normal value thereof. Sub-clause (b)(iii) is very important and makes it clear that a depot, the premises of a consignment agent, or any other place or premises from where the excisable goods are to be sold after their clearance from the factory are all places of removal. What is important to note is that each of these premises is referable only to the manufacturer and not to the buyer of excisable goods. The depot, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iv) they are so associated that they have interest, directly or indirectly in the business of each other. Explanation. - In this clause - (i) inter-connected undertakings shall have the meaning assigned to it in clause (g) of section 2 of the Monopolies and Restrictive Trade Practices Act, 1969 (64 of 1969); and (ii) relative shall have the meaning assigned to it in clause (41) of section 2 of the Companies Act, 1956 (1 of 1956); (c) place of removal means - (i) a factory or any other place or premises of production or manufacture of the excisable goods; (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty, from where such goods are removed; (d) transaction value means the price actually paid or payable for the `goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time and place of removal but are transferred to a depot, premises of a consignment agent or any other place or premises (hereinafter referred to as such other place ) from where the excisable goods are to be sold after their clearance from the place of removal and where the assessee and the buyer of the said goods are not related and the price is the sole consideration for the sale, the value shall be the normal transaction value of such goods sold from such other place at or about the same time and, where such goods are not sold at or about the same time, at the time nearest to the time of removal of goods under assessment. 21. The actual cost of transportation from the place of removal up to the place of delivery of excisable goods is excluded from the computation of excise duty provided it is charged to the buyer in addition to the price of goods and shown separately in the invoices for such goods. Interestingly, despite the substituted Section 4 not providing for a depot or other premises as a place of removal, Rule 7 deals with the normal transaction value of goods transferred to a depot or other premises which is said to be at or about the same time or the time near ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that order that freight charges must be included as the sale in the present facts took place at the buyer's premises is incorrect. Further, for the period 1.7.2000 to 31.3.2003 there will be no extended place of removal, the factory premises or the warehouse (in the circumstances mentioned in the Section), alone being places of removal. Under no circumstances can the buyer's premises, therefore, be the place of removal for the purpose of Section 4 on the facts of the present case. 25. It now remains to deal with some of the judgments cited at the Bar. Escorts JCB Ltd. v. CCE, (2003) 1 SCC 281, was strongly relied upon by Shri Bagaria and sought to be distinguished by Shri Panda. The facts of Escorts JCB's case are similar to the facts in the present case. The show cause notice in that case alleged that freight and transit insurance were charged from buyers but no central excise duty was paid by mis-declaring the place of removal as the factory gate instead of the buyer's premises. It will be noted that just as in the present case, the price was ex-works and exclusive of freight insurance etc. After setting out Section 4 post its amendment in 1996, this Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration to decide ownership or the point of sale of goods. 28. Similarly in VIP Industries Ltd. v. Commissioner of Customs Central Excise, (2003) 5 SCC 507, this Court was faced with the following question:- The question for consideration in both these appeals is whether in cases where a manufacturer includes equalised freight in the price of the goods and sells the goods all over the country at a uniform price, the Department is entitled to compute value by including the cost of transportation from the factory to the depot. This question was decided by this Court in the case of Union of India v. Bombay Tyre International Ltd. [(1984) 1 SCC 467 : 1984 SCC (Tax) 17 : 1983 ELT 1896]. It was thereafter confirmed in the case of Govt. of India v. Madras Rubber Factory Ltd.[(1995) 4 SCC 349 : (1995) 77 ELT 433] [at para 3] 29. Like the Escorts JCB's case this judgment was also concerned with Section 4 as it stood after the amendment of 1996 but before the amendment of 2000. This Court held:- After the amendment, the Department sought to include in the value the cost of transport from factory to the depot, even in case where the manufacturer sold the goods at a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cost of transportation was to be added. Thus in cases where the price remains uniform or constant all over the country, it does not follow that value for the purpose of excise changes merely because the definition of the term place of removal is extended. The normal price remains the price at the time of delivery and at the place of removal. In cases of equalised freight it remains the same as per the judgments of this Court set out hereinabove. In our view, the amendments have made no difference to the earlier position as settled by this Court. In this view of the matter, we are unable to uphold the judgments of the Tribunal. They are accordingly set aside. The appeals are allowed with consequential relief. There shall be no order as to costs. [paras 5 to 8] 30. In Prabhat Zarda Factory Limited v. CCE, 2002 (146) E.L.T. 497 (S.C.), this Court held:- In these matters, the question is whether freight and insurance charges are to be included in the assessable value for the purposes of excise. This question is covered by the judgment of this Court in the case of Escorts JCB Ltd. v. Commissioner of Central Excise, Delhi-II [2002 (146) E.L.T. 31 (S.C.)]. The onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng, transportation, transit risk and unloading charges, etc. Even transit damage/breakage on the assessee account which would clearly imply that till the goods reach the destination, ownership in the goods remain with the supplier, namely, the assessee. As per the terms of payment clause contained in the procurement order, 100% payment for the supplies was to be made by the purchaser after the receipt and verification of material. Thus, there was no money given earlier by the buyer to the assessee and the consideration was to pass on only after the receipt of the goods which was at the premises of the buyer. From the aforesaid, it would be manifest that the sale of goods did not take place at the factory gate of the assessee but at the place of the buyer on the delivery of the goods in question. The clear intent of the aforesaid purchase order was to transfer the property in goods to the buyer at the premises of the buyer when the goods are delivered and by virtue of Section 19 of the Sale of Goods Act, the property in goods was transferred at that time only. Section 19 reads as under: 19. Property passes when intended to pass. --(1) Where there is a contract fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directly in the name of the customer in which the name of the Insurance Company as well as the number of the transit Insurance Policy were mentioned. Above all, excise invoices were prepared at the time of the goods leaving the factory in the name and address of the customers of the respondent. When the goods were handed over to the transporter, the respondent had no right to the disposal of the goods nor did it reserve such rights inasmuch as title had already passed to its customer. On facts, therefore, it is clear that Roofit's judgment is wholly distinguishable. Similarly in Commissioner Central Excise, Mumbai-III v. M/s. Emco Ltd, this Court re-stated its decision in the Roofit Industries' case but remanded the case to the Tribunal to determine whether on facts the factory gate of the assessee was the place of removal of excisable goods. This case again is wholly distinguishable on facts on the same lines as the Roofit Industries case. 34. In the view of the law that we have taken as well as the facts detailed above, the statement made by Shri S.P. Dahiwade pales into insignificance as has been correctly held by the Tribunal. We, therefore, dismiss this appeal with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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