Modvat credit on manufacturing accessories under Rule 57A can support waiver of pre-deposit where a strong prima facie case exists.

Accessories used in or in relation to manufacture may qualify as inputs for Modvat credit under Rule 57A of the Central Excise Rules, 1944, even if they are not contained in the final product. Articles such as an assembly wheel cover, tool bag, carpet and radio cover were treated as eligible accessories, and that classification was found to disclose a strong prima facie case for credit. On that basis, waiver of pre-deposit was justified and recovery of the disputed amount was stayed during pendency of the appeals.

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Issues: Whether the appellants made out a prima facie case for waiver of pre-deposit of the disallowed Modvat credit on the footing that the disputed items were inputs or accessories covered under Rule 57A of the Central Excise Rules, 1944.

Analysis: The disputed articles, including assembly wheel cover, tool bag, carpet and radio cover, were treated as accessories specifically covered as inputs. Rule 57A permitted Modvat credit on goods used in or in relation to the manufacture of final products, whether used directly or indirectly and whether or not contained in the final product. On that basis, the claim that the items were eligible inputs was considered to disclose a strong prima facie case.

Conclusion: The appellants were entitled to waiver of pre-deposit and recovery of the entire amount was stayed during the pendency of the appeals.

Ratio Decidendi: Accessories used in or in relation to manufacture can qualify as inputs for Modvat credit under Rule 57A, and such eligibility can justify waiver of pre-deposit when a strong prima facie case is shown.

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