M/S. ESCORTS JCB LTD. versus COMMISSIONER OF CENTRAL EXCISE, DELHI-II

M/S. ESCORTS JCB LTD. versus COMMISSIONER OF CENTRAL EXCISE, DELHI-II

Where goods are sold ex-factory gate and delivered to carrier or buyer's representative there, the transaction is complete at that point and ownership passes to buyer. Transit insurance arranged by the seller for buyer’s benefit and charged separately does not lead to inference that seller retains ownership during transit. Thus, freight and transit insurance are not to be included in normal value for assessment of excise duty.

Parties
Appellant/respondent: M/s. Escorts JCB Ltd.; Respondent/appellant: Commissioner of Central Excise, Delhi-II
Jurisdiction
India
Judgment Date
24 October 2002
Procedural Posture
Civil Appeal / Supreme Court Decision on Appeal From CEGAT
Outcome
Civil Appeal No. 7230/1999 allowed; Civil Appeal No. 1163/2000 dismissed as infructuous.
Legal Topics
Central Excise Valuation, Sale of Goods—ownership and Risk, Transit Insurance and Excise Duty
Taxation Commercial Law Central Excise Valuation Sale of Goods—ownership and Risk Transit Insurance and Excise Duty

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Parties

M/s. Escorts JCB Ltd.

Appellant/respondent

Commissioner of Central Excise, Delhi-II

Respondent/appellant

Procedural Posture

Civil Appeal / Supreme Court Decision on Appeal From CEGAT

Legal Issues

  1. 1 Whether transit insurance and freight charges are to be included in the assessable value for the purpose of Central Excise duty when sale is ex-factory gate
  2. 2 Whether the arrangement of transit insurance by the seller implies retention of ownership in the goods until delivery to the buyer

Ratio Decidendi

Where goods are sold ex-factory gate and delivered to carrier or buyer's representative there, the transaction is complete at that point and ownership passes to buyer. Transit insurance arranged by the seller for buyer’s benefit and charged separately does not lead to inference that seller retains ownership during transit. Thus, freight and transit insurance are not to be included in normal value for assessment of excise duty.

Court Disposition

Civil Appeal No. 7230/1999 allowed; Civil Appeal No. 1163/2000 dismissed as infructuous.

Orders

  • Order and judgment of Commissioner of Central Excise and CEGAT imposing duty and penalty set aside.
  • No order as to costs.