ORDER
U.L. Bhat, J. (President)
1. Appellant is absent in spite of notice of hearing but has sent a request for disposal of the appeal on merits. We have heard Shri K. Srivastava, SDR and perused the papers.
2. Appellant engaged in the manufacture of Enamelled Copper Winding Wires falling under Heading 85.44 of the Schedule to CETA, 1975 uses primary copper imported through M.M.T.C. as raw material. C.V. duty having been paid on the raw material, appellant was also enjoying the benefit of Modvat credit in respect of C.V. duty. C.V. duty has been paid @ Rs. 6.20 per kg. The impugned order show that the appellant claimed deduction of this amount from the value in Price List Nos. 59/86, 60/86, 64/86 and 75/86 and the subsequent price lists on the ground that the benefit of Modvat credit is being passed on to the buyer with whom the appellant had entered into contracts. Assistant Collector declined the deduction and passed order which has been confirmed by the Collector (Appeals). Hence the present appeal.
3. The question of law arising in this case has been discussed by a Larger Bench of the Tribunal in Dai Ichi Karkaria Ltd. -1996 (81) E.L.T. 676. Dai Ichi Karkaria’s case itself was one where valuation was to be under Section 4(1)(b) of the Central Excise Act, 1944 and not under Section 4(1)(a) of the Act as in the case at hand. The Larger Bench considered two earlier decisions of the Tribunal where valuation was under Section 4(1)(a) of the Act, namely, Incab Industries -1990 (45) E.L.T. 342 and Atic Industries Ltd. -1992 (62) E.L.T. 321 and pointed out that the decision in both the cases was to the effect that the amount of Modvat credit availed of on duty paid inputs cannot be included in the assessable value of the intermediate product, though in the former case it was pointed out that Modvat does not directly reduce the value automatically but does so indirectly. Larger Bench in Dai Ichi Karkaria case held that where valuation is to be on the basis of Section 4(1)(b) of the Act, the amount of Modvat credit availed on the input cannot be included in the assessable value of the intermediate product or final product.
4. The case at hand has to be decided in the light of the principles referred to above. The impugned order would suggest that the appellants case was that the benefit of Modvat credit had been passed on to the contract customers. According to the Memo, of Appeal contracts themselves required such benefit to be passed on to the buyers and that the buyers had even subsequently demanded so. The question is not so much whether contract provides for such passing on the benefit or whether there is subsequent demand; the question is whether price had been reduced to any extent on account of enjoyment of the benefit of Modvat credit. If so, the reduced price should form the basis for determination of the assessable value. Price may be reduced either by actual reduction of price or by passing on the benefit of Modvat credit to the buyers. The matter in this perspective has not been considered by the lower authorities. We are therefore of the opinion that the matter has to be re-considered by the jurisdictional authority. Impugned order is set aside and the case is remanded to the jurisdictional adjudicating authority for decision afresh in accordance with law and in the light of the observations in this order and after giving the appellant an opportunity of personal hearing.
5. Appeal is allowed.