Dutiability of assembled generator sets and Modvat valuation relief, with credit allowed despite procedural default.

Assembled diesel generator sets were treated as dutiable excisable goods, following prior Tribunal authority on similar assembled products. For valuation, the assessable value had to be recomputed in line with Dai Ichi Karkaria, so duty taken as Modvat credit was excluded from the cost base. Modvat credit was also to be considered despite non-filing of a Rule 57G declaration, where the remaining substantive conditions were satisfied and duty had been demanded later. The assessee therefore obtained limited relief on valuation and credit, but not on the basic duty liability of the assembled goods.

---

---

Issues: (i) Whether the diesel generator sets assembled in the factory were liable to central excise duty; (ii) whether the assessee was entitled to re-computation of assessable value and Modvat credit, including credit despite non-filing of declaration under Rule 57G.

Issue (i): Whether the diesel generator sets assembled in the factory were liable to central excise duty.

Analysis: The duty liability on the assembled diesel generator sets was not contested on merits before the Tribunal, and the levy was treated as covered by earlier Tribunal decisions holding such assembled goods dutiable.

Conclusion: The goods were held liable to duty, against the assessee.

Issue (ii): Whether the assessee was entitled to re-computation of assessable value and Modvat credit, including credit despite non-filing of declaration under Rule 57G.

Analysis: The Tribunal accepted that the assessable value had to be worked out in accordance with the Full Bench ruling in Dai Ichi Karkaria, under which duty taken as Modvat credit is not to be included in the cost element for valuation. It further directed consideration of Modvat credit even where the declaration under Rule 57G had not been filed, if the remaining Modvat requirements were satisfied, because duty had been demanded subsequently.

Conclusion: The assessee was entitled to consideration of valuation recomputation and Modvat credit, including on the stated procedural default, subject to compliance with the Modvat conditions.

Final Conclusion: The appeal failed on dutiability of the assembled goods but succeeded to the limited extent of valuation and Modvat-related relief, and was otherwise dismissed.

Ratio Decidendi: Assembled excisable goods are dutiable, but for valuation the duty element allowed as Modvat credit is excluded from the assessable value, and Modvat credit may be considered notwithstanding non-filing of declaration where the substantive requirements are otherwise met.

---