Deemed Modvat credit includes freight, insurance and sales tax where the full invoice amount is paid by cheque.

For deemed Modvat credit under Notification No. 58/97, the invoice price of inputs may include freight, insurance, sales tax and other charges shown in the manufacturer's invoice. The notification's explanation defined "invoice price" as the price charged by the manufacturer and reflected in the invoice, and the Board circular clarified that such invoice under Section 3A may include those stated charges. Read together, these instruments require credit to be computed on the full invoice amount where the downstream manufacturer pays that amount by cheque. The practical effect is that the stated ancillary charges form part of the credit base.

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Issues: Whether, for the purpose of deemed Modvat credit under Notification No. 58/97 and the corresponding Board circular, the invoice price of inputs could include freight, insurance, sales tax and other charges shown in the manufacturer's invoice.

Analysis: The notification's explanation defined "invoice price" as the price charged by the manufacturer and indicated in the accompanying invoice. The Board's circular similarly clarified that the manufacturer's invoice under Section 3A may include freight, insurance, sales tax and other charges. Reading the notification and circular together, the Tribunal held that where the downstream manufacturer pays the full invoice amount by cheque, the credit is to be computed on the invoice price as shown in the invoice, including the stated charges.

Conclusion: The inclusion of freight, insurance, sales tax and other charges in the invoice price for computing deemed Modvat credit was upheld, and the assessee was entitled to the credit.

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