Full Judgment
2. The common question for consideration in these appeals is whether in determining the assessable value of the goods manufactured by each of the assessees, the insurance and freight incurred in relation to transport of the goods from the factory of the manufacturer to the premises of the consignee is to be included. In the orders impugned in the appeals, the Commissioner has, heavily relying upon the decision of the Tribunal in Escorts JCB Ltd. v. CCE [2000 (118) E.L.T. 650 = 1999 (35) RLT 9], upheld that these charges are includible.
3. The contention of the counsel for each of the appellants is that it has now been held in two judgments of the Supreme Court, that the fact that the manufacturer insures the goods and arranges for payment of freight for their transport from his premises to buyer is itself no criteria for holding that he retained the title to the goods. On appeal by the assessee, the Supreme Court, in its judgment reported in 2002 (146) E.L.T. 31, reversed the decision of this tribunal in Escorts JCB Ltd. While doing so, it noted with the approval another decision of this tribunal in Associated Strips Ltd. v. CCE - 2002 (143) 131. On appeal, the Supreme Court also reversed the decision of the Larger Bench of the Tribunal in CCE v. Prahhat Zarda Factory Ltd. - 2000 (119) E.L.T. 191, holding that the place of removal of goods cleared either from the factory of the manufacturer or his depot would be the premises of the buyer.
4. In its judgment in Escorts JCB Ltd., the Supreme Court quoted the passage from Sale of Goods by Benjamin to the following effect :- "Insurance. The passing of property is rarely of relevance to insurance. A person can insure goods to their full value against any loss on behalf of anyone who may be entitled to an interest in the goods at the time the loss occurs, provided that it appears from the terms of the policy that it was intended to cover their interest.
Also a buyer will have an insurable interest in goods if they are at his risk, whether or not the property has passed to him." 5. It concluded that the 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 was erroneous.
6. As we perceive it, the ground advanced by the notice which resulted in the orders impugned before us for holding that the place of removal from the buyer's premises is essentially the fact that the insurance and the freight for the goods were arranged by the manufacturer who initially paid for it, although reimbursed by the buyer.
7. The departmental representative was unable, despite his efforts, to show that there was any ground in any of the notices or the orders, besides these two, for sustaining the conclusion that has been arrived at by the Commissioner. He raised a contention that sale is defined in Section 2(h) of the Act to mean transfer or possession of goods for valuables by consideration; by applying this meaning to Section 4, as it stood amended, the sale takes place only when the goods are delivered at the premises of the buyer.
8. We are unable to accept this contention. The amendment made to Sub-section (4) of Section 4, as a result of which the notice has been issued and the orders passed, defined the place of removal in Clause (b) to include "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." Therefore it is the place from which the goods are removed that is the place of removal as defined. The clause will only apply where the place of removal and the place of sale are the same. If the place of removal is different from the place of sale, this will not apply. Even if we assume that the provisions of Section 2H will ignore the meaning of the word buyer, it is yet to be shown for it to be applied, removal takes place at the premises of the buyer. The only ground is that the insurance and freight provided by the buyer. We have already dealt with this aspect.
9. The departmental representative also emphasised, in the case of Asea Brown Boveri Ltd. that the contract determines the deeming date of delivery to be in the case of goods transported by road the date of receipt of material in the purchaser's store. We do not see how the deeming provision relates to date of delivery has any bearing upon the place of removal and therefore fail to see the significance of this contention.
10. The appeals are accordingly allowed and the impugned orders set aside.