Modvat credit on inputs excludes input duty from assessable value of finished excisable goods.

Where Modvat credit is available on inputs, duty paid on raw materials and components is not includible in the assessable value of the finished excisable goods. The Tribunal followed the Larger Bench ruling in Dai Ichi Karkaria and later decisions, and rejected the Department's contrary argument because that line of contention had already been considered and negatived. The valuation adopted by the Collector (Appeals) was therefore sustained, and the departmental challenge failed.

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Issues: Whether duty paid on raw materials and components, in respect of which Modvat credit was available, was includible in the assessable value of the finished excisable goods.

Analysis: The appeal concerned the Department's challenge to exclusion of the duty element on inputs from the pricing of the final product. The Tribunal relied on the Larger Bench decision in Dai Ichi Karkaria and subsequent Tribunal decisions holding that duty paid on inputs, where Modvat credit is available, is not to be added to the assessable value of the final product. The contrary reliance placed by the Department was rejected on the ground that the earlier Larger Bench view had already considered and negatived that line of argument.

Conclusion: Duty paid on the inputs was not includible in the assessable value of the finished goods; the appeal was rejected.

Final Conclusion: The Department's challenge to the valuation adopted by the Collector (Appeals) failed, and the exclusion of input duty from the assessable value was sustained.

Ratio Decidendi: Where Modvat credit is available on inputs, the duty paid on such inputs is not includible in the assessable value of the final excisable product.

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