1992 (7) TMI 161 - AT - Central Excise

Summary

Issues:
- Whether Modvat Credit availed by the respondents on raw materials should be included in the assessable value of their final products.

Detailed Analysis:
1. Background: The case involves an appeal against an order passed by the Collector (Appeals) Ahmedabad regarding the inclusion of Modvat Credit availed by the respondents in the assessable value of their final products.

2. Facts of the Case: The respondents, engaged in manufacturing dyes and dye intermediates, were issued Show Cause Notices seeking recovery of Central Excise duty for not including Modvat Credit in the value of their final products. The Assistant Collector confirmed the demands, but the Collector (Appeals) set aside the order, leading to the appeal.

3. Revenue's Argument: The Revenue contended that Central Excise duty should be levied on the normal price of goods, including the duty attracted on raw materials. Referring to relevant Supreme Court decisions, the Revenue argued that Modvat Credit should not be deducted from the manufacturing cost.

4. Respondents' Argument: The respondents argued that as per Section 4(l)(a) of the Central Excises and Salt Act, the assessable value should be the wholesale price of goods unless related parties are involved. They cited a Supreme Court decision and a Tribunal order to support their stance that Modvat Credit should not impact the assessable value.

5. Tribunal's Decision: The Tribunal examined the records and previous rulings, notably the case of Collector of Central Excise v. Incab. Industries. It emphasized that Modvat Credit reduces the cost of the final product but does not automatically reduce the assessable value, which is determined by Section 4 of the Act. As the declared wholesale price was approved and no related party allegations existed, the Tribunal agreed with the Collector (Appeals) that Modvat Credit should not be included in the assessable value.

6. Conclusion: Based on the analysis, the Tribunal rejected the appeal, affirming that Modvat Credit availed by the respondents should not be part of the assessable value of their final products.

This detailed analysis highlights the key arguments presented by both parties, the legal principles applied, and the Tribunal's rationale in deciding the issue of including Modvat Credit in the assessable value of the final products.