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TMI Blog2002 (3) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... ise Act, 1944. The demand of differential duty as per the show cause notice was confirmed by its order dated 2-2-2000. Appeal therefrom was dismissed by the Commissioner (Appeals). According to the Commissioner (Appeals), appellant's case has to be decided in the light of the ratio of the decisions of this Tribunal in CCE, Meerut v. Prabhat Zarda Factory Ltd. - 2000 (119) E.L.T. 191 and M/s. Escorts JCB Ltd. v. CCE, New Delhi - 2000 (118) E.L.T. 650 (Tribunal) = 1999 (35) RLT 9. Aggrieved by the above the assessee has come up in appeal before this Tribunal. 3. It is contended on behalf of the appellant that the facts in this case are entirely different from what were available in the two decisions of the Tribunal, namely, Escorts JCB Ltd. and Prabhat Zarda (supra). According to the appellant, original authority as well as the appellate authority have wrongly applied the dictum laid down in the abovementioned cases to the facts of the appellant's case. 4. The appellant is engaged in the manufacture of steel tubular poles, rectangular poles and pipes etc. falling under sub-heading 7306.90 of the Central Excise Tariff Act, 1985. The poles are chargeable to duty ad valo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here was no factory gate sale by the assessee. The ownership of the goods remained with the assessee till the goods reached the buyer's premises. Both consignor and consignee was the manufacturer. There was also a further stipulation that the transporting agency shall not part with the goods till it received instruction from the seller. This would indicate that the property in the goods had not passed on entrusting the same with the transporter. The documents relating to the goods were given by the transporter to the buyer only after getting instruction from the seller. On the other hand, in the appellant's case goods were dispatched after they were identified and approved by the buyers representative and the buyer's name affixed on the goods. It was then handed over to the transporter with the seller as consignor and buyer shown as consignee. Once the goods are with the transporter there was no further instruction required from the appellant to deliver the goods to the buyer (Electricity Board). These, according to the appellant are the distinction between the facts in its case from that of Prabhat Zarda. (b) In Escort JCB there is no reference to a contract between the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority took the view that the sale takes place at the buyers place and relying on the decisions of this Tribunal in M/s. Escorts JCB Ltd. and Prabhat Zarda it was held that the cost of transport is to be included in the assessable value of the goods for the purpose of payment of duty. It is this finding that is under challenge in the present set of appeals. 10. It is contended by the appellant that the appellants are clearing the cylinders for sale from the factory gate. Terms and conditions of sale between the appellant and oil companies are on principal to principal basis and are based on purchase orders and agreements entered into between the parties. Under the terms of the agreement, the Representative of the oil company would inspect the manufactured cylinders. Thereafter a test certificate is to be obtained from the Bureau of Indian Standards. The cylinders are to be marked with the name of the oil company. According to the appellant after the inspection and identification the cylinders are appropriated to contract. Sale invoices are raised by the appellant showing therein the ex-works price. Payment of excise duty on the above ex-works price is also shown in the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the property in the goods sold did not pass to the buyer till it reached the premises of the buyer in view of the fact that insurance policies were taken out by the seller to cover the goods till it reached the buyers premises. Even though the contention of the seller, that the sale of the goods took place at the factory gate was considered in the above decision, there is no reference to the terms of the contract between the parties. It is not seen contended that as per the terms of the contract the seller was duty bound to insure the goods in transit thus retaining insurable interest in the goods even though title to the goods had already been passed to the buyer at the factory gate. In the absence of any of these contentions it is seen that the Tribunal applied the general rule that 'risk follows property'. Since the seller was found insuring against risk of loss or damage of the goods in transit, it was held that the seller continued to be the owner of the goods till it reached the buyer's premises. In Prabhat Zarda, a decision rendered by the Larger Bench, the issue referred for consideration was whether in a case where the ownership of the excisable goods remained with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. Escorts JCB was a case the facts of which would attract the principle that risk prima facie passes with property. On the other hand, the facts in the present appeals would make it clear that the title to the goods had been passed on to the buyer at the factory gate, the seller retaining only the risk in terms of the contract. In the case of Mauria Udyog Ltd. the seller has not retained even that insurable interest. Therefore, we find that the facts of these appeals are entirely different from the facts of Escorts JCB and Prabhat Zarda. 