Banswara Syntex Limited vs. Union Of INDIA

Facts

The petitioner, Banswara Syntex Limited, sought rebate of excise duty on 7 consignments exported in 2016, including post-removal charges. The dispute centered on whether the place of removal was the factory gate or the Port of Export. The Assistant Commissioner initially accepted the rebate claims, considering the Port of Export as the place of removal, and sanctioned Rs. 13,00,485/-. The Department appealed, but the Commissioner (Appeals) rejected their appeals, relying on previous orders and a Board circular stating the Port of Export is the place of removal for exports. Subsequently, the Department filed a revision application, which was accepted by the Revisionary Authority via an order dated 19.12.2019, reversing the earlier decisions. This order is challenged by the petitioner in the present writ petition.

Held

The Court held that the provisions of the Sale of Goods Act, 1930, govern the issue of determining the point of sale/place of removal. Following the Supreme Court's decision in Commissioner, Customs and Central Excise, Aurangabad vs. Roofit Industries Limited, the Court found that ownership of goods is transferred to the buyer when the shipping bill is filed and the goods are handed over to the shipping line at the port. Until this point, the manufacturer retains control over the goods. The Court affirmed the applicability of the Board's circular dated 28.02.2015, clarifying that for manufacturer-exporters, the place of removal is the Port/ICD/CFS, and this principle applies to both CENVAT Credit and excise duty rebate claims, as the crucial factor is the point of sale. The Court found the Revenue's argument that the circular only pertains to CENVAT Credit to be without merit. The Court also noted that the circular dated 08.06.2018, while highlighting general principles, has exceptions for export cases. Consequently, the order of the Revisionary Authority dated 19.12.2019 was reversed and set aside, and the orders of the Adjudicating Authority and Commissioner (Appeals) were affirmed.

Key Issues

1. Whether, in the case of goods cleared for export by a manufacturer-exporter, the place of removal should be considered the factory gate or the Port of Export, and consequently, whether post-removal charges up to the Port of Export are includible in the valuation for excise duty rebate, under Section 4 of the Central Excise Act, 1944 read with the Sale of Goods Act, 1930? Petitioner's arguments: The petitioner contended that the controversy is covered by the Supreme Court judgment in Commissioner, Customs and Central Excise, Aurangabad vs. Roofit Industries Limited, which mandates examination under the Sale of Goods Act, 1930. They argued that transfer of ownership occurs at the port where goods are handed to the shipping line, making the Port of Export the place of removal. They relied on Board circulars dated 28.02.2015 and 08.06.2018, asserting that these clarify the place of removal for exports is the Port/ICD/CFS. Revenue's arguments: The Revenue argued that the circulars dated 28.02.2015 and 08.06.2018 are not applicable as they deal with CENVAT Credit, not excise duty rebate. They contended that the Revisionary Authority correctly determined the place of removal to be the factory gate and the transactional value to be at the factory gate.