1998 (2) TMI 402 - AT - Central Excise

Commitment charge not included in duty assessment. Tribunal upholds decision.

COLLR. OF C. EX., BOMBAY Versus RAM DECORATIVE & INDUSTRIES LIMITED

The appeal centered on whether the 'commitment charge' collected by the respondent from buyers should be included in the assessable value for duty ... Valuation Issues Involved: The dispute in this appeal pertains to the 'commitment charge' collected by the respondent from buyers for excisable goods and whether such charges should be included in the assessable value for duty calculation.Summary:Issue 1: Inclusion of 'Commitment Charge' in Assessable ValueThe dispute revolved around the 'commitment charge' collected by the respondent from buyers, which was not included in the assessable value for duty calculation. The respondent argued that the charge was liquidated damages for breach of contract by buyers and should not be considered as part of the price. The adjudicating authority accepted this argument and dropped the demand for duty. The Collector of Central Excise appealed this decision.Issue 2: Nature of 'Commitment Charge'It was established that the 'commitment charge' collected was directly related to the quantity of goods the buyers had agreed to purchase but failed to lift. This charge was deemed to be liquidated damages for breach of contract. The Tribunal cited precedents such as Spring Fresh Drinks and Bhartia Cutler Hammer Ltd., which supported the view that amounts recovered as liquidated damages should not be considered part of the price for duty calculation.Conclusion:Based on the nature of the 'commitment charge' as liquidated damages for breach of contract and in line with established precedents, the Tribunal found no reason to interfere with the decision of the adjudicating authority. Therefore, the appeal was dismissed.