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Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 1996 (4) TMI AT This

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1996 (4) TMI 194 - AT - Central Excise

Issues:
- Availability of Modvat credit on luggage carrier as an essential accessory for motor vehicles.

Analysis:
The appeals were filed by the department challenging the availability of Modvat credit on a luggage carrier, contending that it was not an essential accessory. The respondents, engaged in manufacturing motor vehicles, claimed that the luggage carrier was a safety device essential for compliance with the Motor Vehicle Rules. The department argued that the luggage carrier was merely an accessory and not an essential input for Modvat credit eligibility.

Shri S.V. Arya, representing the respondents, argued that the luggage carrier, described as a safety device, was necessary for the functioning and safety of the motor vehicle. Referring to relevant legal provisions and precedents, it was contended that the item in question was essential for the main product, the motor vehicle, and thus eligible for Modvat credit. The larger Bench decision in the case of Lipi Data System was cited to support the argument that items necessary for the functioning of the main product should be considered eligible for Modvat credit.

On the other hand, Shri P. Dass, representing the department, maintained that only a part of the goods could be classified as a safety device, not the entire luggage carrier. The Assistant Collector's findings were reiterated to support the department's stance.

After considering the arguments from both sides and reviewing the relevant case law, the Tribunal examined the criteria for determining whether an item qualifies as an essential input used in or in relation to the manufacture of the final product. The Tribunal emphasized that the item must be essential for the functioning of the main product. In this case, the Tribunal found that the luggage carrier, serving as a safety device for the motor vehicle, was not only a normal trade requirement but also a legal requirement without which the product could not be sold in the market. Therefore, the Tribunal concluded that the luggage carrier was an essential accessory for the motor vehicle, making the respondents eligible for Modvat credit.

In light of the above analysis, the Tribunal upheld the impugned order regarding the luggage carrier, ruling in favor of the respondents and dismissing the appeals. The Cross-Objections were also disposed of accordingly.

 

 

 

 

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