Per Lajja Ram :

In this reference to the Larger Bench, the issue for consideration is that in a case where the ownership of the excisable goods remained with the manufacturer upto the place of the buyer from where the said goods were delivered to the buyer, what would be the "place of removal" for the purpose of Clause (iii) of Section 4 (4) (b) of the Central Excises Act, 1944 (hereinafter referred to as the `Act').

2. In Escorts J.C.B. Ltd. Vs. Commissioner of Central Excise, New Delhi - 1999 (35) RLT 9 (CEGAT), a bench of this Tribunal had taken a view that when the manufacturer continued to remain the owner of the goods till the goods reached the buyer's destination, the place of removal for the purpose of Section 4 (4) (b) (iii) of the Act will be the buyers' premises.

It was an admitted position that M/s. Escorts had insured the goods on their account when they were transported to the place of their buyers. Insurance policy was in their name. In case of loss in transit, the Insurance Company was to reimburse them. M/s. Escorts continued to have the property in the goods when the same were in transit. They continued to remain the owner of the said goods. The sale took place when the goods reached the buyer's destination.

When the two appeals - one filed by M/s. Prabhat Zarda Factory Ltd. and the other filed by the Revenue came before the Tribunal for hearing, on the argument that the law stated by the Tribunal in the case of Escorts J.C.B. Ltd. required reconsideration, the matter was referred to the Larger Bench.

It was argued on behalf of M/s. Prabhat that the Tribunal while taking a view in the case of M/s. Escorts had not noticed the expression "from where such goods are removed" occurring at the end of Clause (b) (iii) of Section 4 (4) of the Act.

3. The matter was heard on 1.5.2000 when Shri K. Narasimhan, Advocate appearing for M/s. Prabhat pleaded that M/s. Prabhat had no factory gate sales. The goods were removed to their depots in Delhi and Noida, and from there they were transported to the place of buyers through transport godowns at the place of destination. It was his submission that the transport godowns at the destination were only the place of delivery and could not be considered as place of removal for the purpose of Section 4 (4) (b) (iii) of the Act.

Shri Sanjeev Srivastava, JDR appearing for the Revenue submitted that M/s. Prabhat had control over the goods upto the transporters' godown at destination and that the control over the goods vested with them till the point of sale to the customers from the transporters godown at the place of buyers. He submitted that a correct law has been laid-down by the Tribunal in the case of Escorts J.C.B. Ltd.

Intervening, Shri V. Lakshmi Kumaran, Advocate expressed the view that the ownership was not relevant for interpreting the expression "place of removal". He referred to Section 4 (2) of the Act and submitted that even after the definition of "place of removal", the main Section 4 has not undergone any change.

4. We have carefully considered the matter. As a part of Finance (No. 2) Act, 1996 (Act 33 of 1996), enacted on 28.09.96, in Section 4 of the Act, in sub-section (4), after sub-clause (ii), the following sub-clause was inserted with regard to the place of removal by Section 74 of the said Act.

"(iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory."

In the same Section 4 in sub-section (4) after Clause (b), the following Clause was inserted with regard to time of removal.

"(ba) "time of removal" in respect of goods removed from the place of removal referred to in sub-clause (iii) of Clause (b) shall be deemed to be the time at which such goods are cleared from the factory."

After such amendment, Section 4 (4) (b) read as under:-

(b) "place of removal" means