Double adjustment in duty computation is impermissible; separate Modvat credit and erection deductions may still be sustained.

Duty already accounted for in the show cause notice cannot be adjusted again in recomputing liability, because that would confer the same benefit twice; the liability and corresponding penalty were therefore enhanced after correcting the double adjustment. Modvat credit against CVD was not disturbed where the record showed it had already been separately proposed for recovery and was taken only once. A 10% deduction for erection and fitment was sustained because a ship-broken article does not consist wholly of M.S., and that allowance was distinct from any separate firewood allowance.

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Issues: (i) whether duty already taken into account in the show cause notice could again be adjusted while recomputing the liability; (ii) whether Modvat credit against CVD could be again excluded from the duty computation; and (iii) whether the 10% deduction towards erection and fitment was liable to be disallowed.

Issue (i): whether duty already taken into account in the show cause notice could again be adjusted while recomputing the liability;

Analysis: The amount of duty and credit relating to the relevant clearances had already been considered in the show cause notice for arriving at the demand on those clearances. Repeating the same adjustment while computing the final duty liability would amount to giving the same benefit twice.

Conclusion: The Revenue's objection on this issue was accepted, and the duty liability was recomputed by correcting the double adjustment.

Issue (ii): whether Modvat credit against CVD could be again excluded from the duty computation;

Analysis: The record showed that the credit had already been the subject of a separate recovery proposal and was taken only once by the assessee. On that footing, there was no basis for disturbing the adjustment made by the adjudicating authority on this count.

Conclusion: The Revenue's challenge on Modvat credit was rejected.

Issue (iii): whether the 10% deduction towards erection and fitment was liable to be disallowed.

Analysis: The deduction was allowed because a ship-broken article does not consist wholly of M.S. and allowance had to be made for erection and fitment. The earlier allowance for firewood did not cover the distinct allowance for erection and fitment.

Conclusion: The Revenue's challenge to the 10% deduction was rejected.

Final Conclusion: The duty demand and the corresponding penalty were enhanced after correcting the double adjustment, while the other objections raised by the Revenue were not accepted.

Ratio Decidendi: Duty already accounted for in the computation cannot be adjusted again, but a deduction supported by the nature of the goods and the assessment methodology may be sustained if it is distinct from any separate allowance already given.

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