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Issues involved:
The deduction on account of transit insurance charges for electric bulbs and tubes, whether it qualifies as an allowable deduction for determining the assessable value. The respondent, a manufacturer of electric bulbs and tubes, claimed a deduction on account of transit insurance charges for the assessable value of the goods. The deduction was disallowed by the assessing authority and in appeal, but the Central Excise and Gold (Control) Appellate Tribunal allowed the appeal based on its earlier orders considering transit insurance as eligible for deduction. The learned Attorney General contended that the amount in question was actually compensation for breakages or losses during transit, citing relevant judgments that held such payments did not qualify for deduction. The respondent relied on Section 4(2) of the Central Excise Act, 1944, which states that the provisions of the Act shall not apply to excisable goods for which a tariff value has been fixed. The respondent argued that the cost of transit insurance should be included in the cost of transportation, emphasizing that even if the goods were not insured with an insurance company, providing insurance to customers and charging two percent amounted to the same effect. The court rejected both submissions, clarifying that the cost of transportation includes the expense of obtaining insurance from an insurance company to cover the goods transported. The court emphasized that payments made to customers for breakages and losses cannot be considered insurance or part of transportation costs but rather a form of compensation for losses incurred during transit. In conclusion, the Supreme Court allowed the civil appeal, setting aside the judgment and order under appeal, with no specific order as to costs.
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