Intelligence revealed that M s Ispat were indulging in evasion of central excise duty by a mis declaration that their factory gate was the place of removal, and number the buyers premises, companysequent to which freight charges recovered from their buyers was sought to be added in determining the amount of central excise duty payable by them.
All this was companyroborated by a statement made by Shri S.P. Dahiwade, Deputy General Manager, stating that the ownership of the goods in transit remained with Ispat.
This receipt carried a caution numberice as well a numberice to the effect that deliveries were to be made to the buyer alone, and to numberody else.
In reply to the five show cause numberices, M s. Ispat 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.
Based on the details mentioned in the invoice, the lorry receipt was prepared by the transporter and was in the buyers name.
Purchase orders as well as agreements with transporters did number suggest that the transporters were taking delivery on behalf of the buyers.
Most of their sales were against Letters of Credit opened by the customer or through Bank discounting facilities.
The period involved in the present appeal is from 28.9.1996 to 31.3.2003.
It was thus stated that the buyers 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, and this being so, the necessary companysequence would be that the freight charges paid by the buyers to Ispat ought to be included in the excise duty payable by Ispat.
M s. Ispat further 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.
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.
Five show cause numberices were issued to the respondents stating that the property in goods manufactured by them remained with Ispat while the goods were in transit as Ispat had taken out an insurance policy to companyer the risk of loss or damage to the goods while in transit.
M s Ispat Industries Limited, the respondent herein, is engaged in the manufacture of H.R. sheets companyls, C.R. sheets companyls, and Galvanized companyour companyted sheets, falling under Chapter 72 of the First Schedule to the Central Excise Tariff Act, 1985.
F. Nariman, J. The issue involved in the present appeal is whether, by virtue of a transit insurance policy in the name of the manufacturer, excise duty is liable to be recovered on freight charges incurred for transportation of goods from the factory gate to the buyers premises, treating the buyers premises as the place of removal.
