2000 (12) TMI 184 - AT - Central Excise

Summary

Issues involved:
- Appeal against confirmation of duty demanded on nitrogen and craked ammonia
- Inclusion of short lifting compensation in assessable value
- Inclusion of interest on advances, short lifting compensation, and notional interest on cost of land in assessable value
- Penalty imposed on manager

Appeal against confirmation of duty demanded on nitrogen and craked ammonia:
The appellant, a manufacturer, appealed against the duty demanded on nitrogen and craked ammonia manufactured and cleared from its factory, arguing that the short lifting compensation paid by their sole buyer should not form part of the assessable value of the gas. The Tribunal referred to previous cases to establish that liquidated damages for breach of contract should not be included in the assessable value, as they are not part of the agreed price for the goods supplied.

Inclusion of short lifting compensation in assessable value:
The agreements between the appellant and buyers provided for compensation in case of failure to take delivery of the agreed quantity of gases. The Commissioners held that this "short lifting compensation" should form part of the assessable value. However, the Tribunal ruled that such damages are not includible in the assessable value as they are considered liquidated damages and do not affect the agreed price for the goods.

Inclusion of interest on advances, short lifting compensation, and notional interest on cost of land in assessable value:
The appellant received an advance from a buyer, and the notional interest on this amount was considered part of the assessable value. The Tribunal rejected this inclusion, stating that unless it can be proven that the advance depressed the price, it should not be included. Similarly, the interest on the price of land provided by the buyer for the plant construction was also deemed not includible in the assessable value.

Penalty imposed on manager:
The penalty imposed on the manager of the assessee was challenged on similar grounds as the duty demanded, arguing that the penalties were not maintainable due to the incorrect inclusion of certain amounts in the assessable value. The Tribunal found in favor of the appellants, setting aside the impugned orders and allowing the appeals.