Insurance charges in invoice.

[SHIVKUMAR SHARMA]

Respected Experts

Please give your opinion on following issue.

We are of the manufacturer & clearing our Finished goods on transaction value at factory gate sale & issue invoice as under.

Basic Value ₹ 100000.00

Excise Duty 12.5% ₹ 12500.00

Insurance 0.08% ₹ 90.00

VAT % ₹ 5630.00

Please confirm Whether we have to pay excise duty on Insurance charged in invoice of ₹ 90/-as we have taken Cenvat credit on service tax on premium paid against insurance policy for risk cover for transit up to the consignee godown. our excise officer is saying that either you reverse service tax credit credit or you have to pay excise/service tax on insurance charged in invoice.Please give your expert opinion & give reference of case law.

Thanks with regards

SHIVKUMAR SHARMA

AI Summary

Factory gate sale: insurance charged in invoice not includible in excise transaction value and Cenvat credit should be reversed.
Where goods are sold at the factory gate and place of removal is the factory, insurance charged for transit beyond removal is not includible in excise transaction value; Cenvat credit claimed on insurance premium for outward transit does not qualify as an input service and should be reversed. State VAT/CST may apply to insurance only if state law treats it as part of the sale price.