Tool kits supplied with motorcycles qualify as inputs, making Cenvat credit admissible on the duty paid.

Tool kits sold along with motorcycles were treated as accessories of the final product and therefore as "inputs" under Rule 2(k)(i) of the Cenvat Credit Rules, 2004. Because the tool kit was supplied with the motorcycle, its cost was included in the sale invoice, and the Central Motor Vehicle Rules required the vehicle to be carried with the prescribed tool kit, it was regarded as a necessary accessory linked to the final product. Cenvat credit on the duty paid on the tool kit was therefore admissible, and the disallowance of credit was unsustainable.

---

---

Issues: Whether tool kits sold along with motorcycles qualified as inputs, being accessories of the final product, so as to entitle the manufacturer to Cenvat credit under the Cenvat Credit Rules, 2004.

Analysis: Rule 2(k)(i) of the Cenvat Credit Rules, 2004 includes within the expression "input" accessories of the final product cleared along with the final product. The tool kit was sold along with the motorcycle and its cost was included in the sale invoice. Rule 138(4)(b) of the Central Motor Vehicle Rules, 1989 required the vehicle to be carried with the prescribed tool kit. On that basis, the tool kit was treated as a necessary accessory of the vehicle and not merely a bought-out item unconnected with the final product.

Conclusion: The tool kit fell within the definition of "input" and Cenvat credit on the duty paid thereon was admissible; the disallowance of credit was unsustainable.

---