Cenvat credit on tyres, tubes and flaps: prima facie inclusion as inputs supported waiver of pre-deposit.

In a dispute over Cenvat credit on tubes and flaps cleared with tyres, the analysis treats the question as one of whether such items fall within the definition of inputs under Rule 2 of the Cenvat Credit Rules, 2004. On a prima facie view, accessories were covered within the scope of inputs, and the fact that tyres, tubes and flaps were cleared as sets, with the value of bought-out items included in the assessable value of tyres, showed a strong case for relief. The assessee was therefore entitled to waiver of pre-deposit of duty and penalty.

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Issues: Whether the assessee was entitled to waiver of pre-deposit in a dispute concerning denial of Cenvat credit on tubes and flaps cleared along with tyres.

Analysis: The dispute turned on the definition of inputs under Rule 2 of the Cenvat Credit Rules, 2004. On a prima facie view, accessories were covered within the ambit of inputs, and the assessee's contention that tyres, tubes and flaps were cleared as sets, with the value of bought-out items included in the assessable value of tyres, disclosed a strong case for waiver.

Conclusion: The assessee was entitled to waiver of pre-deposit of duty and penalty.

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