Tool kits supplied after manufacture are not inputs for modvat credit when they serve maintenance and customer convenience, not production.

Tool kits supplied with motor vehicle chassis at customer request were held not to be inputs used in or in relation to manufacture under Rule 57A, because they were bought-out items supplied after manufacture for maintenance and repair, and the chassis was marketable without them. Inclusion of the tool kit value in the assessable value did not convert them into manufacturing inputs. The earlier trade notice permitting credit had also been validly withdrawn, so modvat credit was not admissible on the tool kits.

---

---

Issues: Whether tool kits supplied with motor vehicle chassis at the request of customers can be treated as inputs used in or in relation to the manufacture of motor vehicle chassis for availing modvat credit under Rule 57A of the Central Excise Rules.

Analysis: Rule 57A allows credit only for inputs used in or in relation to manufacture, and the expression has a broad scope only where the item has a direct or indirect nexus with the manufacturing process. Tool kits supplied with chassis were bought-out items, supplied only on customer request, and were not part of the manufacturing process of the chassis. The chassis was already manufactured and marketable without the tool kits, and the kits were meant for maintenance and repair after manufacture. The fact that their value was included in assessable value did not make them inputs. The earlier trade notice allowing credit had also been validly cancelled.

Conclusion: Tool kits are not inputs within Rule 57A and modvat credit is not admissible on them; the objection to the writ petitioner fails.

Ratio Decidendi: An item supplied after manufacture for maintenance or customer convenience, without direct or indirect participation in the manufacturing process, is not an input used in or in relation to manufacture for the purpose of modvat credit.

---