Modvat credit on couplers supplied with cables is admissible when their value forms part of the duty-paid final product.

Modvat credit was admissible on couplers separately purchased and supplied with cables where the couplers were supplied as part of customer orders, their value was included in the assessable value of the final product, and duty was paid on the composite value. The Tribunal followed its earlier view in the assessee's own case that the cleared goods were not merely wires and cables simpliciter, and that credit could not be denied when the coupler formed part of the duty-paid final product. Credit was therefore correctly allowed by the first appellate authority.

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Issues: Whether Modvat credit was admissible on couplers purchased from other manufacturers and supplied along with the cables manufactured by the assessee.

Analysis: The couplers were supplied with the cables in terms of the customers' purchase orders, their value was included in the assessable value of the final product, and duty was paid on the composite value. The question had already been settled in the assessee's own case by an earlier Tribunal order, which held that the cleared goods were not merely wires and cables simpliciter and that credit was rightly allowed where the value of the coupler formed part of the duty-paid final product. No basis was found to depart from that view.

Conclusion: Modvat credit on the couplers was admissible and was rightly allowed by the first appellate authority.

Ratio Decidendi: Where an item supplied along with the manufactured final product is included in the assessable value and duty is paid on the composite value, credit cannot be denied merely because the item is separately procured, if it forms part of the goods cleared by the assessee.

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