16. Section 4(4)(b) of the Central Excise Act, 1944 defines "place of removal" as follows : "(b) "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; (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, from where such goods are removed." Considering sub-clause (iii), this Tribunal held in Escorts JCB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Goods Act provides that where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. Intention of the parties are to be ascertained with reference to the terms of the contract, the conduct of the parties and the circumstances of the case. Unless a different intention appears; the rules contained in Sections 20 to 24 are provisions for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer. Section 23 provides that where there is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be expressed or implied and may be given either before or after the appropriation is made. Sub-section (2) of Section 23 further provides that where, in pursuance of the contract, the seller delivers the goods to the buyer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansit in terms of the contract entered into between the parties, would make any difference in the legal position regarding transfer of title to the goods to the buyers. Unless the seller has some interest in the goods there can be no contract of insurance. If under the terms of the contract the seller is made responsible for the safe transit of the goods, that risk against damage is sufficient for the seller to have an insurable interest in the goods even when title has passed to the buyer. It is levent to quote the following passage from Benjamin's ; Sale of Goods 5th Edition para 6-012 - Page 290 :- "The question of the allocation of risk is often of importance where a claim is made on an insurance policy, since the insured must have an insurable interest in the goods at the time of the loss. It will be sufficient that the goods are at his risk even though he has no property in them." Section 26 of the Sale of Goods Act lays down the general principle that risk prima facie passes with property unless otherwise agreed. It therefore shows that even though the general rule is that the goods remain at the seller's risk until the property therein is transferred to the buyer and wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te, there will be no interest of the purchaser to be protected by way of insurance. In this context, the following observations in the commentary on the Sale of Goods by P.S. Atiyah QC, DCL, FBA Eighth Edition, First Indian Reprint, 1985 Page 294 is relevant :- "An obligation to insure placed upon one party by the contract is also an indication that he bears the risk, and it has been said that this is an indication that he also has the property. But again, it is possible to draw a contrary inference from this fact, for why should a party who has not got the property in the goods concern himself whether they are insured or not ? Once again, therefore, the proper inference to be drawn must depend on all the circumstances of the case." Therefore in this present case the insistance of the buyer that the seller shall insure the goods in transit has to be taken as an indication that property in the goods has already passed to the buyer. 21. The only other point to be considered is the contention raised by the learned Departmental Representative on the basis of a term in the contract in the case of Associated Strips Ltd. that balance 10% of the sale price will be paid within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t bargain, in which it is agreed that the property shall pass on or before delivery, subject to the right of the person taking the goods to return them and revest the property in the seller should they not suit him, either within a fixed time or a reasonable time. In this case there is a sale subject to a condition subsequent, and the transaction comes within the scope of the sale of goods Act." [Benjamin's Sale of Goods Fifth Edition Page 49 Para 1-056] 23. We have referred in detail in the earlier portion of the order how the goods are identified at the factory by the representative of the buyer which was followed by marking the same according to the instruction given by the buyer and thereafter appropriated to contract. It was then delivered to the carrier as per the terms of the contract. If that be so the sale has taken place at the factory gate and delivery also given to the buyer when the goods were delivered to the carrier in view of the provisions contained under Sections 23 and 39 of the Sale of Goods Act. The term regarding payment of balance 10% of the sale price after approval of the material at DESU Stores, can, therefore, be only a condition subsequent. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... railway consignment notes. The merchants were to check the weights and Laing was to pay according to the weights so checked. The appellant consigned 160 bags of coco to Laing which he sold to the respondent transferring the same to the consignment note. The respondent took delivery in good faith and credited Laing with the purchase price against a large debt due to them from him. The appellant brought an action to recover damages from the respondents for conversion of the coco. It was the contention of the appellant that sale to Laing had not taken effect and therefore, the respondent could not acquire any title to the goods from Laing. The concurrent finding of the Courts below that Laing purchased the coco from the appellant and this finding was attacked by the appellant as erroneous in law alleging that weighing up of the goods must be treated as having been a condition precedent to an operative sale. Rejecting the above contention their Lordships of the Privy Council held as follows :- "Their Lordships agree that the provisions as to the weight of the goods being tested was not a condition precedent to a sale. The goods were transferred, their price was fixed and the testing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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