TaxTMI 
TaxTMI 
2005 (12) TMI 20
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.... of the Central Excise Rules, 1944. The notices covered the period from May, 1992 to June, 1995 and the total credit sought to be disallowed was Rs. 88,00,854.60. The notices also proposed to impose penalty in terms of Rule 173Q(1)(bb) of the Central Excise Rules. The notices were resisted by the assessees who contended, inter alia, that in the heavy and commercial vehicle segment, they manufactured and cleared only chassis from Pune Works. In the light commercial vehicle segment, they manufactured and removed complete vehicles and in the case of removals of LCVs and cars, tool kits were supplied as standard supply with each vehicle, without any option to customers; whenever chassis were removed to DGS & D customers/Government customers, to....
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....ces by disallowing the Modvat credit. He also imposed penalties totalling Rs. 8,70,000/. The Commissioner (Appeals) set aside the adjudication order, following the decision of the Larger Bench of the Tribunal in Bajaj Auto Ltd. v. CCE, Pune [1996 (88) E.L.T. 355] in which it was held that modvat credit was admissible on jack assemblies and tool kits supplied along with motor vehicles as they are inputs within the meaning of Rule 57A of the Central Excise Rules, 1944; hence this appeal by the Revenue. 2.We have heard both sides. We note that in the case of the same assesses, the Hon'ble Patna High Court has disallowed modvat credit on tool kits observing clearly that - para 19 "The motor vehicle chassis cleared without tool kits is also ma....
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....In our opinion, the criteria for determination and inclusion of value is not the basis for allowing and disallowing modvat credit as per provision stipulated under modvat credit. As decided by the Apex Court in the case of Union of India v. Bombay Tyre Internation Ltd., reported in 1983 (14) E.L.T. 1896 (S.C.) = AIR 1984 SC 420 expenses incurred on account of several factors including service which have contributed to the value of an excisable goods are liable to be included in the assessable value. Accordingly, the petitioners are adding cost of tool kits in the assessable value of the chassis on the above principle of law and not for the reason that such tool kits are used in or in relation to the manufacture of chassis, as submitted by t....
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....ty paid on tool kits is not available. 4.In the light of the above, we agree with the ld. SDR that tool kits are not inputs for vehicles and that benefit of modvat credit of duty paid on tool kits is not admissible to the respondents. 5.The respondents contended in the alternative that even in the Revenue's contention of non admissibility of modvat credit on tool kits is accepted, they cannot be directed to pay back amount of modvat credit taken on duty paid tool kits as they had included the value of tool Kits in the assessable value of the motor vehicles cleared by them during the relevant period. They submit that the stand taken by them in their reply dated 13-6-97 to the show cause notice that the value of tool kits and jack assemblie....
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....tivity undertaken by the assessee would amount to manufacture or not, is integrally linked with the eligibility to credit on the parts used in that activity, and that when an assessment is reopened by the department that manufacture is involved and duty is determinable, rejecting the contention of the appellants that no manufacture is involved, all aspects of assessment including availability of modvat credit can be gone into. The Tribunal has consistently held that when credit is proposed to be denied by holding that the process in which inputs on which credit has been taken were used, did not amount to manufacture, duty paid by the assessee by utilising the credit on such inputs should be treated as reversed/paid back. One such recent dec....