Modvat credit for imported components used in manufacture was allowed where the parts formed the final mobile pager.

Imported Radio Pager components used along with other parts to make a Mobile Pager operative were treated as inputs used in manufacture of the final product, so the duty paid on them qualified for Modvat credit. The analysis turned on the functional use of the imported components in the manufacturing process rather than their treatment as a finished end-product. On that basis, credit could not be denied and the departmental appeals were rejected.

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Issues: Whether Modvat credit of duty paid on imported Radio Pager components was admissible when such goods were used in relation to the manufacture of the final product.

Analysis: The imported material was not treated as a finished end-product for the assessee's purposes, because the record showed that components from the imported Radio Pagers were used along with other components to make the final Mobile Pager operative. On that basis, the imported goods were regarded as inputs used in the manufacture of the final product, and the duty paid thereon was held to be eligible for credit.

Conclusion: Modvat credit could not be denied; the departmental appeals were rejected.

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