Whether certificate of insurance is must for imports under Stock Turnover Policy (STOP)?
A manufacturing unit has insured its sale (Domestic/Export), Purchases (Domestic /Import) through a marine insurance policy known as STOP. The valuation of sales is Invoice value plus 10% and valuation of purchases is Invoice value plus 10% and for imported purchase plus Custom duty also. The manufacturing unit is neither declaring the purchase not taking any certificate on imported purchases. The manufacturing unit is exporting the material also therefore the custom duty on purchase refunded as an export incentive.
In one of the imported consignments amounting to Rs 62 lakhs (Invoice value) was damaged during transit and as per Bill of entry the Custom Authority did not demand any custom or any other related duties. The Surveyor asses the loss of Rs 62 lakhs without custom duty as the consignee has not paid the same.
The consignee insisting that claim should be paid Rs 62 lakhs plus custom duty amount of Rs 14.8 lakhs as in the policy document the valuation includes custom duty.
The Surveyor is reluctant to pay custom duty amount as neither is it paid nor any certificate was obtained from Insurer proving the custom duty is covered.