Modvat credit on vehicle safety components upheld where wiper kits and motors were treated as manufacture-related inputs.

Modvat credit was recognised for windscreen wiper kits and wiper motors supplied with motor vehicle chassis because they were treated as items used in or in relation to manufacture of the final product. The Tribunal noted that the components were essential for the vehicle's running and safety, and that their inclusion in the assessable value of the chassis supported their manufacture-linked character. Supply in loose condition did not alter that character. Relying on the settled meaning of "in or in relation to" manufacture and prior Larger Bench decisions, the Tribunal confirmed credit on the impugned items and rejected the Revenue's challenge.

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Issues: Whether Modvat credit was admissible on windscreen wiper kit and wiper motor supplied with motor vehicle chassis as items used in or in relation to manufacture of the final product.

Analysis: The items were found to be essential for the running and safety of the motor vehicle and their value was included in the assessable value of the chassis. The Tribunal accepted that supply in loose condition did not detract from their essential character. It also relied on the settled interpretation of the expression "in or in relation to" manufacture and on prior Larger Bench decisions recognising that items supplied along with the vehicle may qualify for credit where they form part of the manufacture-related process.

Conclusion: Modvat credit was rightly allowed on the impugned items, and the Revenue's challenge failed.

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