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2018 (11) TMI 1142 - AT - Central ExciseValuation - inclusion of Guaranteed Powder Factor in assessable value - disallowance of reduction in assessable on “Guaranteed Powder Factor” holding that is not a price variation clause but is in the nature of a penalty - Held that:- It is a common practice in many agreements to have clauses with respect to variation and prices, depending upon several factors. It is also a common practice in agreements to have a clause related to achievement of the desired benchmarks and a reward or penalty for either over achieving or not achieving the benchmarks. In this case it is in the form of a guaranteed powder factor which will be evaluated once in every quarter and if there is shortfall, they will make proportionate deduction in payment. There is another clause in the agreement towards price variation depending upon various factors including the guarantee for blast failure. It is evident that the respondent is paid less if they do not meet the guarantee powder factor but will not be rewarded if they over achieve - This issue is no longer res integra . In the appellant’s own case Gulf Oil Corporation Limited [2009 (11) TMI 417 - CESTAT, KOLKATA], it has been held that the penalty in the contract in case the explosives are not upto the bench mark agreed to between the parties will not have any bearing in the assessable value. The Guaranteed Powder Factor in the form of penalty cannot alter the assessable value under section 4 of Central Excise Act, 1944 - appeal allowed - decided in favor of appellant.
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