Modvat credit on torch accessories upheld where their value formed part of the final product's assessable value.

Modvat credit was held admissible on cells, batteries, sleeves and packing materials used with torches because Rule 57B allowed credit on accessories of the final product when their value formed part of the assessable value. The record showed no dispute that the value of the cells was included in the assessable value of the torches, so the disputed items satisfied the statutory condition. On that basis, disallowance of credit and the related penalty were unsustainable.

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Issues: Whether Modvat credit was admissible on cells and batteries cleared along with torches, and on sleeves and packing materials used for such clearances, where the value of the items formed part of the assessable value of the final product.

Analysis: Rule 57B permitted credit on accessories of the final product, subject to the condition that their value was included in the assessable value of the final product. The record showed no dispute that the value of the cells was included in the assessable value of the torches. On that basis, the items in question qualified for Modvat credit and there was no justification for disallowance or penalty.

Conclusion: The Modvat credit was admissible on the disputed items, and the disallowance and penalty were unsustainable.

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