Case Law Details
In the present case the Hon’ble Supreme Court held that the “place of delivery” could not be termed as “place of removal” for the relevant time mentioned in the show cause notices with respect to section 4 of Excise Act and Rule 5 of Excise Valuation Rules. The Judgment was delivered after taking section 4 into consideration as it was originally enacted till the period involved in the show cause notices.
Facts of the case
The Assessee was making the payment of Duty by declaring that their factory gate was the place of removal, and not the buyer’s premises. The period involved in the present appeal is from 28.9.1996 to 31.3.2003. Five show cause notices were issued to the respondents stating that the property in goods manufactured by them remained with the Assessee while the goods were in transit as Assessee had taken out an insurance policy to cover the risk of loss or damage to the goods while in transit. It was stated that the buyer’s place or the place of delivery should be treated as the place of removal of the goods for the purpose of Section 4 of the Central Excise Act.
In reply to the five show cause notices, the Assessee stated that all their prices were ex-works, and that the goods were cleared from the factory on payment of central or local sales tax. Most of their sales were against Letters of Credit opened by the customer or through Bank discounting facilities. Invoices were prepared at the factory directly in the name of the customers, and the name of the Insurance Company as well as the number of Transit Insurance Policy were both mentioned. Based on the details mentioned in the invoice, the lorry receipt was prepared by the transporter and was in the buyer’s name. This receipt carried a caution notice as well a notice to the effect that deliveries were to be made to the buyer alone, and to nobody else. Further it was stated that these transactions were entered in their sales register and were booked as sales, the stock or inventory of finished goods being reduced by such sales. In the event that there was an insurance claim, recovery was credited to the customer’s ledger account against the recovery due from the customer in respect of the sale of the said goods. Excise invoices were prepared at the time that the goods left the factory in the name and address of the customers, and once the goods were handed over to the transporter, the respondent did not reserve any right of disposal of the goods in any manner. It had no right to divert the goods so handed over to the transporter and meant for a particular customer to anybody else.
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