2008 (3) TMI 598 - AT - Central Excise

Summary

Issues involved: Interpretation of charges collected by the assessee as breakage and insurance charges in relation to assessable value u/s customs law.

The dispute in the present appeal concerns the charge of Rs. 1.00 per sq. meter per MM collected by the assessee as breakage and insurance charges from their customers. The Deputy Commissioner confirmed the demand, stating that the assessee did not provide a breakdown of the charges, which exceeded the actual expenses incurred by them. However, the Commissioner (Appeals) ruled in favor of the assessee, citing previous Tribunal decisions that insurance charges for goods in transit should not be included in the assessable value. The revenue appealed, arguing that these charges were separate from transportation or freight charges, citing a Supreme Court case where compensation for breakage or loss during transit was deemed part of the assessable value.

Upon reviewing the Supreme Court decision referenced by the revenue, it was noted that the case involved reimbursement to customers for goods broken during transit, which could not be claimed as a deduction. In contrast, the respondents in the current case collected the amount as insurance charges, not as a cost of the goods. Unless it can be proven that these charges are related to the cost of the goods disguised as transportation or insurance charges, any excess amount collected by the assessee should not be included in the assessable value. This interpretation aligns with the precedent set by the Supreme Court in the case of Baroda Electric Meters Ltd. v. Collector of Central Excise and has been consistently followed by the Tribunal in various decisions, such as Sri Kaliswari Fireworks v. C.C.E., Madurai. Consequently, the Tribunal found no merit in the revenue's appeal and rejected it.

*(Pronounced in the open Court)*