Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, Mumbai vs Kaycee Industries Ltd on 22 February, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No.E/3949/03 (Arising out of Order-in-Appeal No.RJB/M-III/409/2003 dated 01/09/2003 dated passed by Commissioner of Central Excise (Appeals), Mumbai) For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. P.R. Chandrasekharan, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
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Commissioner of Central Excise, Mumbai Appellant
Vs.
Kaycee Industries Ltd., Respondent
Appearance:
Shri.N.A. Sayyad, JDR for appellant
Shri.D.N. Nadkarni, Advocate for respondent
CORAM:
Honble Mr. M.V. Ravindran, Member (Judicial)
Honble Mr. P.R.Chandrasekharan, Member (Technical)
Date of Hearing : 22/02/2011
Date of Decision : 22/02/2011
ORDER NO
Per: P.R. Chandrasekharan
1. This appeal has been filed by the Commissioner of Central Excise, Mumbai-III against the order-in-appeal No.RJB/M-III/409/2003 dated 01/09/2003 passed by the Commissioner of Central Excise (Appeals), Mumbai-III.
2. The issue involved is relating the valuation of excisable goods sold by the assessee. The assessee M/s.Kaycee Industries Ltd., Mumbai-78 are the manufacturer of excisable goods falling under Chapter 84, 85, 90 & 91 of the Schedule to Central Excise Tariff Act, 1985. The assesses were recovering freight and transit insurance charges from their customers but at the time of they were not including the said charges in the assessable value determined under Section 4 of the Central Excise Act, 1944. The case of the department is that in certain cases, the goods manufactured and sold by the assessee were insured by them from the factory gate of the destination and in such cases both the freight and insurance charges, as mentioned in the purchase order were recovered by the assessee from their customers. The legal letter of ownership of goods was with them till it reached the destination and the insurance cover granted was not assignable or transferable. In view of this position, the department was of the view that the place of removal was not the factory gate but the premises of the buyer where the delivery took place and accordingly, the cost incurred on account of freight including transit insurance charges from the factory gate to such place of removal was includable in the assessable value. Accordingly, a show-cause notice was issued to the assessee demanding a duty of Rs.58,981/- for the period from April 99 to March 2003 under the provisions of Section 11A (i) of the Central Excise Act, 1944. The assessee contended that merely because they have an insurable interest in the goods even when the proprietary of the goods is passed on to the buyers, which had taken place at the factory gate as per the provisions of Sale of Goods Act,1930, they cannot be loaded with duty liability on the freight and insurance charges. They relied upon the judgement of the Tribunal in the case of Escorts JCB Ltd., Vs. CCE, Delhi-II 2002 (146) ELT 31 (SC), Associated Strips Ltd., Vs. CCE, 2002 (143) ELT 131 (Tribunal) and CCE Delhi Vs. Ravi Cables Industries 2002 (145) ELT 694 (Tri-Del) in support of their contention.
3. The adjudicating authority confirmed the duty demand of Rs.58,981/- and also imposed a equivalent amount of penalty under Section 11AC of Central Excise Act, 1944 along with interest at the appropriate rate on the duty adjudged by the order dated 11/04/2003.
4. The party preferred an appeal before the Commissioner (Appeals) and the Commissioner (Appeals) vide impugned order set aside the order of the lower adjudicating authority and allowed the appeal filed by the party. The Commissioner (Appeals) inter-alia observed that the terms of sale were ex-works as evidenced from the purchase order and this was completely ignored by the lower adjudicating authority. Merely because the assessee had arranged the transport and had taken out a transit insurance policy, it cannot be concluded that the transfer of title on the goods sold was taking place at the buyers premises. The Ld. Appellate authority relied on the judgements of the Honble apex Court in the case of Escorts JCB Ltd., 2002 (53) RLT 1 (SC) and Prabhat Zarda 2002 (53) RLT 883 (SC) in support of his decision.
5. The grounds of appeal adduced by the department is that the place of removal has to be deemed to be the buyers premises, in view of the fact that delivery takes place at the buyers premises and the assessee is collecting the freight and insurance charges from the buyers. Therefore, the cost of transportation as well as insurance charges incurred upto the point of sale needs to be included in the assessable value.
6. We have carefully considered the matter.
7. As rightly observed by the Commissioner (Appeals), the terms of sale were ex-works i.e., ex-factory gate. Merely because the assessee has arranged for the transportation of the goods along with transit insurance it does not lead to the conclusion that the place of removal has been shifted from the factory gate to the buyers premises. In the Escorts JCB Ltd., case, the Honble apex Court held that terms and conditions between the assessee and the buyer has to be seen carefully to determine the place of removal. If as per the terms and conditions of sale, the delivery is taking place at the factory gate and transit risk and insurance are to be borne by the buyers from the time the goods are handed over to the buyers representative or from the time the goods leave the assessees premises, the place of removal remains the factory premises, since the transaction of sale, payment of the price and delivery of goods to the carriers occurred at factory premises. The Honble apex Court further held that the ownership of goods have no relevance in so far as transit insurance of goods is concerned and the delivery to the carrier at factory gate is delivery to the buyer and element of freight and transit insurance is not includable in the assessable value. The ratio of the above judgement applies squarely to the facts of the case.
8. Accordingly, we do not find any merit in the appeal and dismiss the same while upholding the findings of the lower appellate authority.
(Pronounced in Court) + (M.V. Ravindran) Member (Judicial (P.R. Chandrasekharan) Member (Technical)) pj 1 2