Modvat credit on tool kits and jack assemblies remained a debatable input issue warranting High Court reference.

Tool kits and jack assemblies supplied with motor vehicles were examined as potential inputs used in or in relation to manufacture under the Central Excise Rules. The Tribunal noted an earlier larger Bench view on Modvat credit and the Patna High Court decision, but also recorded that it did not fully agree with that High Court's reasoning. On that basis, the status of these items remained a debatable question of law requiring authoritative determination, and the matter was referred to the Allahabad High Court.

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Issues: Whether tool kits and jack assembly supplied with motor vehicles could be treated as inputs under Rule 57A of the Central Excise Rules, 1944 so that a referable question of law arose.

Analysis: The Tribunal noted that the larger Bench had earlier examined the admissibility of Modvat credit on tool kits and jack assembly and had considered the Patna High Court decision on the subject. Even so, the present order records that the Tribunal had not fully agreed with that High Court view. On that basis, the question whether such items were inputs used in or in relation to the manufacture of motor vehicles was treated as a debatable point of law requiring authoritative determination.

Conclusion: A question of law arose and the matter was required to be referred to the Allahabad High Court. The reference application was allowed.

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