TMI Blog1994 (4) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... em basis. The Company supply to buyers of their motor vehicle chassis at their option a tool kit comprising of spanners, wrenches, screw drivers and a jack attachment. According to the petitioners, tool kits are supplied in accordance with the practice of the trade by all manufacturers as users of motor vehicles require such tool kits and, as far as public service vehicles are concerned, are required by law to carry such tool kits. It is further stated that tool kits are bought out from other manufacturers and are excise duty paid items. The petitioners include the value of tool kits in the assessable value of the motor vehicle chassis manufactured by them. 3. The petitioners, on the aforesaid facts and circumstances, contend that there are numerous items such as wipers, driver's seat, cabs and tool kits which are supplied or not supplied along with the basic motor vehicle chassis at the option of the customer, and that such items are 'inputs' used in manufacture of the motor vehicle chassis or in relation to such manufacture, though all such items may not be cleared with each vehicle and as such, in all such cases the value of the input is included in the assessable value and mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion on 11th October, 1988 with the Central Board and in pursuance of discussions between the representative of Industry and the Excise Department it was decided that modvat credit in respect of excise duty paid on tool kits would be admissible, provided that such tool kits were supplied along with motor vehicles and their value was included in the assessable value of the motor vehicles. In pursuance of the said decision, the Central Excise and Customs Collectorate, Calcutta issued a Trade Notice dated 18th July, 1989 directing the modvat credit on duties paid on tool kits and jacks would be admissible provided such tool kits/jacks were supplied along with motor vehicles and their value was included in the assessable value of the motor vehicles. 7. The appeal filed by the petitioners before the Tribunal against the Appellate Collector's said order dated 20th November, 1987 came up for hearing before the East Regional Bench of the Customs, Excise and Gold (Control) and by an order dated 19th February, 1990 the said Tribunal allowed the petitioners' appeal holding that apart from trade notice issued by the different Collectorates, the legal propositions also establish that the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hicle chassis by the petitioners at the request of its customers could be treated as 'inputs' for the purpose of availing the benefit of modvat credit under Rule 57A of the Central Excise Rules. 12. Mr. Trivedi, representing the Revenue, raised a preliminary objection in the present case that the petitioners are not entitled to prefer the present application under Article 226 of the Constitution of India as an efficacious alternative remedy is available to them under the provisions of the Act. 13. Dr. A.M. Setalvad, the learned counsel appearing for the petitioners, on the other hand, submits that in this petition the petitioners seek to raise an issue on which there are conflict of decisions of the Tribunal which need settlement at the higher level. Besides the present writ application having been already admitted and pending for final hearing, the question of existence of alternative remedy is irrelevant. In this respect, he relies on a decision of the apex court in the case of Hirday Narain v. Income Tax Officer, AIR 1971 S.C. 33 and a decision of this Court in the case of Tata Yodogawa Ltd. v. Union of India, 1987 (32) E.L.T. 521 (Patna). 14. In our opinion, as the questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondents submitted that the word "used in or in relation to" manufacture is solely related to the word manufacture and 'manufacture' is defined under Section 2(f) of the Act which cannot be kept in isolation while interpreting the admissibility on tool kits supplied with motor vehicles which never participated directly or indirectly in or in relation to manufacture of the motor vehicle chassis. According to him, the ratio of the decision of the Apex Court cited by the learned counsel for the petitioners have no application to the facts of the present case as supply of tool kits with the motor vehicle is not at all any process for converting raw materials into finished goods. Mr. Trivedi further submits that the 10/723 petitioners have another factory at Lucknow for manufacturing motor vehicles and they are availing modvat credit on tool kits supplied with motor vehicle chassis and whatever amount of modvat had been availed on such tool kits had since been paid to the Department by them without any protest because modvat credit is not admissible on tool kits on merit. According to the Motor Vehicle Rules along with the many other accessories which cannot form the basis of availing mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases, in our opinion, the expression 'in manufacture of' denotes direct participation of the inputs in the manufacturing process resulting in the emergence of the final product whereas the words 'in relation to manufacture' convey the meaning of indirect participation of the inputs in the manufacture of final product but even the indirect participation is essential to the manufacture of final product. In view of the aforesaid legal proposition, let us now examine whether tool kits supplied by the petitioners in their motor vehicle chassis at the request of its customers could come within the ambit of any of the aforesaid expressions so as to enable it to avail of the benefit of the modvat scheme. 19. It is the admitted position of the parties that tool kits are supplied by the petitioners along with their motor vehicle chassis on the request of buyers. Accordingly, the supply of tool kits is limited to some of the motor vehicle chassis but not applicable to all motor vehicle chassis manufactured and sold by the petitioners. The term 'manufacture' relates to all motor vehicles as provided for in Section 2(6) of the Act. The motor vehicle chassis cleared without tool kits is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel for the petitioners, helping in the marketability of the finished products i.e. motor vehicle chassis. The driver's seat is essential component of the motor vehicle chassis manufactured by the petitioners and without it the chassis cannot be cleared or cannot be transported outside the factory. Wiper machine is also fitted with all chassis manufactured by the petitioners. Accordingly, the wiper machine and driver's seat are the essential components of the motor vehicle chassis whereas the tool kits cannot be said to be essential component of a motor vehicle chassis for it is admittedly supplied only when there is a request from a customer for supply of the same. It is thus clear that the chassis is marketed without the help and assistance of the tool kits and accordingly the ratio of the decision of the Apex Court in the case of Jay Engineering on which the learned counsel strongly relied upon, has no application in the present case as the name plates to electric fans are not similar to tool kits supplied with motor vehicle chassis. 23. So from whatever angle the issue is examined, the irresistible conclusion that is arrived at is that tool kits supplied by the petitioners wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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