COMMISSSIONER, CUSTOMS AND CENTRAL EXCISE, AURANGABAD versus M/S ROOFIT INDUSTRIES LTD.

Citation: [2015] 6 S.C.R. 716 · Decided: 23-04-2015 · Supreme Court of India · Bench: A.K. SIKRI · Disposal: Appeal(s) allowed

Judgment (excerpt)

[2015] 6 S.C.R. 716 
A 
COMMISSSIONER, CUSTOMS AND CENTRAL EXCISE, 
B 
c 
AURANGABAD 
v. 
MIS ROOFIT INDUSTRIES LTD. 
(Civil Appeal No.5541 of 2004) 
APRIL23, 2015 
[A.K. SIKRI AND R. F. NARI MAN, JJ.] 
Central Excise Act, 1944 - s. 11A(1), 11AB, 11AC -
Central Excise Rules, 1994 - r. 9(1) - Sales of Goods Act, 
1930 - s. 19 - Central Excise Duty - Evasion of - Non-
computation of assessable value offinished goods properly 
D - Place of removal of finished goods different from the factory 
gate, however, deduction of the amount of freight, insurance 
and unloading charges from the price excisable goods -
Demand of differential excise amount - Adjudicating 
Authority confirming the demand on account of under 
E valuation - Said order set aside by the tribunal - On appeal, 
held: On the basis of the terms and conditions of the orders 
placed by the government authorities with the assessee, it is 
clear that the sale of goods did not take place at the factory 
gate of the assessee but at the place of the buyer on the 
F delivery of the goods - The clear intent of the purchase order 
was to transfer the property in goods to the buyer at the 
premises of the buyer when the goods are delivered and by 
virtue of s. 19, the property in goods was transferred at that 
time only- Tribunal did not take into consideration all these 
G aspects- Thus, the order passed by the tribunal is set aside 
and that by the Adjudicating Authority restored. 
Allowing the appeal, the Court 
H 
716 
COMMNR., CUSTOMS & CENTRAL EXCISE, 
717 
AURANGABAD v. ROOFIT INDUSTRIES LTD. 
HELD: 1.1 It is to be seen as to what point of time A 
sale is effected namely whether it is on factory gate or at 
a later point of time i.e. when the delivery of the goods is 
effected to the buyer at his premises. This aspect is to 
be seen in the light of provisions of the Sale of Goods 
Act by applying the same to the facts of each case to B 
determine as to when the ownership in the goods is · 
transferred from the seller to the buyer. The charges 
which are to be added have put up to the stage of the 
transfer of that ownership inasmuch as once the 
ownership in goods stands transferred to the buyer, any C 
expenditure incurred thereafter has to be on buyer's 
account and cannot be a component which would be 
included while ascertaining the valuation of the goods 
manufactured by the buyer. That is the plain meanin~ 0 
which has to be assigned to Section 4 read with 
Valuation Rules. [Para 12) [728-D-F] 
1.2 In the instant case, most of the orders placed wit~ 
the respondent assessee were by the various 
Government authorities. On going through the terms and E 
conditions of the order placed by Kerala Water Authority, 
it becomes clear that the goods were to be delivered at 
the place of the buyer and it is only at that place where 
the acceptance of supplies was to be effected. Price of F 
the goods was inclusive of cost of material, central excise 
duty, loading, transportation, transit risk and unloading 
charges etc. Even transit damage/breakage on the 
assessee account which would clearly imply that till the 
goods reach the destination, ownership in the goods G 
remain with the supplier namely the assessee. As per 
the 'terms of payment' clause contained in the 
procurement order, 100% payment for the supplies was 
to be made by the purchaser after the receipt and 
verification of material. Thus, there was no money given H 
718 
SUPREME COURT REPORTS 
[2015] 6 S.C.R. 
A earlier by the buyer to the assessee and the 
consideration was to pass on only after the receipt of 
the goods which was at the premises of the buyer. It 
would be manifest that the sale of goods did not take 
place at the factory gate of the assessee but at the place 
B of the buyer on the delivery of the goods in question. 
The clear intent of the aforesaid purchase order was to 
transfer the property in goods to the buyer at the 
premises of the buyer when the goods are delivered and 
by virtue of Section 19 of Sale of Goods Act, the property 
C in goods was transferred at that time only. These are 
clear finding of facts on the said lines recorded by the 
Adjudicating authority. However, the CESTAT did not 
take into consideration all these aspects and allowed the 
0 appeal of the assessee by merely referring to the 
judgment in the case of Escorts JCB Ltd. Obviously the 
exact principle laid down in the judgment has not been 
appreciated by the CESTAT. Thus, the order passed by 
the tribu

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