Cenvat credit on vehicle tool kits and first aid kits upheld as accessories cleared with two-wheelers.

Tool kits and first aid kits supplied with two-wheelers were treated as inputs for Cenvat credit because Rule 2(k)(i) of the Cenvat Credit Rules, 2004 includes accessories of the final product cleared along with it. Their sale with the vehicles and inclusion in the vehicle price supported their character as part of the final product supply. Rule 138 of the Central Motor Vehicle Rules, 1989 also requires carriage of a tool kit and first aid kit, reinforcing that they are statutorily mandated accessories used in relation to the vehicle. On that basis, Cenvat credit was treated as properly availed and the related disallowance, demand, interest, and penalty were not sustainable.

---

---

Issues: Whether tool kits and first aid kits sold along with two wheelers qualify as inputs, including accessories of the final product, for the purpose of Cenvat credit.

Analysis: Rule 3 of the Cenvat Credit Rules, 2004 allows credit on inputs used in the manufacture of final products. Rule 2(k)(i) of the Cenvat Credit Rules, 2004 expressly includes accessories of the final product cleared along with the final product within the definition of input. The tool kits and first aid kits were sold with the vehicles and their cost formed part of the vehicle price. Rule 138 of the Central Motor Vehicle Rules, 1989 requires carriage of a tool kit and first aid kit, showing that they are necessary accessories attached to the vehicle by statutory mandate and used in relation to the final product.

Conclusion: Tool kits and first aid kits are inputs within the meaning of Rule 2(k)(i) of the Cenvat Credit Rules, 2004, and Cenvat credit was rightly availed. The disallowance of credit, demand, interest, and penalty could not be sustained.

---