Recent Supreme Court judgements
'READY Mix Concrete' (RMC) vs Concrete Mix (CM) - Not Same
: Concrete Mix (CM) manufactured at the site of construction for use in construction work at such site, is exempted from excise duty. And this was exempted since 1994. Ready Mix Concrete (RMC) is not so exempted. But is there a difference between the two? In 2002, the Commissioner held that these were two different items and what the assessee in that case manufactured at the site was RMC and not CM and so duty was payable. This decision of the Commissioner was upheld by the CESTAT in 2005 (2005-TIOL-1281-CESTAT-BANG), against which the assessee, L&T is in appeal before the Supreme Court.
The Supreme Court this week dismissed the assessee's appeal and held: the assessee was producing RMC and the exemption notification exempts only CM and the two products are different. Even if there is a doubt, which was even accepted by the assessee, since we are dealing with the exemption notification it has to be strict interpretation and in case of doubt, benefit has to be given to the Revenue.
Please see Larsen and Tourbo Ltd Vs Commissioner of Central Excise, Hyderabad -
Central Excise - Valuation - whether, by virtue of a transit insurance policy in the name of the manufacturer, excise duty is liable to be recovered on freight charges incurred for transportation of goods from the factory gate to the buyer's premises, treating the buyer's premises as the place of removal. No:
The question of including the cost of transport in the assessable value is as old as excise valuation itself. The Revenue always wanted a share in the transport charges. Any number of Court Orders or discourses could not convince them that excise is a duty on manufacture and transport is an entirely different activity and cannot be a part of manufacture. Just because a manufacturer is also in the business of transporting goods, the cost of transport should not be added to the value.
During the hearing of the famous case, Bombay Tyre International (), the legendary lawyer for the assessee, Mr. Nani Palkhiwala propounded three principles as forming the essential characteristics of a duty of excise. They were:
1. Excise is a tax on manufacture or production and not on anything else.
2. Uniformity of incidence is a basic characteristic of excise.
3. Exclusion of the post manufacturing expenses and post manufacturing profits is necessarily involved in the first principle and helps to achieve the second.
But for some reason the Government wants excise duty on transport - by legislation or litigation or both.
Supreme Court decided a case on 7th October in which the issue involved was whether, by virtue of a transit insurance policy in the name of the manufacturer, excise duty is liable to be recovered on freight charges incurred for transportation of goods from the factory gate to the buyer's premises, treating the buyer's premises as the place of removal.
The Commissioner even relied on the statement of a manager of the Company to hold that there was no transfer in the right to property on the goods at the factory gate.
The Supreme Court observed, "in the present case all prices were "ex-works", like the facts in Escorts JCB's case. Goods were cleared from the factory on payment of the appropriate sales tax by the assessee itself, thereby indicating that it had sold the goods manufactured by it at the factory gate. Sales were made against Letters of Credit and bank discounting facilities, sometimes in advance. Invoices were prepared only at the factory directly in the name of the customer in which the name of the Insurance Company as well as the number of the transit Insurance Policy were mentioned. Above all, excise invoices were prepared at the time of the goods leaving the factory in the name and address of the customers of the respondent. When the goods were handed over to the transporter, the respondent had no right to the disposal of the goods nor did it reserve such rights inasmuch as title had already passed to its customer."
Please see Breaking News and Commissioner of Customs and Central Excise, Nagpur Vs Ispat Industries -
Customs: Import of computer software in CD ROMs: Tribunal held that value was fair and when the goods are wholly exempt from customs duty, there could be no motive in mis-declaration of value. These are questions of fact - No substantial question of Law.
The Department issued notice alleging overvaluation of imported goods and evasion of Duty on import of computer software. Before the decision, opinion from the Electronics and Computer Software Export Promotion Council was sought, which gave the opinion that the goods were computer software and value which was declared appeared to be fair in the international market for the titles of such goods. In spite of this opinion, the Commissioner confirmed the demand. Revenue conceded before the Tribunal that the assessee was eligible for exemption.
On valuation, the Tribunal held that the declaration of the price in the Bill of Entry was correct and it was not a case of showing excessive value. Tribunal also observed that when the goods are wholly exempt from customs duty, there could be no motive in mis-declaration of value.
Against this, the Revenue is in appeal before the Supreme Court!
The Supreme Court observed, "These are all questions of fact and when we find that the decision of the Tribunal is based upon the opinion of the expert body which had examined the goods in question as well as the price declared, we do not find any reason to interfere with the order of the Tribunal as no substantial question of law arises for consideration."