Modvat credit not includible in assessable value where goods are sold at genuine contract price under Section 4.

Where finished goods are sold at a genuine contract price under a filed Part II price list, the assessable value under Section 4 of the Central Excise Act, 1944 is confined to the declared trade price if it reflects the normal course of sale. Modvat credit availed on inputs is not added to that value unless there is material showing that the buyer had to pay an amount over and above the agreed price on that account. On that basis, the Modvat credit was held not includible in assessable value, and the departmental appeal failed.

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Issues: Whether the Modvat credit availed on inputs was includible in the assessable value of the finished goods when the goods were sold at a contract price under a filed Part II price list.

Analysis: The assessable value would include the cost of raw materials and manufacture only where valuation is to be made on that basis. In the present case, the goods were sold at an agreed price under a contract, and the declared price in the Part II price list represented the genuine price in the normal course of trade. There was no material to show that the buyer was required to pay any amount over and above the agreed price on account of Modvat credit or otherwise. The declared price accordingly satisfied Section 4 of the Central Excise Act, 1944.

Conclusion: The Modvat credit on inputs was not liable to be added to the assessable value, and the departmental appeal failed.

Ratio Decidendi: Where goods are sold at a genuine contract price conforming to Section 4 of the Central Excise Act, 1944, Modvat credit on inputs is not includible in the assessable value merely because the manufacturer has availed such credit.

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