Modvat credit for product accessories allowed where bowl and spoon were necessary for effective use and contamination control

Plastic bowl and spoon supplied with herbal sikkakai powder were treated as accessories for Modvat purposes because they were necessary for effective use of the product and to prevent contamination. The reasoning accepted that the powder could not be properly used by bare hands and that the items formed part of the product's packaging and use. On that basis, goods supplied along with the final product and shown to be functionally necessary may qualify as accessories or inputs for Modvat credit, and credit on the bowl and spoon was allowed.

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Issues: Whether the plastic bowl and spoon supplied with herbal sikkakai powder qualified as inputs or accessories so as to entitle the assessee to Modvat credit.

Analysis: The items were supplied along with the final product and were found to be necessary for effective use of the powder and to avoid contamination from fungus. The reasoning accepted that the powder could not be properly used with bare fingers and that the bowl and spoon formed part of the packaging and use of the product. Applying the earlier decisions relied upon, the Tribunal treated the items as falling within the scope of accessories for Modvat purposes.

Conclusion: The assessee was entitled to Modvat credit on the bowl and spoon, and the denial of credit was set aside.

Ratio Decidendi: Goods supplied along with the final product and shown to be necessary for its effective use and protection from contamination can qualify as accessories or inputs for Modvat credit.

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