1992 (3) TMI 183 - AT - Central Excise

Summary

Issues:
Whether transit risk insurance charges form part of the assessable value of goods under Section 4(i)(a) of the Central Excises & Salt Act, 1944.

Analysis:
The case involves an appeal against an order passed by the Collector of Central Excise (Appeals), Allahabad regarding the recovery of transit risk insurance charges by the respondents from their customers. The Assistant Collector demanded Central Excise duty claiming these charges formed part of the assessable value of Electric Fans. The Collector (Appeals) held that these charges could not be connected with manufacturing cost or profit and thus not part of the assessable value under Section 4(i)(a) of the Act.

The appellant argued that the respondents were not authorized to transact transit risk insurance and should not deduct these charges from the assessable value. However, the respondents contended that they only collected such charges from outstation customers, and these charges should not be included in the assessable value as they were post-clearance charges.

The Tribunal examined previous decisions related to transit insurance charges and held that such charges were not includible in the assessable value based on Supreme Court judgments. The Tribunal noted that transit breakage/loss and insurance costs were akin to transportation costs and thus permissible deductions. Citing relevant case law, the Tribunal upheld the impugned order of the Collector (Appeals) and dismissed the appeal filed by the Revenue.

In conclusion, the Tribunal agreed with its previous decisions and the Collector (Appeals) that transit risk insurance charges do not form part of the assessable value of goods. The judgment was based on the nature of these charges as post-clearance occurrences similar to transportation costs, as established by Supreme Court precedents.