ESCORTS JCB LIMITED Vs. COMMISSIONER OF CENTRAL EXCISE DELHI II
LAWS(SC)-2002-10-47
SUPREME COURT OF INDIA
Decided on
October 24,2002
ESCORTS JCB LIMITED
Appellant
VERSUS
COMMISSIONER OF CENTRAL EXCISE,DELHI
Respondents
Referred Judgements :-
UNION OF INDIA AND OTHERS ETC. ETC. V. BOMBAY TYRE INTERNATIONAL LTD. ETC. ETC. [REFERRED TO]ASSOCIATED STRIPS LTD. AND ANR,V. CCE,NEW DELHI [REFERRED TO]
Cited Judgements :-
MERCEDES BENZ INDIA PRIVATE LIMITED VS. UNION OF INDIA [LAWS(BOM)-2010-3-42] [REFERRED TO]COMMISSIONER OF C. EX. & CUSTOMS VS. PARTH POLY WOOVEN PVT. LTD. [LAWS(GJH)-2011-4-260] [REFERRED TO]
MSC AGENCY INDIA PVT LTD VS. M/S. GLINTS GLOBAL PTE LTD. [LAWS(MAD)-2014-2-9] [REFERRED TO]
KUNAL ENTERPRISES VS. COMMISSIONER OF CENTRAL EXCISE, RAJKOT [LAWS(CE)-2013-4-67] [REFERRED TO]
STATE OF ANDHRA PRADESH VS. ITC BHADRACHALAM PAPER BOARDS LIMITED [LAWS(APH)-2014-12-147] [REFERRED TO]
LARSEN AND TOUBRO LTD. VS. STATE OF ANDHRA PRADESH AND ORS. [LAWS(APH)-2015-9-16] [REFERRED TO]
BLUE STAR LTD. VS. COMMISSIONER OF CENTRAL EXCISE, VAPI [LAWS(CE)-2008-1-70] [RELIED ON]
ANDHRA SUGARS LIMITED VS. COMMISSIONER OF C. EX., GUNTUR [LAWS(CE)-2006-9-36] [RELIED ON]
ANDHRA PRADESH PAPER MILLS LTD. VS. COMMISSIONER OF C. EX., VISAKHAPATNAM-II [LAWS(CE)-2007-1-83] [REFERRED TO]
RAGHAVENDRA PRE-STRESS PRODUCTS (P) LTD. VS. COMMR. OF C. EX., TIRUPATI [LAWS(CE)-2006-3-113] [REFERRED TO]
MOTOROLA INDIA (P) LTD. VS. COMMISSIONER OF C. EX., BANGALORE [LAWS(CE)-2006-5-85] [RELIED ON]
ADITYA BIRLA INSULATORS LTD. VS. COMMR. OF C. EX., KOLKATA-IV [LAWS(CE)-2008-4-114] [REFERRED TO]
COMMISSIONER OF C. EX., SHILLONG VS. GUWAHATI CARBON LTD. [LAWS(CE)-2009-4-177] [REFERRED TO]
COMMISSIONER OF CENTRAL EXCISE VS. WIPRO ACER LTD. [LAWS(CE)-2007-6-250] [REFERRED TO]
APOLLO TYRES LTD. VS. COMMISSIONER OF CENTRAL EXCISE, COCHIN [LAWS(CE)-2003-5-157] [REFERRED TO]
TOYOTA KIRLOSKAR MOTORS LTD. VS. COMMISSIONER OF C. EX., BANGALORE [LAWS(CE)-2004-8-165] [REFERRED TO]
JINDAL VIJAYNAGAR STEEL LTD. VS. COMMISSIONER OF C. EX., BELGAUM [LAWS(CE)-2004-6-202] [REFERRED TO]
BPL TELECOM PVT. LTD. VS. COMMISSIONER OF C. EX., COCHIN [LAWS(CE)-2002-12-101] [REFERRED TO]
SANGHVI CYLINDERS (P) LTD. VS. COMMISSIONER OF CENTRAL EXCISE, BELGAUM [LAWS(CE)-2006-2-92] [RELIED ON]
SAVEAIR INDIA LTD. VS. C.C.E. [LAWS(CE)-2004-8-231] [REFERRED TO]
MARUTI UDYOG LTD. VS. COMMISSIONER OF CENTRAL EXCISE [LAWS(CE)-2002-11-133] [REFERRED TO]
FILAMENT INDIA AND K.G. BAJORIA, VS. CCE, JAIPUR [ALONGWITH APPEAL [LAWS(CE)-2003-6-279] [REFERRED TO]
ARHAM SPINNING MILLS VS. CCE [LAWS(CE)-2004-7-267] [REFERRED TO]
