Equalised transit insurance charges were excluded from excisable value where the differential had no manufacturing nexus.

Differential transit insurance charges collected from buyers, where the amount paid to the insurer was lower, were held not includible in excisable assessable value. The charges were collected uniformly from all customers and treated as a separate post-manufacture activity with no direct nexus to manufacture. Applying the same principle used for equalised freight charges, the differential insurance amount could not be added to valuation. The demand based only on that difference was therefore unsustainable.

---

---

Issues: Whether differential amount arising from collection of equalised transit insurance charges from buyers, when the amount actually paid to the insurer was lower, could be included in the assessable value for excise duty purposes.

Analysis: The demand was founded only on the difference between the insurance charges collected and the amount paid to the insurer. The notice did not allege any deliberate depression of price by treating part of the sale price as transit insurance. Transit insurance was treated as a separate post-manufacture activity with no direct nexus to manufacture. Since the charges were collected at the same rate from all customers, they were characterised as equalised charges. On the same principle that equalised freight charges are not includible in assessable value, the differential insurance amount could not be added for valuation.

Conclusion: The differential transit insurance amount was not includible in assessable value and the demand was unsustainable in favour of the assessee.

---