AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (7) TMI 1034
X X X X Extracts X X X X
X X X X Extracts X X X X
....atement of Shri Ashok Jain confirms that said 7% is not freight, it is not an actual insurance premium paid to the insurance company, it is not even equalized insurance premium paid by the company. In fact, they are paying very meagre amount of premium to the insurance company which is in the range of Rs. 11 to 16 lakhs in a year. What they have called as transit insurance is a sum collected by them towards reimbursement of breakage in respect of various customers. Is this collection by the appellant towards insurance charges as claimed by them The appellant is not empowered or authorized to act as an insurance company. What is collected by them at 7% is by no stretch of imagination can be treated as insurance charges. 7.3 Anybody including a manufacturer can act as transporter, as no special permission is required to act as a transporter. In such cases, if freight is collected for transportation at the option of the buyer, and collected from the buyer, such freight is excludable from assessable value. The case laws cited on behalf of the appellants support their case, that such extra money collected towards freight may not be included in the assessable value. The amount collected....
X X X X Extracts X X X X
X X X X Extracts X X X X
....T for decision on all the issues. The appeals are disposed of accordingly." Consequently, these appeals are taken up together for disposal. 3. The ld. Senior Advocate, Shri V.Sridharan for the appellants submits that the appellants, inter alia, are engaged in the manufacture of Sheet glass of various thickness, falling under Chapter Sub-Heading No.70.02 of the CETA,1985. The manufactured goods during the relevant period had been sold at different ex-factory prices to dealers, situated in different zones of the entire country, depending upon the factors, like sales tax, local levies, competition in particular area etc. He further submits that General Terms of sale between the appellants and the dealers, inter alia, provides that the price of the goods be ex-factory and the dealers are free to arrange their own transportation for delivery of the goods from the factory to their premises. In the event, the dealers opt to get the goods delivered at their premises by the Appellant, the cost of transportation to be paid by the dealers which includes 7% of the price, as transit insurance charges for safe delivery of the manufactured goods, free from breakage in transit. In the event, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....th effect from 1.7.2000. It is his contention that their basic price does not vary depending upon the factor whether the appellant arrange transportation & insurance for the buyer or other wise. He has submitted that the cost of transportation of goods shown in the invoice consisting of freight charges + transit insurance; the transit insurance is collected @ 7% of the price; the freight is collected by equalized rate on the total quantity in Sq. Mtr. supplied by the appellants. 6. Further, he has submitted that since transit risk insurance is part of cost of the transportation, hence it cannot form part of the transaction value, in view of the provisions contained in Section 4(2) of C.E.A., 1944. He submits that Section 4(2) of C.E.A., 1944 is a residuary section and applies only to such cases, where the price of the goods at the place of removal, is not known and the value thereof, is determined with reference to the price for delivery at the place other than the place of removal. Under the said Section, the cost of transportation from the place of removal to the place of delivery, will be deductible provided the assessable value, is not known at the factory gate but has to be d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....excise duty. It is his contention that the principle laid down by the Tribunal in Triveni Glass Ltd. - 2004 (178) ELT (268) is squarely applicable to the present circumstances of the case. 10. In relation to other discounts, the ld. Senior Advocate for the appellant has submitted that even though the eligibility of discount in principle has not been disputed by the Department, however, the quantum of credit passed by them is in dispute. It is his contention that the total discount claimed by them was Rs. 21,60,72,896/- whereas the actual discount passed on by them to their buyer was much more Rs. 23,23,77,024/-. Hence, the total discount passed on was more than the deduction claimed by them. Accordingly, the demand on this count is bad in law. Ld. Senior Advocate has further submitted that the differential duty demanded in the show cause notice dated 26.2.2004 invoking extended period of limitation is unsustainable as the collection of 7% of the price towards transit insurance from the dealers has always been with the knowledge of the Department and proceedings were in fact initiated way back in 1995. Also, even after amendment of Section 4 of CEA, 1944, the appellant through lett....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s case and Accurate Meters Limited's case are not applicable to the facts of the present case. It is his further contention that the principle laid down in Triveni Glass Ltd's case is in different set of facts and hence not applicable to facts of the present case. Citing an example, the ld. A.R. for the Revenue has submitted that Invoice No.AB 3769 dated 29.12.2004 under the head "Cost of Transportation", the total amount shown as Rs. 37,818/- from which the total amount towards cost of freight incurred was Rs. 18,730/- and hence difference in freight amount is Rs. 19,088/- towards compensation of breakage during transit. Hence the same is includible in the assessable value. Further, the ld. A.R. for the Revenue has submitted that dismissal of the Revenue's appeal by the Hon'ble Supreme Court against the Tribunal's order dated 1.12.2009 has no precedentiary value as the Civil Appeal was dismissed at the preliminary stage itself in view of principle of law laid down by the Supreme Court in the case of C.C.E., Ahmedabad Vs. Ramesh Food Products - 2004 (174) ELT 310 (SC) and in the case of Sun Export Corporation Vs. C.C., Bombay - 1997 (93) ELT 641 (SC). Hence, the jud....