Cenvat credit and assessable value: duty paid on chassis cannot be added again when valuing body-built vehicles.

For valuation of body-built vehicles under central excise, the assessable value must be determined under Section 4(1)(a) of the Central Excise Act, 1944 read with Rule 11 of the 2000 Valuation Rules by reference to manufacturing cost plus the landed cost of the chassis. Where the recipient has taken admissible Cenvat credit of the duty paid on the chassis, that duty element cannot be added again to the valuation. The principle applied is that excise duty on input materials, once credit is available and availed, is excluded from the cost base for assessable value. Accordingly, the additional basic excise duty on the chassis was not includible in the assessable value and the differential demand was held unsustainable.

---

---

Issues: Whether, for valuation of body-built vehicles under the central excise valuation provisions, the additional basic excise duty paid on chassis and subsequently availed as Cenvat credit by the recipient was liable to be included in the assessable value.

Analysis: The valuation was required to be determined under Section 4(1)(a) of the Central Excise Act, 1944 read with Rule 11 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. The assessable value had to reflect the manufacturing cost added to the landed cost of the chassis. Since the recipient had availed admissible Cenvat credit of the duty paid on the chassis, the duty element on such input could not again be included in the valuation. The principle applied was that excise duty paid on raw materials, where credit is available and taken, is excluded from the cost base for valuation.

Conclusion: The additional basic excise duty of Rs. 10,000 per chassis was not includible in the assessable value, and the demand of differential duty was unsustainable. The appeals succeeded in favour of the assessees.

---