BAJAJ TEMPO LIMITED Vs. CCE

JUDGEMENT

(1.) THIS appeal is preferred against the order dated 17.8.2004 made by the Commissioner (Appeals), Indore allowing the departmental appeal against order -in -original dated 17.3.2003 of the Assistant Commissioner, by which the demands of Rs. 70268/ - under show cause notice dated 28.12.2001 and Rs. 57,232/ - under show cause notice dated 23.12.2002 were dropped against the appellant, by holding that modvat credit taken by the appellant on first -aidkit/box in the vehicle manufactured and removed by them was not permissible.

(2.) THE appellant was engaged in the manufacture of motor vehicles falling under chapter 87 of the schedule to the Central Excise Tariff Act, 1885 and was availing cenvat facility under the Rule 57AB of the Central Excise Rules, 1944/Rule 3 of Cenvat Credit Rules, 2001/Rule 3 of Cenvat Credit Rules, 2002. During scrutiny of the records of the assessee, it was observed that, it had taken cenvat credit on first -aidkit/box of Rs. 70268/ - during the period from December 2000 to October 2001 and Rs. 57232/ - during the period December 2001 to October 2002. According to the Revenue, since the first -aidkit/box was not used in or in relation to manufacture of vehicle directly or indirectly and was provided alongwith the vehicle as an additional kit for first -aid purpose, the availment of cenvat credit in respect thereof was not admissible, because it did not fall under the definition of "input". Two show cause notices were therefore issued in respect of the said two periods, and on the basis of the material on record, the Assistant Commissioner held that the first -aid box was used in relation to the manufacture of the vehicle because in Rule 180 of the M.P. Motor Vehicle Rules, 1994, there was a provision to the effect that every "stage carriage" shall carry a dust proof first -aid box. It was held that considering the statutory requirement enforced by the State Government, first -aid kit box was used in relation to the manufacture of motor vehicle and hence was "input" as contemplated in Rule 57AA(d) of the said rules. It was, therefore, held that the demand under the show cause notices could not be sustained. The Commissioner (Appeals), however, was of the view that first -aid box/kit cannot be called as an accessory of the final product (motor vehicle). It was held that the requirement of Rule 180 of the M.P. Motor Vehicle Rules, 1994, requiring first -aid box/kit in every vehicle, did not create an obligation on the manufacturer to supply such first -aid box/kit, which can be procured even from outside for compliance of the provision of Rule 180 of those rules. It was held that Rule 180 of M.P. Motor Vehicle Rules, 1994 applied to stage carriage and public service vehicle and these may not be applicable to the vehicle carrying goods. It was held that even though the value of first -aid box/kit was included in the value of the vehicle cleared by the assessee, the credit of duty paid on such first -aid box/kit would not be available to the assessee as, such first -aid box/kit cannot be considered as an "input" for the manufacture of the vehicle during the relevant period.

(3.) THE appellant had filed notes on 7.9.2006 and 27.9.2006 making written submissions and requesting to decide the appeal on merits on their basis. In the written submissions dated 7.9.2006, the appellant has relied upon the meaning of the word 'accessory' from the dictionaries. It has also relied upon the meaning of word 'input' in Rule 57AA(d) during the period December 2000 to June, 2002, and the definition of word 'input' in Rule 2(f) which was applicable during the period from July 2001 to October 2002. On the basis of these definitions, it is submitted that accessories of the final product if cleared along with the final product were to be treated as "input". Reliance is also placed on Rule 180 of the M.P. Motor Vehicles Rules and Rule 192 of the Maharashtra Motor Vehicles Rules which provided that the motor vehicles must contain first -aid kit/box. It is submitted that the case law referred to by the department had no application because it related to the earlier period when the definition of the word 'input' was different. The appellant has placed reliance on the following decisions: