COLLECTOR CENTRAL EXCISE MEERUT Vs. SURYA ROSHANI LIMITED

JUDGEMENT

(1.) The respondent manufactures electric bulbs and tubes. The bulbs and tubes are sold for destination. The price charged includes two per cent towards transit risk insurance. For the purposes of the assessable value of the bulbs and tubes, the respondent claimed a deduction on account of equalized freight based on the elements of transportation charges, insurance charges, octroi and taxes. The respondent filed a statement of actual expenses for the year in question, namely, 1994-95, duly certified by a Cost Accountant. It showed that the deduction on account of insurance charges was actually on account of "transit losses/breakages replenished to customers". The deduction on this account, claimed in the sum of Rs. 1,05,79,909, was disallowed by the assessing authority and in appeal. The Central Excise and gold (Control) Appellate Tribunal, however, in a brief order, said that transit insurance was eligible for deduction while determining assessable value according to its earlier orders. It, therefore, allowed the appeal.

(2.) The learned Attorney-General appearing for the appellant submitted that what was in question was actually compensation for breakages or losses sustained during transit paid by the respondent to its customers and it was, therefore, not an allowable deduction. He drew attention in this behalf to the two MRF judgments (CCE v. Madras Rubber Factory Ltd. and Govt. of india v. Madras Rubber Factory Ltd. ) where it has been held that payments in the nature of compensation did not qualify for deduction.

(3.) Learned counsel for the respondent placed reliance upon Section 4 (3) of the Central Excise Act, 1944. It provides: