HINDUSTAN WIRES LTD. Vs. COMMISSIONER OF CENTRAL EXCISE,

JUDGEMENT

(1.) THIS is an application filed by M/s Escorts Ltd, for waiver of pre -deposit of Central Excise Duty of Rs. 63,61,580/ - and equal amount of penalty.

(2.) SHRI V. Laxmikumaran, ld. Advocate, submitted that the applicants manufacture tractors which are sold both from the factory gate and from the various depots; that the terms of conditions of sale between the applicants and the dealers are on a principal to principal basis and the same are incorporated in the dealers sales agreement; that interms of the agreement they deliever the tractors to the dealers' authorised representatives either at the factory gate or depot; that the authorised representative are transporters of tractors and endorsement of transporters accepting the tractors on behalf of customers is mentioned on the invoices; that accordingly the delievery of tractors is complete at the factory gate; that in terms of section 2(h) of the Central Excise Act transfer of possession of goods is the essence of sale; that the Larger Bench of the Tribunal also held so in the case of CCE Meerut Vs. Prabhat Jarda Factory Ltd., 2000 (119) ELT 191. He, further, submitted that as the sale is complete at the factory gate/Depot, the question of contending that the sale takes place at the premises of the buyer does not arise. He also mentioned that the applicants arange for the transit insurance for the tractor on behalf of the dealers and recover the cost of insurance from the dealer which is built up in the equalised freight; that in case of claims, the insurance company reimburse the losses to the dealers by virtue of the cover note on the back side of each invoices wherein it is mentioned against the name and address of the insured "as mentioned on the top of the bill"; that as per agreement with the Insurance Company the payment could be made to the dealers who file the claim with the insurance company in case of loss; that thus it is clear that the risk in the goods is on the dealers and not on the applicant. Finally, he submitted that the demand is barred by limitations and the larger period of limitation is not applicable as the practice of claiming deduction of equalised freight which also has an in built element of insurance was known to the Department since long; that further, in an earlier show cause notice dt 22 -4 -97 the department has issued the notice involveing the same issue as in the present appeal regarding taking comprehensive insurance policy on each tractor.

(3.) OPPOSING the prayer, Shri Jagdish Singh, ld. DR, submitted that the issue involved in the present appeal is squarely covered by the decision of the Larger Bench in the case of Prabhat Zarda in as much as the Larger Bench observed that the decision in the case of M/s Escorts J.C. B. Ltd Vs. CCE 1999 (35) RLT -9 has laid down the correct law; that in that case the Tribunal has held that the place where the goods are sold can be place of removal where the property in the goods sold passes from seller to the buyer. Insurance Policies taken by the Appellant in this case shows that the Applicants continued to be the owner of the goods which were in transit and only when the goods reached buyer's destination the sale takes place. The ld. DR also mentioned that as per the agreement the applicants reserved right of property subject to fulfilment of condition of final payment; that the extended period of limitation is invokable as the vital facts were suppressed from the Department.