2015 (10) TMI 865 - AT - Central Excise

Duty demand - Insurance claim received against damaged gear boxes - gear box still lying in the factory - Held that - As per Section 4 of the Central Excise Act, 1944 an assessee is required to pay duty of the sale of the goods or deemed to be sale of the goods manufactured by them and the same shall be transaction value. In this case, sale did not take place. It is not a case of deemed sale, as appellant is not the manufacturer of gear box.When the transaction is not covered under Section 4 of the Central Excise Act, 1944, we hold that the appellant is not required to pay duty on the amount of insurance claim for damaged gear box. - Decided in favour of assessee.

Summary

Issues:
- Duty demand on insurance claim of damaged gear box

Analysis:
1. Duty Demand on Insurance Claim:
- The appellant, engaged in manufacturing steel strips, filed an insurance claim for a damaged gear box in 2001, receiving Rs. 5,60,000 after deducting cenvat credit.
- The Revenue claimed duty on the insurance amount, considering it as the sale value of the damaged gear box.
- The appellant argued that duty cannot be demanded as the gear box was not sold and is still in their factory, citing Section 4 of the Central Excise Act, 1944.

2. Contentions and Submissions:
- The appellant's counsel contended that duty cannot be demanded as the gear box was not sold, and the duty is only applicable on goods sold or deemed to be sold under Section 4 of the Act.
- The Revenue argued that since the appellant received Rs. 5,60,000 for the damaged gear box, duty is applicable regardless of whether the gear box is in the factory or not.

3. Judgment and Reasoning:
- The Tribunal analyzed Section 4 of the Central Excise Act, 1944, which requires duty payment on goods sold or deemed to be sold.
- Since the gear box was neither sold nor deemed to be sold, the Tribunal held that duty is not applicable on the insurance claim amount.
- The Tribunal ruled in favor of the appellant, setting aside the duty demand on the insurance claim for the damaged gear box.

4. Conclusion:
- The impugned duty demand on the insurance claim for the damaged gear box was overturned, providing the appellant with consequential relief.
- The judgment clarified the applicability of duty under the Central Excise Act, emphasizing the requirement for goods to be sold or deemed to be sold for duty imposition.