Inclusion of Cost of insurance in Assessable Value for Excise Duty

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Commissioner of Central Excise, Belapur Vs. Kapoor Glass (I) Pvt. Ltd. [2014 (12)

TMI 491 – CESTAT MUMBAI]

Kapoor Glass (I) Pvt. Ltd. (the Assessee) cleared the goods from the factory to their customers and recovered cost of insurance from them. In the lorry receipts, the freight was on “to pay basis” and the buyer of the goods were shown as the consignee. The Revenue alleged that since the Assessee has collected the insurance amount from the customers, the place of delivery should be deemed to be the customer’s premises and therefore, duty demand was raised on the cost of insurance recovered from the customers. However, the Commissioner (Appeals) relying upon the Judgment of the Apex Court in the case of Escorts JCB Ltd Vs. CCE, Delhi-II [2002 (146) ELT 31 (SC)]held that duty demand on the cost of insurance incurred by the Assessee is not admissible, in as much as the goods have been delivered at the Assessee’s factory gate. Being aggrieved the Revenue filed an appeal before the Hon’ble CESTAT, Mumbai. The Hon’ble CESTAT, Mumbai after observing that the Department was unable to prove that the factory gate is not the place of removal, held that when the lorry receipts under which the goods were consigned indicate that the consignee is the buyer and the freight is on “to pay basis”, duty demand on the cost of insurance incurred by the Assessee is not admissible, in as much as the goods have been delivered at the Assessee’s factory gate.