Capital goods credit on duty-paid DG set components survives procedural lapses, and erection charges are excluded from assessable value.

Duty-paid components used to assemble a DG set in the assessee's factory qualified for capital goods credit, and the benefit was not denied merely because the prescribed declaration and other procedural formalities were not complied with. The Tribunal also held that erection and commissioning charges were not includible in the assessable value of the assembled DG set, and that notional profit on assembly had no relevance on the facts. On that basis, the Revenue's challenge to the valuation and the Commissioner (Appeals)'s view failed, and the order setting aside the demand, confiscation, and penalty was sustained.

---

---

Issues: (i) Whether the assessee was entitled to capital goods credit on duty paid components used for assembling a DG set in its factory despite non-filing of declaration and non-compliance with procedural formalities under the excise rules, and whether the cost of erection and commissioning was liable to be included in the value of the DG set.

Analysis: The duty had already been paid on the components of the DG set, and the set was assembled in the assessee's factory. The DG set was treated as capital goods, and the benefit of credit could not be denied merely because the declaration under the relevant rule was not filed and other procedural requirements were not followed. The Tribunal also held that erection and commissioning charges were not required to be included in the assessable value of the DG set, and that the notional profit on assembly was of no consequence to the Revenue in these facts.

Conclusion: The assessee was entitled to the credit, and the Revenue's challenge to the valuation and the finding of the Commissioner (Appeals) failed.

Final Conclusion: The appeal was rejected and the order vacating the original authority's demand, confiscation, and penalty was sustained.

Ratio Decidendi: Procedural non-compliance does not defeat credit where duty has been paid on capital goods components used in the assessee's factory, and erection and commissioning charges are not part of the value of the assembled DG set for excise purposes.

---