Transaction value for excise includes excess transit insurance recovered beyond actual premium where invoice price is not sole consideration.

Under Section 4 of the Central Excise Act, 1944, sale price is the transaction value only if it is the sole consideration for the sale between unrelated parties at the time and place of removal. On the stated facts, transit insurance charges recovered from the buyer were more than 300% of the actual premium paid, indicating that the invoice price was not the only consideration and that part of the sale consideration had been disguised as insurance charges. The excess over the actual premium was therefore treated as part of the assessable value, and the demand and penalty were upheld.

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Issues: Whether the excess amount recovered towards transit insurance charges over the actual insurance premium was includible in the transaction value of the goods for the purpose of excise duty.

Analysis: The governing principle under Section 4 of the Central Excise Act, 1944 is that, where goods are sold at the time and place of removal and the buyer and assessee are unrelated, the sale price is the transaction value only if it is the sole consideration for the sale. On the facts, the amount recovered as transit insurance charges was more than 300% of the actual premium paid. That abnormal disparity showed that the price shown in the invoices was not the only consideration and that part of the sale consideration had been camouflaged as insurance charges. In such a situation, the excess recovered over the actual premium formed part of the assessable value.

Conclusion: The excess transit insurance charges were rightly included in the transaction value, and the demand and penalty were upheld in favour of the Revenue.

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