TMI Blog2018 (11) TMI 1142X X X X Extracts X X X X X X X X Extracts X X X X ..... nce 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 pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s entitled to reduction in assessable value based on the guaranteed powder factor. Revenue contends that the Guaranteed Powder Factor is not in the form of price variation but in the form of a penalty for not achieving the desired results. Ld. DR submits that it is now well settled that any bonus received as a result of high performance of the product or a penalty imposed as a result of low performance of the product cannot alter the assessable value under section 4 of Central Excise Act, 1994. He relied on the following case laws: (a) Burn Standard Co. Ltd. vs. CCE, Coimbatore [2007(216) ELT 77 (Tri.- Chennai)] wherein it was held that the bonus claimed from the buyers if product supplied to them out performed its guarantee period is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for normal blasting (excluding side casting) in dragline benches that can be achieved with their explosives on insitu volume of rock excavated (surveyed volume) basis. (2) Evaluation of the powder factor in OB removal will be made once in every quarter and in case of shortfall in the guaranteed powder factor achieved, proportionate payment will be made on system landed cost of explosives. Final evaluation of powder factor shall be done on yearly basis separately for the first and second years. Extended period of the order validity if any beyond the second year will be treated as extension to second year. For the purpose of powder factor evaluation, the computation year starts from the date of actual use of explosive supplies. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mark. He would draw our attention to the price schedule in Annexure- II of the agreement and Table C - Sl. No. K which reads as follows: S.No. Item Applicability K Price Variation Applicable a) For the products covered in CIL R/C, price variation will be allowed from time to time as allowed by CIL for the corresponding period. b) For the products not covered in CIL R/C, percentage price variation will be allowed from time to time as applicable to the corresponding period over their previous year prices for the equivalent products. He would, therefore, argue that the guaranteed powder factors are to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that other terms and conditions shall be as per Annexure-III. Annexure-III inter-alia includes guaranteed powder factor. Thus, 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. The question is whether this will vary the assessable value. This issue is no longer res integra . In the appellant s own case [(Gulf Oil Corporation Limited (supra)], 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. Similarly in the case of Bhartia Cutler Hammer Limited (supra) it was held that payment liquidated damages in the contract for fai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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