Modvat credit and assessable value on job work must follow settled valuation law, not be treated as additional consideration.

Assessable value of goods manufactured on job work basis cannot be increased merely by adding Modvat credit earned by the manufacturer where the valuation issue is governed by the Larger Bench ruling in Dai Ichi Karkaria Ltd., as affirmed by the Supreme Court. The Commissioner (Appeals) had failed to apply that binding principle and had treated Modvat credit as an additional consideration for inclusion in assessable value. The impugned order was therefore set aside and the matter remanded for fresh decision in accordance with the settled valuation law.

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Issues: Whether, while determining the assessable value of goods manufactured on job work basis, the quantum of Modvat credit earned by the appellant was required to be added.

Analysis: The issue was covered by the Tribunal's Larger Bench decision in Dai Ichi Karkaria Ltd., as affirmed by the Supreme Court. The Commissioner (Appeals) had not considered the binding effect of that law and treated Modvat credit as an additional consideration liable to be included in assessable value.

Conclusion: The impugned order was set aside and the matter was remanded to the Commissioner (Appeals) for fresh decision in accordance with the declared on valuation.

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