PONDS INDIA LTD. VS. CCE [LAWS(CE)-2004-1-242] [REFERRED TO]
COMMISSIONER OF CENTRAL EXCISE VS. EASTERN ELECTRICALS [LAWS(CE)-2004-3-335] [REFERRED TO]
RELIABLE SAFETY GLASS, SHRI VS. CCE [LAWS(CE)-2004-6-336] [REFERRED TO]
TRIVENI GLASS LIMITED VS. CCE [LAWS(CE)-2004-2-374] [REFERRED TO]
MERCEDES-BENZ INDIA PVT. LTD. VS. CCE [LAWS(CE)-2009-10-138] [REFERRED TO]
PURE DRINKS LTD. VS. COMMISSIONER OF CENTRAL EXCISE [LAWS(CE)-2005-4-175] [REFERRED TO]
PURE DRINKS LTD. VS. COMMISSIONER OF CENTRAL EXCISE [LAWS(CE)-2005-4-175] [REFERRED TO]
COMMISSIONER OF CENTRAL VS. ACCURATE METERS LTD [LAWS(SC)-2009-3-66] [REFERRED TO]
SULTANKHAN YUSUFKHAN PATHAN VS. STATE OF GUJARAT [LAWS(GJH)-2003-10-23] [REFERRED]
COMMNR. OF CENTRAL EXCISE, SHILLONG VS. INDIA CARBON LTD. [LAWS(SC)-2011-4-154] [REFERRED TO]
GUJRAL AIRCON LTD. VS. COMMISSIONER OF CENTRAL EXCISE [LAWS(CE)-2004-1-202] [REFERRED TO]
COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, AURANGABAD VS. ROOFIT INDUSTRIES LTD [LAWS(SC)-2015-4-62] [REFERRED TO]
COMMISSIONER CENTRAL EXCISE, MUMBAI-III VS. EMCO LTD. [LAWS(SC)-2015-7-82] [REFERRED TO]
COMMISSIONER OF CUSTOMS AND CENTRAL ECISE, NAGPUR VS. ISPAT INDUSTRIES LTD [LAWS(SC)-2015-10-88] [REFERRED TO]
COMMISSIONER OF CUSTOMS AND CENTRAL ECISE, NAGPUR VS. ISPAT INDUSTRIES LTD [LAWS(SC)-2015-10-88] [REFERRED TO]
COMMISSIONER OF CENTRAL EXCISE VS. KANISHK STEEL INDUSTRIES LTD. [LAWS(MAD)-2019-3-506] [REFERRED TO]
JUDGEMENT
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(1.)The appeals indicated above, arise out of judgment and order dated 24-8-1999 passed by the Customs Excise and Gold (Control) Appellate Tribunal (for short 'CEGAT), operative part of which reads as under :
"In the result we dispose of this appeal by confirming the order of the Commissioner imposing a duty of Rs. 29,65,532/- under R.9(2) of the Central Excise Rules, 1944 read with S. 11-A of the Act, set aside that part of the order which imposed duty amount to Rs. 98,219/- and reduce the penalty to Rs. 10 lakhs under S. 11-AC of the Act."
Escorts JCB Ltd., the appellant in Civil Appeal No. 7230/99 and respondent in Civil Appeal No. 1163/2000 (hereinafter to be referred to as 'the assessee') is aggrieved by the order confirming imposition of duty and levy of penalty. The Commissioner of Central Excise, appellant in Civil Appeal No. 1163/2000 and respondent in Civil Appeal No. 7230/99 (hereinafter to be referred to as 'The Revenue') is aggrieved by the order reducing the amount of penalty to Rs. 10 lakhs as imposed under S. 11-AC of the Central Excise Act.
