1997 (12) TMI 324 - AT - Central Excise

Issues: Inclusion of excess insurance premium in assessable value; Bar on limitation for notice issuance.

Analysis:
1. Inclusion of Excess Insurance Premium: The primary issue in this appeal was whether the excess amount collected as insurance premium, beyond the actual premium paid to the insurance company, should be included in the assessable value of motor scooters and auto-rickshaws manufactured by the appellant. The Commissioner (Appeals) held that the surplus amount collected as insurance premium was payable by the appellant and should form part of the assessable value. The appellant argued that the entire amount collected was in the nature of transportation costs and should not be considered for assessable value calculation. The appellant relied on the decision of the Supreme Court in Baroda Electric Meters Ltd. v. C.C.E., Ahmedabad to support their contention.

2. Bar on Limitation for Notice Issuance: The advocate for the appellant contended that the notice issued in December 1990, relating to clearances made from July 1985 to December 1989, was barred by limitation. The appellant explained that the surplus amount collected as insurance premium was refunded only at the end of the year, after the actual premium payable became known. Therefore, they argued that there was no suppression or misdeclaration, and the extended period for notice issuance was not applicable. However, the Departmental Representative argued that the failure to declare the surplus amount collected as insurance premium led to the extended period being rightly invoked.

3. Judicial Interpretation and Application: The Departmental Representative highlighted the principle established by the Supreme Court in Indian Oxygen Ltd. v. C.C.E., stating that duty of excise is a tax on the manufacture, not on the profits made by a dealer on transportation. The representative argued that the excess amount collected as transportation charges, but not actually incurred, should be considered in the assessable value. The Tribunal, following the Supreme Court's decision, allowed the appeal and set aside the order, emphasizing that any amount collected as transportation charges but not utilized for that purpose cannot be part of the assessable value, irrespective of the parties involved in the transaction.

4. Final Decision: The Tribunal concluded that the excess amount collected as insurance premium, which was not paid to the insurance company but retained by the appellant, should not form part of the assessable value. The Tribunal aligned with the Supreme Court's stance that excise duty is imposed on the manufacturer, not on profits from transportation. Therefore, the appeal was allowed, and the order including the surplus amount in the assessable value was set aside. The decision emphasized the application of legal principles to determine the assessable value in excise matters, irrespective of the parties involved in the transaction.

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