2002 (9) TMI 440 - AT - Central Excise

Summary

Issues: Modvat credit on additional film rolls supplied with cameras.

Issue 1: Modvat Credit Eligibility
The case involved a dispute regarding the Modvat credit availed by the appellants on additional film rolls supplied with cameras. Initially, the appellants included one free film roll with the camera, and the Modvat credit was allowed without any issue. However, when the appellants started providing two additional film rolls without changing the declared MRP, the Department raised concerns. The Commissioner (Appeals) denied the credit, stating that the film rolls were not eligible inputs under Rule 57B. The Commissioner emphasized that the film rolls were accessories/gifts and not integral to the final product. The appellants argued that the cost of the film rolls was included in the assessable value, but the Commissioner rejected this argument. The Appellate Tribunal analyzed Rule 57B, which allows credit on specified items like accessories included in the assessable value of the final product. The Tribunal noted that the rule did not define 'accessory' in singular form, and since the department accepted one film roll as an accessory, multiple film rolls should also be considered eligible inputs. Therefore, the Tribunal found no legal impediment in considering multiple film rolls as permissible inputs under Rule 57B.

Issue 2: Commissioner's Findings
The Tribunal critiqued the Commissioner's order for not providing a valid reason for rejecting the certificates submitted by the appellants showing that the cost of the additional film rolls was absorbed. The appellants argued that the Asst. Commissioner had accepted that the value of the film rolls was included in the assessable value of the cameras. However, the Commissioner did not address this argument in his order. The Tribunal found that the Commissioner failed to justify why he disregarded the evidence provided by the appellants and did not explain why he disagreed with the Asst. Commissioner's acceptance of the cost absorption. Consequently, the Tribunal concluded that there was no basis to uphold the Commissioner's decision.

In conclusion, the Appellate Tribunal allowed the appeal by overturning the Commissioner (Appeals) order, emphasizing that multiple film rolls supplied with cameras should be considered eligible inputs for Modvat credit under Rule 57B. The Tribunal highlighted the lack of justification in the Commissioner's findings and ruled in favor of the appellants regarding the inclusion of the film rolls' cost in the assessable value.