Modvat credit and excise valuation: duty on inputs was not added to the assessable value of television sets.

Duty paid on inputs for which Modvat credit was availed was held not to form part of the assessable value of television sets under Section 4 of the Central Excises and Salt Act, 1944. The Tribunal accepted the larger Bench view that Modvat credit does not directly reduce or alter assessable value under Section 4(1)(a), and that duty reimbursed or credited on inputs is not to be added to the final product's valuation. The earlier Supreme Court ruling on wrapping paper was treated as distinguishable on its facts and not controlling. The appeal was dismissed.

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Issues: Whether the duty suffered on inputs on which Modvat credit is availed is includible in the assessable value of the final product for valuation under Section 4 of the Central Excises and Salt Act, 1944.

Analysis: The dispute turned on valuation of television sets under Section 4 of the Central Excises and Salt Act, 1944. The Revenue sought to add the duty element on duty-paid inputs to the sale price so as to raise the assessable value beyond the relevant threshold. The respondents relied on the larger Bench decision holding that Modvat credit does not directly reduce or affect assessable value under Section 4(1)(a), and that the excise duty reimbursed or credited on inputs is not to be treated as part of the cost for valuation of the final product. The Tribunal held that the earlier Supreme Court ruling on wrapping paper was distinguishable on its facts and did not govern the present controversy.

Conclusion: The duty paid on inputs for which Modvat credit was availed was not includible in the assessable value of the television sets, and the appeal was dismissed.

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