TaxTMI 
TaxTMI 
2007 (6) TMI 85
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....ore specifically, tyres for earthmovers and other industrial equipments, for exports. While it manufactures the tyres in its factory, the inner tubes and flaps for the tyres are procured from outside. Tyres are cleared from the factory after fixing the inner tubes and flaps into/on to the tyres. 3. Bulk of the produce of the appellant is exported and the appellant is entitled to rebate of excise duty paid on the tyres. The appellant is also availing of credit of duty on the inputs going into the manufacture of the tyres including on the inner tubes and flaps procured from other manufacturers. 4. The dispute raised is as to whether credit is available in regard to inner tubes and flaps. Under the impugned order, the credits have been d....
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....other. He would also point out that, from the record, it is not clear, as to whether the value of tubes and flaps were forming part of the assessable value of the tyre/'set pack' at the time of their clearance from the factory. 8. We agree with the assessee. The tyres in question are not tubeless tyres. They required inner tubes as an essential item for functioning. The flaps are also useful and make the functioning of the tyres more convenient and trouble free. Therefore, while tubes can as well find place as part or component of tyre, the flap will clearly be an accessory as pointed out by the ld. Counsel for the appellant. 9. The view taken in the order is also contrary to the plain terms of the definition. We may read that definit....
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.... definition to an extent that it excludes situations specifically covered by the definition. 10. This is also for good reason. Excise is on manufacture and the definition of manufacture includes all processes in connection with the manufacture, including embellishment. And the value of all these processes and the items going into them go into the assessable value of the manufactured product. Thus, it is the product, as it is cleared from the factory, with all improvements, embellishment and accessories that gets assessed. Input credit rules have to be in consonance with this scheme of taxation, by treating all items including accessories, packing materials as credit eligible inputs. Therefore, the very narrow interpretation sought to be ....
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....f a manufacturer levied a charge for an item (socket in this case), which was instrinsically necessary to place the pipes on the market then the cost of such an item had to be loaded to the normal price of the pipes. Applying the above test to the fact of the present case, we find, as stated above, that the sockets were fitted on the said m.s./g.i. pipes before their clearance. It has been concurrently found by the Commissioner as well as by the Tribunal that the sockets were fitted on the threaded portion of the pipes. It has been found that the said sockets enabled the functioning of the pipes. It is found that the sockets were essential for functioning of the pipes. They were required for joining the pipes to each other. In the circum....