CENVAT valuation on inputs cleared as such cannot override binding remand directions or a controlling Larger Bench ruling.

Fresh valuation of inputs cleared as such could not be sustained by adding landing cost, incidental expenses and profit where credit had been reversed or an equivalent amount paid under the CENVAT scheme. On remand, the adjudicating authority was bound to apply the Larger Bench ruling identified in the remand order and could not reject that precedent by relying on Board circulars without recording a legally tenable distinction. The Tribunal held that the authority had travelled beyond the remand directions, so the demand failed and the impugned order was set aside.

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Issues: Whether the demand on inputs cleared as such could be sustained on a fresh valuation basis by adding landing cost, incidental expenses and profit, and whether the adjudicating authority complied with the remand directions and the binding Larger Bench ruling.

Analysis: The dispute concerned inputs on which credit had been taken and which were removed after reversal of proportionate credit or payment of equivalent amount. The earlier remand required reconsideration in the light of the Larger Bench ruling, which had held that fresh valuation at the time of removal was not permissible merely because the goods were removed as inputs already subjected to duty. The adjudicating authority, instead of applying that direction, proceeded on the basis of Board circulars and rejected the Larger Bench view without recording any finding that the case was distinguishable. The Tribunal held that the authority could not travel beyond the remand directions or disregard the Larger Bench decision. It also noted that the appellant had reversed the credit or paid the equivalent amount, which was consistent with the applicable CENVAT scheme.

Conclusion: The demand could not be sustained and the impugned order was set aside in favour of the assessee.

Ratio Decidendi: An adjudicating authority, while giving effect to a remand, must apply the binding precedent identified in the remand order and cannot sustain a demand by adopting a valuation method rejected by the controlling Larger Bench ruling unless a legally tenable distinction is recorded.

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