2006 (9) TMI 480 - AT - Central Excise

Summary

Issues:
Challenge to Commissioner (Appeals) order regarding Central Excise duty on insurance claim for damaged gear box.

Analysis:
The case involves a challenge to the order of the Commissioner (Appeals) regarding the Central Excise duty on an insurance claim made by the applicant for a damaged gear box. The Assistant Commissioner had held that the insurance claim made by the applicant in relation to the value of the damaged gear box from an insurance company as the sale proceeds is subject to Central Excise duty along with interest and penalty.

The applicant had purchased the gear box in 1996 and after using it in their factory, it got damaged in 2001, leading to an insurance claim of Rs. 5,60,000. The applicant's counsel argued that the insurance claim should not be considered as sale proceeds since the gear box was damaged after long use in the factory and had not been removed or used for any other purpose.

The Senior Departmental Representative (SDR) reiterated the findings of the Commissioner (Appeals), supporting the imposition of Central Excise duty on the insurance claim amount. However, after hearing both sides and examining the records, the Tribunal found merit in the applicant's argument. The Tribunal concluded that the insurance claim received cannot be equated with the sale proceeds of the damaged gear box, especially considering its condition after prolonged use in the factory.

As a result, the Tribunal directed an interim stay on the impugned order until the matter is finally taken up for a hearing. The requirement of a pre-deposit was waived, and the appeal was scheduled for a future hearing. The Tribunal disposed of the application accordingly, with the order being dictated and pronounced in open court on 29th September 2006.