Cenvat valuation of inputs removed as such turns on transaction value at removal, not original invoice value.

Removal of inputs as such after availment of Cenvat credit attracted duty on the transaction value at the time and place of removal, because Rule 3(4) linked valuation to Section 4 of the Central Excise Act where the goods were sold. The earlier Rule 57F(1)(ii) decisions were distinguished on the basis of materially different wording, and the Board circular was treated as consistent with transaction value. The original manufacturer's invoice value was not the measure applied. A contrary coordinate-bench view led to reference of the valuation issue to a Larger Bench.

---

---

Issues: Whether, on removal of inputs as such after availment of Cenvat credit, duty is payable on the assessable value declared by the original manufacturer or on the transaction value at which the inputs are sold by the assessee.

Analysis: Rule 3(4) of the Cenvat Credit Rules required payment of an amount equal to the duty leviable on the goods at the rate applicable on the date of removal and on the value determined under Section 4 or Section 4A of the Central Excise Act. Section 4 makes the transaction value at the time and place of removal the assessable value where the goods are sold. On that construction, the duty payable on removal of inputs as such was linked to the sale value at the time of removal from the factory. The earlier decisions under Rule 57F(1)(ii) of the Central Excise Rules, 1944 were distinguished because the rule text had materially changed, and the Board's circular was read as supporting transaction value where the goods were sold to buyers.

Conclusion: The inputs, when removed as such on sale, were liable to duty on the transaction value at the time and place of removal, not on the original invoice value of the first manufacturer.

Final Conclusion: A view on valuation was recorded, but the matter was sent for consideration by a Larger Bench because of a conflicting coordinate-bench view.

Ratio Decidendi: Where the governing rule expressly ties duty on removal of inputs as such to the value determined under Section 4 of the Central Excise Act, the assessable value is the transaction value at the time and place of removal.

---