1999 (8) TMI 141 - AT - Central Excise

Transit-insured goods sales with title passing on delivery: buyer's premises treated as place of removal; excise demand upheld

Where goods were insured in transit in the assessee's name and any transit loss was reimbursable to the assessee, title was held to pass only on delivery ... Valuation (Central Excise) - imposition of penalties - 'Place of removal' - suppress payment of central excise duty - availing extended period of limitation - invocation of Section 11A - HELD THAT:- It is an admitted case that the appellant got the goods insured when it was sent to the purchaser. Policy was taken in the name of the appellant. In the course of transit if the goods are lost, it is conceded before us, insurance company was to reimburse the appellant. Insurance company was reimbursing the appellant only because the appellant continued to have the property in the goods which were in transit. In this view of the matter it can be said that though the goods were in transit, the appellant continued to be the owner of the goods. In other words, no sale took place till it reached the buyers destination. Only when the goods reached buyers destination, the sale takes place. In such a situation, the goods belonging to the appellants were sold at the premises of the buyer. As per definition of place of removal referred to earlier, that place is the relevant place with reference to which value of the goods is to be assessed. In these circumstances, we do not find any infirmity in the conclusion reached by the Commissioner in the impugned order in imposing duty amounting under Rule 9(2) of the Central Excise Rules, 1944 read with Section 11A of the Central Excise Act. The appellant regarding invocation of Section 11A of the Act. According to him authorities were not justified in availing extended period of limitation for, the appellant did not conceal any fact in order to suppress payment of central excise duty. Actually, the appellants have no case that documents showing insurance taken by them while the goods were sent to the purchasers premises was made available to the Department. Only when they got it on inspection of the premises of the appellant, they came to know the actual place where the goods were sold. These circumstances justify the authorities taking recourse to extended period of limitation under Section 11A of the Act. According to us the limit fixed therein is the maximum limit and it is not mandatory that in all cases such maximum should be imposed as penalty. Authority is having a discretion to impose lesser penalty. On the facts and circumstances of the case we feel that a lesser amount is to be imposed as penalty on the appellants. We reduce the penalty. In the result we dispose of this appeal by confirming the order of the Commissioner imposing a duty under Rule 9(2) of the Central Excise Rules, 1944 read with Section 11A of the Act, set aside that part of the order which imposed duty amounting and reduce the penalty under Section 11AC of the Act. Issues involved: Assessment of Central Excise duty on the basis of goods sold, quantification of insurance charges, imposition of penalties under various provisions.Assessment of Central Excise Duty: The case involved the determination of the place where the property in the goods sold passed from the seller to the buyer. The Tribunal found that since the goods were insured by the seller until they reached the buyer's premises, the property did not pass at the factory gate but at the buyer's destination. Therefore, the value of the goods at the buyer's premises was held to be the basis for assessment under Section 4 of the Central Excise Act. The Commissioner's decision to impose duty amounting to Rs. 29,65,532 under Rule 9(2) of the Central Excise Rules, 1944 read with Section 11A of the Act was upheld.Quantification of Insurance Charges: The Tribunal disagreed with the Department's view that the unused portion of insurance charges should be liable for excise duty. Citing a previous decision, it was held that collecting equalized insurance charges from all customers did not warrant duty on the differential amount. Therefore, the imposition of central excise duty amounting to Rs. 98,219 was set aside.Penalties Imposed: The appellant contested the penalty imposed under Section 11AC of the Act as excessive. The Tribunal acknowledged that while the section allows for a penalty equal to the duty determined, it is not mandatory to impose the maximum amount. Considering the circumstances, the penalty was reduced from Rs. 30,63,751 to Rs. 10 lakhs.Conclusion: The Tribunal confirmed the duty of Rs. 29,65,532 under Rule 9(2) of the Central Excise Rules, 1944 read with Section 11A of the Act. The imposition of duty amounting to Rs. 98,219 was set aside, and the penalty under Section 11AC was reduced to Rs. 10 lakhs. The appeal was disposed of with the above modifications.