2019 (4) TMI 1336 - AT - Central Excise

Valuation - inclusion of performance bonus received by the appellant from their buyer towards the out performance of refractory bricks and monolithi as heat guarantee bonus - Section 4 of the Central Excise Act - HELD THAT - The issue is decided both for pre as well as post amendment of Section 4 of the Act, wherein the transaction value concept was brought in for the purpose of assessment with effect from 1/7/2000 - the said amount need not be included in the assessable value - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Inclusion of performance bonus (heat guarantee bonus) in the transaction value for the purpose of Central Excise Duty assessment.
2. Applicability of pre and post amendment Section 4 of the Central Excise Act, 1944.
3. Validity of the demand, penalty, and interest imposed by the Adjudicating Authority.

Issue-wise Detailed Analysis:

1. Inclusion of Performance Bonus in Transaction Value:
The primary issue is whether the performance bonus received by the appellant from their buyers for the refractory bricks and monolithi, termed as 'heat guarantee bonus,' should be included in the assessable value for Central Excise Duty under Section 4 of the Central Excise Act, 1944. The Department contends that this bonus is an additional consideration and must be included in the transaction value as per Section 4(3)(d) of the Act. The appellant, however, argues that this issue has been settled by various Tribunal decisions, which state that such bonuses are not part of the sale consideration for the goods.

2. Applicability of Pre and Post Amendment Section 4 of the Central Excise Act:
The Revenue argues that the decisions cited by the appellant pertain to the pre-amendment period of Section 4 of the Act and are not applicable post-amendment (effective from 1/7/2000). The Revenue relies on the decision in Ubique Meta Pvt. Ltd vs. Commissioner of Central Excise, Bolpur [2007 (217) ELT 241(Tri-Kol)] to support their stance. The appellant counters this by citing decisions that are relevant both pre and post-amendment, such as MPR Refractory vs. Commissioner of Central Excise, Hyderabad [2010 (262 ELT 274 (Tri-B)].

3. Validity of Demand, Penalty, and Interest:
The Adjudicating Authority's order confirmed the demand under Section 11A(1) of the Act, imposed an equal penalty under Section 11AC, and ordered interest under Section 11AB. The appellant disputes this, citing several Tribunal decisions, including Jalan Refractories Pvt. Ltd. and Burn Standard Co. Ltd., which have consistently held that performance bonuses are not includible in the assessable value. The Tribunal's analysis aligns with these precedents, leading to the conclusion that the impugned order is not in conformity with the law.

Judgment:
The Tribunal found that the performance bonus received by the appellant for the refractory bricks and monolithi is not includible in the assessable value for Central Excise Duty. The Tribunal referred to multiple decisions, including those post-amendment of Section 4, which support the appellant's position. The Tribunal concluded that the demand, penalty, and interest imposed by the Adjudicating Authority were unsustainable. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.

Conclusion:
The Tribunal's decision comprehensively addressed the issues, confirming that performance bonuses are not part of the transaction value for excise duty purposes, both pre and post-amendment of Section 4 of the Central Excise Act. The demand, penalty, and interest imposed by the Adjudicating Authority were deemed unsustainable and were accordingly set aside.