Assessable value and buyer subsidy: unreceived contractual amounts were excluded, and extended limitation did not apply.

A fixed-price contract prevented the alleged 10% buyer subsidy from being treated as additional consideration for central excise valuation, because the amount was neither actually received from the buyer nor contractually payable. It was therefore not includible in the assessable value of the jack-up rig. Since no duty was payable on that component, the extended period of limitation for the differential duty demand did not arise and was not attracted. The demand and penalty were unsustainable to the extent challenged.

---

---

Issues: (i) whether the 10% subsidy allegedly payable by the buyer formed part of the assessable value of the jack-up rig for central excise purposes; (ii) whether the extended period of limitation could be invoked for the differential duty demand.

Issue (i): whether the 10% subsidy allegedly payable by the buyer formed part of the assessable value of the jack-up rig for central excise purposes.

Analysis: The contractual price was fixed and contained no stipulation for any additional payment by the buyer. The record showed that the arrangements subsequently reached between the parties treated the contracts as fixed price contracts and ruled out any further payment by the buyer. Since the alleged 10% amount was not in fact received from the buyer and was not an additional consideration flowing from the buyer under the contract, it could not be added to the assessable value.

Conclusion: The 10% subsidy was not includible in the assessable value and this issue was decided in favour of the assessee.

Issue (ii): whether the extended period of limitation could be invoked for the differential duty demand.

Analysis: Once the amount in question was held not to be duty payable as part of the assessable value, no duty liability survived on that component. In the absence of any duty payable on the amount itself, the question of invoking the extended limitation period did not arise.

Conclusion: The extended period of limitation was not attracted and this issue was decided in favour of the assessee.

Final Conclusion: The demand and penalty were unsustainable to the extent challenged, and the appeal succeeded.

Ratio Decidendi: Amounts not actually received from the buyer and not flowing as contractual consideration cannot be included in the assessable value for excise, and where no duty is payable on the disputed amount, extended limitation cannot be invoked.

---