Excess insurance amounts not includible in assessable value of goods

The Tribunal held that excess insurance amounts collected by the appellant for transit of goods, even if exceeding actual premiums, were not includible in the assessable value of the final product. Relying on precedent cases and the Supreme Court decision in Baroda Electric Meters Ltd. v. Collector of Central Excise, it was determined that such excess amounts solely for insurance were not part of the sale of goods. Therefore, the impugned order was set aside, and the appeal was allowed on 5th January 2017 by the Tribunal.

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Issues:
Whether excess insurance amount towards transit insurance of excisable goods collected by the appellant from their buyer is includible in the assessable value of the final product or not.

Analysis:
The appellant argued that the amount collected was for insurance premium for transit of goods and not towards the sale of goods, thus should not be included in the assessable value. The excess amount collected was adjusted in subsequent clearances, ensuring the appellant did not benefit from it. Citing various judgments, the appellant contended that insurance amounts are not includible in the assessable value. The Revenue reiterated the findings of the impugned order.

The Tribunal noted that the excess amount collected by the appellant was towards insurance premium, even though in some cases, it exceeded the actual premium. As the amount collected was solely for insurance, it was not part of the sale of goods. Referring to the Supreme Court's decision in Baroda Electric Meters Ltd. v. Collector of Central Excise, the Tribunal held that amounts collected over and above the actual premium were not includible in the assessable value. Relying on the precedent set in U. P. Twiga Fiberglass Ltd. v. Commissioner of C. Ex. & S. T., Noida, the Tribunal concluded that excess amounts collected as insurance premiums were not to be included in the assessable value under Section 4 of the Central Excise Act, 1944. Consequently, the impugned order was set aside, and the appeal was allowed.

The judgment was delivered by Mr. Ramesh Nair, Member (Judicial), and Mr. Raju, Member (Technical) on 5th January 2017.

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