Customs, Excise and Gold Tribunal - Bangalore
Bpl Telecom Pvt. Ltd. vs Cce on 4 December, 2002
Equivalent citations: 2003(85)ECC212
JUDGMENT G.A. Brahma Deva, Member (J)
1. Whether the appellant is liable to include transportation charges in the assessable value of the goods supplied by it to various customers by treating the buyers premises as the place of delivery of the goods is an issue to be considered herein.
2. Shri Nambiar, appearing for the appellants submitted that the appellant is a manufacturer of push button telephones, EPABX systems and accessories. The goods manufactured by the appellants are sold to various buyers pursuant to tenders or pursuant to specific purchase order placed by the buyers in question. While in the case of tenders the price quoted is an all-inclusive price {including transportation) in other cases, the transportation charges are separately collected fro the buyers. The sales are all ex-factory sales and the sales are completed at the factory gate after the representative of the buyer inspects the goods and gives clearance for dispatch of the same. The goods are thereafter despatched to the buyer under cover of documents, which show the appellant as consignor and buyer as consignee. Once the goods are delivered to the transporter for onward carriage to the buyer, the appellant does not retain any control over the goods save the right to be indemnified by the insurer in the event of damage to the goods in transit.
3. According to the Department, since the assessee has insured the goods during the transit transportation charges/insurance is Includable in determining the assessable value of the goods. The Commissioner/adjudicating authority finds that by insuring the goods the appellants have ensured that the sale of the goods to the buyer had not taken place and the complete transfer of property and possession of the goods to the buyer took place only at the premises of the buyer. It was the contention of the party that contract between the parties specifically provides that the seller shall insure the goods, merely because the seller insures the goods in transit, it does not follow that the title to the goods has not passed to the buyer.
4. Shri Nambiar submitted that buyers deems to be the owner of the goods, even though the goods were insured by the appellant during transit since the title of the goods has already been passed to the buyer and the very issue has been considered by the Supreme Court in the case of Escorts JCB Ltd. 2002 (84) ECC 225 (SC): 2002 (53) RLT 1 (SC). In this context, he drew our attention to paras 7, 11 and 12 of the order, which is as under:-
"7. From the perusal of the provision quoted above, it would be clear in the case in hand the place of removal of goods is factory premises since the transaction of sale, payment of price and handing over possession of the goods to the carrier after clearance is at the factory at Ballabgarh.
11. In one of the cases referred to and reported in 1984(2) ECC 102 (SC): 1983 ELT 1896 (SC) Union of India and Ors. etc. v. Bombay Tyres International Ltd. etc. etc. the question involved was regarding deduction of transportation charges along with cost of insurance. It was held as follows:
"Therefore, the expenses incurred on account of the several factors which have contributed to its value upto the date of sale, which apparently would be the date of delivery, are liable to be included. Consequently, where the sale is effected at the factory gate expenses incurred by the assessee upto the date of delivery of account of storage charges, outward handling charges, interest on inventories (stocks carried by the manufacturer after clearance), charges for other services after delivery to the buyer, namely after-sales service and marketing and selling organization expenses including advertisement expenses cannot be deducted. It will be noted that advertisement expenses, marketing and selling organization expenses and after-sale service promote the marketability of the article and enter into its value in the trade. Where the sale in the course of wholesale trade is effected by the assessee through its sales organization at a place or places outside the factory gate, the expenses incurred by the assessee upto the date of delivery and the aforesaid heads cannot on the same grounds be deducted. But the assessee will be entitled to a deduction on account of the cost of transportation of the excisable article from the factory gate to the place or places under it is sold. The cost of transportation will include the cost of insurance on the freight for transportation of the goods from the factory gate to the place or places of delivery."
The assessee also referred to a decision in 2002 (81) ECC 404 (T) : 2002 (49) RLT 506; Associated Strips Ltd and Anr. v. CCE, New Delhi. It is a decision of CEGAT. Considering several decisions of different Courts and the terms of the contract between the parties, it was held that sale of goods had taken place at the factory gate and therefore the place of removal was not the premises of the buyer. In view of the provisions of Section 23 and Section 39 of the Sale of Goods Act, 1930, it was found that goods to be treated as delivered to buyer and property and possession of the goods passed on to buyer when the goods were handed over to tranporter, In such a case element of freight and transit insurance were not to be included in the normal value of the goods. We approve of the view taken by the CEGAT.
12. In view of the discussion held above in our view the Commissioner of Central Excise and the CEGAT erred in drawing an inference that the ownership in the property continued to be retained by the assessee till it was delivered to the buyer for the reason that the assessee had arranged for the transport and the transit insurance. Such a conclusion is not sustainable."
5. Shri Narasimha Murthy appearing for the appellants justified the action of the Department since the Commissioner has followed the earlier order passed by the Tribunal.
6. It was brought to our notice that the earlier order (Escorts JCB Ltd. case) referred to and relied by the Commissioner has been reversed by the Supreme Court as can be seen. In view of the facts and circumstances and since the issue has already been considered by the Supreme Court in the case referred to above, we accept the plea of the Counsel for the appellants on the point at issue. In the result, appeal is allowed with consequential relied.