Assessable value of captive goods excludes input duty where proforma credit is available under Rule 56A.

For captively consumed laminated aluminium foils valued under Rule 6(b), duty paid on unlaminated foils used as inputs was not required to be added to the assessable value where proforma credit under Rule 56A was available. The analysis treats Union Carbide as governing authority for deducting duty paid on raw material or components in such valuation, distinguishes Kirloskar Brothers as involving a different factual setting and valuation under Section 4, and relies on Dai Ichi Karkaria as confirming the same principle in the Modvat context. The challenge to exclusion of the input duty therefore failed.

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Issues: Whether, in determining the assessable value of laminated aluminium foils captively consumed under Rule 6(b) of the Valuation Rules, the duty paid on unlaminated foils used as input was required to be included despite availability of proforma credit under Rule 56A.

Analysis: The earlier decision in Union Carbide was treated as directly governing the question and was held to require deduction of the duty paid on raw material or components for the purpose of arriving at the assessable value of the finished product when credit under Rule 56A was available. The decision in Kirloskar Brothers was distinguished on the ground that it dealt with a different factual situation and with valuation under Section 4, not with valuation under Rule 6(b). The later Larger Bench decision in Dai Ichi Karkaria was also relied upon as affirming the same principle in the context of Modvat credit.

Conclusion: The duty paid on the unlaminated foils was not required to be included in the assessable value; the appeal challenging that view failed.

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