Performance bonus after clearance not includible in assessable value; central excise duty, interest and penalty fail.

Performance bonus received after clearance of goods under a supply contract was not part of the assessable value for central excise duty because it related to better performance in use and not to the value of the manufactured goods at removal. On that basis, the duty demand could not be sustained, and the consequential levy of interest and penalty also failed.

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Issues: Whether performance bonus received under the supply contract was includible in the assessable value for central excise duty, and whether the demand for duty, interest, and penalty could survive if the bonus was not includible.

Analysis: The performance bonus arose after clearance of the goods and was linked to better performance in use, not to the value of the manufactured goods at the time of removal. The issue was covered by earlier decisions holding that such post-clearance bonus is not part of the assessable value. Once the duty demand itself could not be sustained, the consequential levy of interest and penalty also could not stand.

Conclusion: The performance bonus was held not includible in the assessable value. The duty demand, interest, and penalty were unsustainable.

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