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 ... Post-sale payment - inclusion of bonus and penalty in assessable value - assessable value - post-sale adjustment not includible in assessable valuePost-sale payment - inclusion of bonus and penalty in assessable value - post-sale adjustment not includible in assessable value - Whether bonus payments and penalty/bonus adjustments received after clearance of goods are includible in the assessable value for excise duty. - HELD THAT: - The Tribunal accepted the contention that the bonus and penalty clauses operated as post-sales provisions and constituted payments arising after clearance of goods. Relying on the judgment in Vishwakarma Refractories Pvt. Ltd. Vs. Commissioner of Central Excise, Bangalore , which the parties placed before the Tribunal and which was affirmed by the Apex Court, the Tribunal held that such post-sale payments do not form part of the assessable value. Applying that principle to the facts and periods under adjudication, the Tribunal found the demand to be unsustainable and set aside the impugned order. The Tribunal therefore allowed the appeal and granted consequential relief, leaving intact the earlier deletion of penalty by the Commissioner (Appeals).Appeal allowed; demand set aside as bonus/penalty payments post-dating clearance are not includible in assessable value.Final Conclusion: The Tribunal allowed the appeal, holding that the bonus and penalty payments were post-sale adjustments not includible in the assessable value and accordingly set aside the impugned demand for the periods under adjudication, granting consequential relief if any. 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.