2015 (10) TMI 2399 - AT - Central Excise

Demand of differential duty - valuation - whether the amount received as bonus by the appellant-assessee from its buyers for the performance of converter bricks/refractory bricks would be included in the assessable value of the refractory bricks sold by the appellant-assessee - Held that - Refractory bricks were sold by the appellant-assessee based upon the terms and conditions as envisaged in the purchase orders. In the purchase order it is specifically stipulated for performance guaranteed bonus which indicated that the appellant-assessee should stand guarantee for the number of heat per set as per the agreements and bonus shall be awarded if the life achieved is above guaranteed heats and there is a penalty clause also that if the refractory bricks do not sustain the guaranteed heats then penalty would be recovered from the appellant-assessee. We find that the issue is no longer res integra as this Tribunal in the cases of MPR Refractories Ltd. Vs. CCE, Hyderabad (2009 (4) TMI 829 - CESTAT BANGALORE), CCE, Chennai Vs. VRW Refractories (2008 (7) TMI 647 - CESTAT, CHENNAI), Jalan Refractories (P) Ltd. Vs. CCE, Jaipur (2000 (9) TMI 192 - CEGAT, CHENNAI) and Indian Telehpone Industries Vs. CCE, Cochin (2004 (8) TMI 210 - CESTAT, BANGALORE), has consistently held that subsequent dealings between the assessee and the buyer on account of performance or otherwise of the goods is not of any concern in regard to the sale price of the goods at the time of removal. We are, therefore, of the opinion that there is no justification for treating the bonus amount as part of the price of the goods and demanding duty on the basis of bonus received from the buyers for better performance of the bricks was not includible in the assessable value of the refractory bricks. - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues Involved:
- Whether the bonus payments received by the appellant-assessee should be included in the assessable value of refractory bricks.
- Whether the bonus and penalty charges are post-removal charges and not part of the price of goods.

Detailed Analysis:

1. Issue 1 - Bonus Payments Inclusion in Assessable Value:
The appeals involved demanding differential duty on bonus payments received by the assessee from buyers for refractory bricks. The contention was that bonus claims constituted additional consideration for the bricks. The Tribunal examined the terms of purchase orders, which included clauses on bonus and penalty based on the performance of the refractory bricks. The appellant argued that bonus and penalty were post-removal charges and did not affect the price of goods, thus should not be included in the assessable value. The Tribunal referred to previous decisions and held that subsequent dealings regarding the performance of goods did not impact the sale price at the time of removal. Therefore, the bonus amount should not be considered part of the goods' price for duty calculation.

2. Issue 2 - Post-Removal Charges and Price of Goods:
The Tribunal analyzed the nature of bonus and penalty charges, emphasizing that they were based on the performance of the refractory bricks after sale. The appellant contended that such charges were not related to the sale price at the time of removal and should not be included in the assessable value. The Revenue argued that any amount collected in connection with the sale of excisable goods, whether before or after removal, should be part of the transaction value. Citing relevant legal provisions and circulars, the Revenue sought to include bonus payments in the assessable value. However, the Tribunal held that the bonus received post-sale should not impact the duty calculation based on the sale price at the time of removal.

3. Final Decision:
Considering the consistent view of the Tribunal on similar issues, the impugned orders by the Commissioner (Appeals) were set aside. The Tribunal allowed all five appeals filed by the appellant-assessee, as the bonus amounts were deemed not includible in the assessable value of refractory bricks. The Department's appeal was dismissed as it lacked merit. The judgment was delivered on 8th July 2015, and the Tribunal upheld that bonus payments for performance should not affect the duty calculation based on the sale price at the time of removal.