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Issues: (i) Whether Modvat credit taken on raw materials was required to be added to the assessable value of the goods; (ii) whether freight incurred for movement of inputs to the job worker's premises was includible in the assessable value.
Issue (i): Whether Modvat credit taken on raw materials was required to be added to the assessable value of the goods.
Analysis: The assessable value had been worked out under Rule 6B(ii) of the Central Excise Valuation Rules, 1975. The Tribunal applied the settled principle laid down in the full Bench decision relied on before it that credit taken on raw materials is not to be added to the assessable value. The attempted distinction on the ground of job work was not accepted.
Conclusion: The Modvat credit on raw materials was not includible in the assessable value, and the impugned order was incorrect on this point.
Issue (ii): Whether freight incurred for movement of inputs to the job worker's premises was includible in the assessable value.
Analysis: On the separate question of transportation cost, the Tribunal held that the freight element actually incurred for moving the inputs to the job worker's premises formed part of the assessable value and was therefore admissible for inclusion.
Conclusion: The freight element was includible in the assessable value.
Final Conclusion: The valuation dispute was resolved partly in favour of the assessee and partly in favour of the Revenue, with exclusion of Modvat credit but inclusion of freight.
Ratio Decidendi: Modvat credit on raw materials is not to be added to assessable value, but freight incurred for transporting inputs to the job worker's premises is includible in valuation.
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