Tool kits sold with motorcycles qualify as inputs for Cenvat credit when treated as mandatory vehicle accessories.

Tool kits sold with motorcycles were treated as inputs for Cenvat credit because the definition under Rule 2(k)(i) covered accessories cleared along with the final product. The kits were supplied with the vehicles, their cost formed part of the sale price, and the mandatory carriage requirement under the Central Motor Vehicle Rules showed they were necessary accessories for the vehicle. Earlier Revenue decisions were distinguished as they arose under a different statutory regime that did not include accessories within the definition of input. Cenvat credit on the duty paid on the tool kits was therefore correctly availed.

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Issues: Whether tool kits sold along with motorcycles qualify as inputs or accessories of the final product for the purpose of Cenvat credit under the Cenvat Credit Rules, 2004.

Analysis: The definition of input under Rule 2(k)(i) includes accessories of the final products cleared along with the final product. The tool kits were sold along with the vehicles and their cost formed part of the sale price. Rule 138(4)(b) of the Central Motor Vehicle Rules, 1989 makes carriage of the prescribed tool kit mandatory, showing that the kit is a necessary accessory for the vehicle. The earlier decisions relied upon by the Revenue were distinguished because they arose under a different statutory regime that did not include accessories within the definition of input.

Conclusion: The tool kits were covered by the definition of input, and Cenvat credit on the duty paid thereon was rightly availed by the assessee.

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