TaxTMI 
TaxTMI 
TaxTMI 
2025 (5) TMI 1913
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....ntelligence it came to notice of the department that the appellants were indulged in charging insurance premium @ 0.6% to 1% in the name of "handling charges" from the dealers/customers for risk assessment and that thereafter, in case any damage occur, then they conduct survey for the assessment and claim settlement amount/damage amount received from their buyers from the subsequent to loss assessment. The aforesaid amount used to be adjusted and balance used to become the appellant's operative proper profit. Department alleged that a Show cause notice earlier also was issued for a period of 2013 up to December 2015 but the appellant continued charging handling charges under the invoices without paying any service tax on the same for the su....
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....llants while relying upon the earlier decision. 7. We have perused the said decision and it is observed that the decision is in favour of the appellant arising out of the identical facts and circumstances of demanding service tax on the handling charges received by the appellant. We also observe that the Ahmedabad Bench of this Tribunal in the case of Gujarat Borosil Ltd. Vs. Commissioner of Central Excise and Service Tax, Surat-II-2018 (364) ELT 281 (Tri.-Ahmd.). The issue involved in said case was whether the amount equal to 7% of the value of the goods, collected as transit insurance charges from the dealers/buyers for safe delivery of the manufactured goods free from breakage in transit. The goods in the present case are fragile tiles ....
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....lected as compensation for breakages during the course of transit by issuing credit notes. Thus, the payment made by the assessee to its customers for breakages and losses neither tantamounts to insurance nor cost of transportation and is includible in the assessable value. The relevant para of the order is quoted below:- "22. We find that the entire issue has been misunderstood and mis-interpreted by be appelant being not considered in the proper perspective, inasmuch as, there is no doubt about the principle of law settled in a catena of cases that freight and transit insurance charge for delivery of the goods from factory gate to the buyer's premises cannot form part of the assessable value. This principle has been further strength....
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....s the was the same in that it was providing insurance to its customers and was charging two per cent from them. In the alternative, he submitted that if this submission was not accepted and the court was of the view that it was compensation that was being paid to the customers, it was part of the cost of the transportation of the goods. 5. We are unable to accept either submission in the case of transportation what is includible is the cost of taking out insurance to cover the goods transported; in other words, to cover oneself against a possible loss by paying a premium to an insurance company. The payment made by the respondent ot its customers for breakages and losses cannot tantamount to insurance. Nor can, by any means, such compensa....