Deemed Cenvat credit allowed on processed fabrics where duty was paid on the accepted assessable value, including export-related components.

Deemed Cenvat credit was available where duty had been paid on the exporters' selling price of processed fabrics, including special export packing, grading or value loss, and manufacturing profit, because those elements formed part of the assessable value. The Commissioner (Appeals) treated the value at which the goods left the factory as the proper duty base, and the Tribunal agreed that once the Revenue accepted that assessable value, it could not deny the corresponding deemed credit. The Tribunal also distinguished the cited job-work valuation precedent as inapplicable on the facts.

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Issues: Whether the assessee was entitled to deemed Cenvat credit on the basis of duty paid on the exporters' selling price of processed fabrics, including the cost of special export packing, grading/value loss and manufacturing profit, where the valuation dispute turned on whether such components formed part of the assessable value.

Analysis: The Commissioner (Appeals) found that the goods were assessed on the basis of the value at which they left the factory premises and that the processes carried out inside the factory, whether by the manufacturer or by the buyer/exporter, formed part of the assessable value. On that basis, the duty paid on the exporters' selling price was accepted as the correct duty base for working out deemed credit. The Tribunal agreed that, once the Revenue accepted the assessable value on which duty had been paid, there was no basis to deny the corresponding deemed credit. It upheld the view that the relied-on precedent on job-work valuation did not govern the present facts.

Conclusion: The assessee was correctly allowed deemed Cenvat credit, and the Revenue's challenge to its denial failed.

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