2013 (9) TMI 61 - AT - Central Excise

Addition to assessable value - Duty on insurance claim - Held that - lower authorities have simplicitor raised the demand on the quantum of insurance claim received by the appellant. There is no doubt about the damage of the goods and subsequent reduction of value of such damaged goods. The appellants have already paid duty on the clearance of damaged goods at the value on which they were sold. The authorities have not referred to any provision of law requiring payment of duty on the insurance claim. Such insurance amount was given to the appellants in respect of goods which were damaged and not on any other account. And as such there is no justification for addition of the same in the value of the goods damaged subsequently sold - Decided in favour of assessee.

Summary

Issues:
Claim of duty payment on insurance claim received for damaged goods.

Analysis:
The judgment pertains to a case where the appellant, a 100% EOU, cleared paper cones to another EOU. The goods were damaged during transit and returned to the appellant, who then sorted them out. Out of the total cleared pieces, 84,699 cones were rejected. The appellant lodged a claim with the insurance company for the damaged goods, cleared the damaged goods at a reduced value, and paid duty accordingly. The Revenue contended that the insurance claim amount should be added to the assessable value of the damaged goods, and duty should be paid on it. The appellate tribunal analyzed the case and found that the demand was raised solely on the quantum of the insurance claim without any legal basis requiring duty payment on the claim amount. The tribunal noted that the insurance amount was received for the damaged goods and not for any other reason. Since the appellants had already paid duty on the clearance of damaged goods at the selling value, there was no justification to include the insurance claim amount in the value of the damaged goods. Therefore, the tribunal allowed the appellant's appeal and rejected the Revenue's appeal, stating that there was no reason to confirm the duty demand.

This judgment clarifies that the duty payment on damaged goods should be based on the actual value at which they were sold, and the insurance claim amount received for the damaged goods should not be included in the assessable value for duty calculation. The tribunal emphasized that the insurance claim was specifically for the damaged goods and did not warrant additional duty payment. The decision underscores the importance of considering the specific circumstances and legal provisions when determining duty liability on damaged goods and related insurance claims.