(2.)The Central Excise Officers of Anti-Evasion Branch, Faridabad on visit to the premises of the assessee found that the amount of "transit insurance" charges was not added to the value of the goods sold, hence issued a show cause notice dated 24-3-1998 to the assessee saying that an open policy for transit risks in the name of M/s. Escorts JCB Ltd. and their bankers appear in the column for the name of assured but there is no mention of the buyer or its name in the column for "insured." Notice also indicates that 'freight' and "transit insurance" were charged from the buyers but no central excise duty was paid on these two elements, and by not including above noted elements in the normal price as per S. 4 of the Central Excise Act, 1944 and by misdeclaring the place of removal as factory gate instead of buyer's place where the goods were to be sold after their clearance from the factory as described in sub-clause (iii) and Cl. (b) of sub-section (4) of the Central Excise Act, 1944, the assessee has suppressed the necessary facts. It also said that S. 11-A of the Act is attracted for extending the period up to 5 years for demanding the central excise duty. The assessee was also noticed as to why penalty under S. 11-AC be not imposed upon it.
(3.)The assessee contested the show cause notice saying that the sale is affected at the factory gate at Ballbgarh in the State of Haryana. The freight and arranging for insurance during transit of goods have no material bearing on the point of place of sale or removal of goods. The Commissioner of Central Excise, Delhi II however confirmed the demand holding that the factum of "transit insurance" by the manufacturer shows that the transaction of sale is complete only on delivery of goods to the buyer otherwise there was no good reason for the manufacturer taking responsibility of the risk involved in transportation of the goods to the buyer's place. The case of the assessee that sale takes place and it is completed at the factory gate was not found acceptable and contrary to S. 2(h) of the Central Excise Act. The appellate authority namely CEGAT upheld the view taken by the Commissioner, Central Excise in so far it related to completion of the transaction of sale at the buyer's place which is the main question for consideration in this appeal before us.
"In the result we dispose of this appeal by confirming the order of the Commissioner imposing a duty of Rs. 29,65,532/- under R.9(2) of the Central Excise Rules, 1944 read with S. 11-A of the Act, set aside that part of the order which imposed duty amount to Rs. 98,219/- and reduce the penalty to Rs. 10 lakhs under S. 11-AC of the Act."
Escorts JCB Ltd., the appellant in Civil Appeal No. 7230/99 and respondent in Civil Appeal No. 1163/2000 (hereinafter to be referred to as 'the assessee') is aggrieved by the order confirming imposition of duty and levy of penalty. The Commissioner of Central Excise, appellant in Civil Appeal No. 1163/2000 and respondent in Civil Appeal No. 7230/99 (hereinafter to be referred to as 'The Revenue') is aggrieved by the order reducing the amount of penalty to Rs. 10 lakhs as imposed under S. 11-AC of the Central Excise Act.
(2.)The Central Excise Officers of Anti-Evasion Branch, Faridabad on visit to the premises of the assessee found that the amount of "transit insurance" charges was not added to the value of the goods sold, hence issued a show cause notice dated 24-3-1998 to the assessee saying that an open policy for transit risks in the name of M/s. Escorts JCB Ltd. and their bankers appear in the column for the name of assured but there is no mention of the buyer or its name in the column for "insured." Notice also indicates that 'freight' and "transit insurance" were charged from the buyers but no central excise duty was paid on these two elements, and by not including above noted elements in the normal price as per S. 4 of the Central Excise Act, 1944 and by misdeclaring the place of removal as factory gate instead of buyer's place where the goods were to be sold after their clearance from the factory as described in sub-clause (iii) and Cl. (b) of sub-section (4) of the Central Excise Act, 1944, the assessee has suppressed the necessary facts. It also said that S. 11-A of the Act is attracted for extending the period up to 5 years for demanding the central excise duty. The assessee was also noticed as to why penalty under S. 11-AC be not imposed upon it.
(3.)The assessee contested the show cause notice saying that the sale is affected at the factory gate at Ballbgarh in the State of Haryana. The freight and arranging for insurance during transit of goods have no material bearing on the point of place of sale or removal of goods. The Commissioner of Central Excise, Delhi II however confirmed the demand holding that the factum of "transit insurance" by the manufacturer shows that the transaction of sale is complete only on delivery of goods to the buyer otherwise there was no good reason for the manufacturer taking responsibility of the risk involved in transportation of the goods to the buyer's place. The case of the assessee that sale takes place and it is completed at the factory gate was not found acceptable and contrary to S. 2(h) of the Central Excise Act. The appellate authority namely CEGAT upheld the view taken by the Commissioner, Central Excise in so far it related to completion of the transaction of sale at the buyer's place which is the main question for consideration in this appeal before us.
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