2009 (5) TMI 776 - AT - Central Excise

Summary

Issues: Inclusion of penal interest collected in the assessable value of goods.

Summary:
The appellants, who are manufacturers of papers, offered cash discounts for prompt payment of the price but collected penal interest through debit notes when buyers defaulted on payment. The issue revolved around whether the penal interest collected should be included in the assessable value of the goods. The Revenue proposed inclusion, which was confirmed by the Original Authority and upheld by the Commissioner (A) citing a case-law distinction. However, upon careful consideration, the Appellate Tribunal found that the penal interest collected was not part of the assessable value as it was equivalent to the cash discount allowed. Referring to a previous decision in the appellant's own case, the Tribunal ruled in favor of the appellants, stating that penal interest is not includable in the assessable value. Consequently, the appeals were allowed with consequential relief.