Modvat credit for accessories cleared with the final product was upheld where the accessory value formed part of assessable value.

Toner cleared along with photocopiers, with its value included in the assessable value of the final product, was treated as an accessory eligible for Modvat credit under Rule 57B(1)(vi). The original finding that toner was an accessory had not been challenged by the Revenue and therefore had attained finality; the appellate authority could not overturn that unchallenged finding. On those facts, the article states that credit of CVD on toner was admissible because the rule allowed input credit for accessories cleared with the final product, and contrary valuation-based arguments did not alter that position.

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Issues: Whether toner cleared along with photocopiers, whose value was included in the assessable value of the photocopiers, was eligible for Modvat credit as an accessory of the final product under Rule 57B(1)(vi); and whether the appellate authority could disturb the original authority's unchallenged finding that toner was an accessory of the photocopier.

Analysis: The toner was cleared along with the photocopier and its value was included in the assessable value of the final product. The original authority had recorded a finding of fact that toner was an accessory of the photocopier, and the Revenue had not challenged that finding. In the absence of any appeal or cross-appeal by the Revenue on that issue, the finding had attained finality and was not open to reversal by the appellate authority. Rule 57B(1)(vi) expressly allowed credit of duty on accessories of the final product cleared along with it, where the value of such accessories was included in the assessable value. The cited authorities on valuation and consumables did not displace this position on the admitted facts of the case.

Conclusion: Modvat credit of the CVD paid on toner was admissible under Rule 57B(1)(vi), and the contrary order of the Commissioner (Appeals) was set aside.

Final Conclusion: The assessee was held entitled to credit on the toner cleared with the photocopier, and the appeal succeeded with consequential relief.

Ratio Decidendi: Where an item cleared along with the final product is conclusively found to be an accessory and its value is included in the assessable value, credit is admissible under the Modvat provision granting input credit to such accessories.

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