Modvat credit on accessories cleared with cameras was admissible where their value formed part of assessable value.

Rule 57B of the Central Excise Rules, 1944 allowed Modvat credit on accessories cleared along with the final product where their value was included in the assessable value. Additional free film rolls supplied with cameras were treated as accessories, and the fact that more than one accessory item was supplied did not create any legal bar to credit. The denial of credit was therefore unsustainable, and the assessee was entitled to Modvat credit on the accessory items.

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Issues: Whether Modvat credit was admissible on additional free film rolls supplied with cameras as accessories, where the value of such accessories was included in the assessable value of the final product.

Analysis: Rule 57B of the Central Excise Rules, 1944 allowed credit on accessories of the final product cleared along with the final product, provided their value was included in the assessable value. The rule used the expression "accessories" without limiting the number of such items. Since the film rolls were cleared in a package with the camera, were treated as accessories, and their value was shown as included in the assessable value, there was no legal basis to deny credit merely because more than one accessory item was supplied.

Conclusion: Modvat credit on the additional film rolls was admissible and the denial of credit was unsustainable.

Final Conclusion: The assessee succeeded, and the order denying credit was set aside.

Ratio Decidendi: Accessories of the final product cleared with it and included in its assessable value qualify for Modvat credit under Rule 57B, and the rule does not impose any numerical limit on the number of accessory items.

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