Cenvat credit dispute remanded for fresh adjudication after Rule 126 plea on prototype testing was left unexamined.

Denial of cenvat credit on inputs, capital goods and input services used in the assessee's research and development unit was set aside for fresh consideration because the plea based on Rule 126 of the Motor Vehicles Rules, 1989 had not been examined by the adjudicating authority. As both sides sought reconsideration on that basis, the matter was remanded for de novo adjudication with an opportunity of hearing.

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Issues: Whether the matter should be remanded for de novo adjudication in the light of Rule 126 of the Motor Vehicles Rules, 1989.

Analysis: The dispute concerned denial of cenvat credit on inputs, capital goods and input services used in the assessee's research and development unit. The assessee invoked Rule 126 of the Motor Vehicles Rules, 1989 to contend that prototype testing and certification were integral to its manufacturing activity. Since this plea had not been examined by the adjudicating authority, and the Revenue also sought reconsideration on that basis, the matter required fresh consideration with an opportunity of hearing.

Conclusion: The impugned order was set aside and the matter was remanded for de novo adjudication.

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