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt, hence to be followed. Before proceeding further, it is necessary to refer to the observation of this Tribunal in the Order dt.01.12.2009. This Tribunal at para 10 of the judgement, dealing with the earlier judgement, recorded as follows: "10. We would like to make it clear at the cost of repetition that this conclusion has been reached only because the Department has not been able to show that the same conclusions which were reached earlier by the Tribunal on the basis of facts are applicable to the present case also. We are not disagreeing with the principles of the law as pronounced by the Tribunal in case of the appellant for the earlier period." 16. From the above observation it is clear that as the Department could not able to show that the facts involved in the earlier case also same in the subsequent case, therefore, without disagreeing with the principle of law laid down in the earlier judgment, the appeal was allowed. Needless to emphasize, in the order dated 01.12.2009, the Tribunal concurred with the principles of law laid down on the includibility of said charges in the value of the glass sheets. The appellants argued before the Hon'ble Supreme Court in their appe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ly in the invoice. (a) In such cases, the cost of transportation will include: (i) Special Packing charges - to minimise the risk of breakages in transit. The charge per square meter will be advised to the buyer from time to time. (ii) Laffa charges for jam packing the boxes in the truck to make the entire consignment into one mass. (iii) Transit risk insurance If the buyer desires such risk to be covered by GBL, he will have to pay insurance charges, which are presently charged at 7% of the total invoice value inclusive of the cost of sheet glass, special packing charges, laffa charges, excise duty and truck freight to destination. (b) The price of the goods inclusive of the above cost of Transportation amount, comprising of special packing, truck freight, transit insurance etc., will also become due simultaneously along with the price of the goods once they leave the factory gate. (3) It will always be understood that the property in the goods shall be deemed to be vested in the buyer the moment the goods leave the factory gate. The transporter will always be deemed to be as taking the delivery of goods as the agent of the buyer." 18. It is argued that the appellants s....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... thereunder that if the buyers desire, the Appellant to bear the risk of breakage and/or of non-delivery in transit due to any reason whatsoever, then they(buyers) were required to pay cost of transportation to the appellant. In the said agreement, no where it is elaborately stated that buyers would be compensated for breakage/damage to the goods on its journey from the factory to the buyers premises. Needless to mention, when the stipulation is a simple arrangement of transportation of the goods from the factory premises to the place of buyer, on behalf of the buyer, without bearing the risk of damages beyond that was provided by the insurance company by way of compensating for the loss/ breakage to the buyers during the transit, the sale could be described as ex-factory basis. But, in the present case, the appellants on receiving extra amount @7% of the total value undertook to deliver the goods breakage free, and compensate the buyer for breakages by issuing credit notes, therefore, such sale ought to be considered not a sale on ex-factory basis but on FOR basis even though the 'Cost Transportation' is not included in the price but shown separately in the invoice. Beside....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rt was of the view that it was compensation that was being paid to the customers, it was part of the cost of the transportation of the goods. 5. We are unable to accept either submission. In the case of transportation what is includible is the cost of taking out insurance to cover the goods transported; in other words, to cover oneself against a possible loss by paying a premium to an insurance company. The payment made by the respondent to its customers for breakages and losses cannot tantamount to insurance. Nor can, by any means, such compensation be treated as a part of the cost of transportation; it is a clear case of making up to the customer by means of a credit note the monies that it has lost on account of breakages or losses in transit. 24. The Hon'ble Supreme Court has clearly laid down the principle as to what should include in the "cost of transportation". It is observed that what is includible in the cost of transportation as transit insurance is the premium paid to an insurance company for the possible loss and not the payment made to the customers for breakages and losses which cannot tantamount to insurance. In the present case the amount is collected from the bu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t. 27. The reliance placed by the Ld. advocate, on the judgements of the Hon'ble Supreme Court in Escort JCB's case and Accurate meters case is out of place and not applicable to the facts of the present case. In Escort JCB's case, the facts before the Hon'ble Apex Court was to decide whether freight and transit insurance be includable in the assessable value, when the goods are delivered at the buyer's premises. In that context, the Hon'ble Supreme Court held that since price is ex-factory, the expenditure incurred, towards freight and transit insurance, cannot form part of the assessable value. Similar facts also in the case of Accurate meter's case and the Tribunal in Triveni Glass case(supra). 28. It is also argued on behalf of the appellant that the excess amount collected as transit insurance cannot be added to the assessable value, in view of the principle of law laid down by the Hon'ble Supreme Court in the case of CCE Vs. Indian oxygen Ltd - 1988 (36) ELT 730(SC), Baroda Electric Meters Ltd Vs. CCE - 1997 (94) ELT 13 (SC), where under it is held that the excess amount of freight collected be considered as a profit and hence not chargeable to duty. In the ....