Modvat credit on raw materials is excluded from assessable value, and pending Supreme Court challenge does not justify deferring the issue.

Modvat credit taken on raw materials used in manufacture was held not includible in the assessable value of the final product, following binding Tribunal precedent including Dai Ichi Karkaria Ltd. The mere fact that the Larger Bench ruling was under challenge before the Supreme Court did not justify keeping the revenue matter pending, because there was no stay of its operation. The revenue challenge therefore failed, and the order in favour of the assessee was affirmed.

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Issues: Whether Modvat credit taken on raw materials used in the manufacture of the final product was includible in the assessable value of the final product, and whether the revenue appeal required to be kept pending merely because the larger bench decision was under challenge before the Supreme Court.

Analysis: The issue was treated as already covered by Tribunal decisions, including the Larger Bench ruling in Dai Ichi Karkaria Ltd., which held that Modvat credit on raw materials used in manufacture is not includible in the assessable value of the final product. The same view had been applied in other tribunal decisions. The fact that the Larger Bench decision had been appealed before the Supreme Court did not justify keeping the matter pending in the absence of any stay of operation of that decision.

Conclusion: The assessable value could not include the Modvat credit taken on raw materials used in manufacture, and the plea to keep the matter pending was rejected.

Final Conclusion: The revenue challenge failed, and the order in favour of the assessee was affirmed.

Ratio Decidendi: In the absence of a stay, a binding tribunal precedent covering the issue must be followed, and Modvat credit on raw materials used in manufacture is not includible in the assessable value of the final product.

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