2018 (9) TMI 1059 - AT - Central Excise

Treatment of bonus payments in excise duty calculation clarified by Tribunal decision

The Tribunal held that bonus/penalty payments are post-sale payments and should not be included in the assessable value for excise duty calculation. The ... Valuation - inclusion of Bonus gained for performance in assessable value - Held that:- The bonus/penalty is a post-sale payment and therefore not includible in the assessable value - appeal allowed - decided in favor of appellant. Issues:1. Inclusion of bonus payments in the assessable value for excise duty calculation.Analysis:Issue 1: Inclusion of bonus payments in the assessable value for excise duty calculationThe case involved a dispute regarding the inclusion of bonus payments received by the appellant in the assessable value for excise duty calculation. The appellants, engaged in the manufacture of refractory bricks, raised bonus claims against buyers based on the performance of the products beyond the guaranteed period. The department contended that these bonus payments should be included in the assessable value. The appellant argued that bonus and penalty clauses were post-sales provisions and excise duty cannot be levied on such payments. The appellant relied on the judgment in the case of Vishwakarma Refractories Pvt. Ltd. Vs. Commissioner of Central Excise, Bangalore, which held that post-sale payments like bonus/penalty are not includible in the assessable value. The Tribunal agreed with the appellant's argument, citing the aforementioned judgment. The Tribunal held that bonus/penalty payments are post-sale payments and should not be included in the assessable value for excise duty calculation. Consequently, the demand raised by the department was deemed unsustainable, and the impugned order was set aside, allowing the appeal with consequential relief if any.This judgment clarifies the treatment of bonus payments in the context of excise duty calculation, emphasizing that post-sale payments like bonuses should not be considered part of the assessable value. The reliance on a previous judgment and the subsequent decision by the Tribunal provide a legal basis for excluding such payments from excise duty calculations.