Customs, Excise and Gold Tribunal - Delhi
Commissioner Of Central Excise vs Maruti Udyog Ltd. on 15 May, 2000
Equivalent citations: 2000(72)ECC229, 2000(120)ELT580(TRI-DEL)
ORDER A.C.C. Unni, Member (J)
1. The Revenue is in appeal against the order passed by the Commissioner of Central Excise, New Delhi dated 24.10.97 allowing Modvat credit on clock assembly and antenna assembly, and allowing the deduction of value of tool kits and jack assembly from the assessable value of the motor vehicles manufactured by the respondents.
2. We have heard both sides.
3. It is contended on behalf of the appellant Commissioner that clock assemblies, radio/audio system etc. are not essential or integral parts of motor vehicles and these are not items without which the motor vehicles are unmarketable. These items even if fitted to motor vehicles before clearance cannot be termed as inputs used in or in relation to the manufacture of the final products namely, motor vehicles. The Appellant Commissioner contends that inasmuch as the impugned order has allowed Modvat credit taken on these items, the order needs to be set aside. The finding in the impugned order that since the value of these items are included in the assessable value of the goods, and therefore, Modvat on these goods cannot be denied, is contested by the Department on the ground that Rule 57A and Section 4 are independent of each other and there was no provision at the relevant time under Rule 57A that if the value of an input is included in the assessable value of the final product then Modvat credit is permissible. As regards admissibility to Modvat credit on tools kit and jack assembly, the Department's contention is that their values were not to be included in the assessable value of the vehicle as they were not essential parts of the vehicle and manufacture of the vehicle was complete even without those items.
4. Ld. Counsel arguing for the respondents has submitted that the impugned order has correctly held that Modvat credit on accessories like clock assembly and antenna assembly would be admissible. He submits that the Commissioner has relied on the Supreme Court decision in CCE v. Eastend Paper Industries Ltd. 1989 (43) E.L.T. 201 (S.C.) which held that anything required to make the goods marketable must form part of the manufacture. The Tribunal had also, in CCE v. Swaraj Mazda 1993 (68) E.L.T. 258 (T) held that any item or process which is essential for making the final product marketable would be an input used in or in relation to the manufacture of the final product. The Commissioner had found that the Deluxe model of the car was complete only when it was fitted with clock assembly and antenna assembly and the respondents had included the cost of those items in the assessable value of the motor vehicles on which they were paying the Central Excise duty.
5. As regards the question whether the cost of tool kit and jack assembly would be includible in the assessable value of the motor vehicles for the reason that since the tool kit and jack assemblies were not in the nature of parts of motor vehicles, the respondents had not included the cost of these items in the assessable value of the vehicles. The Department on the other hand had sought to include the cost of tool kit and jack assembly in the value of the motor vehicle manufactured by the respondents and had demanded differential duty for the period mentioned in the show cause notice. It was the Department's case that the said items were being supplied along with the vehicles as a matter of course and in terms of the Motor Vehicles Act. According to the Department, it also enhanced the value of the vehicles and its marketability in trade as envisaged in the Bombay Tyres case 1983 (14) E.L.T. 1896 (SC). Therefore, since the supply of these items enhanced the value of the vehicles, their value has to be included in the assessable value of the vehicles in spite of the face that Modvat credit was not allowed as an input.
6. Refuting these claims, ld. Counsel for the respondent has argued that various decisions of the Tribunal has settled the position that the cost of bought out items cannot be included in the value of the manufactured items if they are not fitted or attached to the manufactured item at the time of clearances from the factory.
Counsel cites the following decisions in support:
1. Uptron India Ltd. v. CCE, Allahabad 1994 (73) E.L.T. 848 (T)
2. CCE, Bhubaneswar v. Radiant Electronics Ltd. 1996 (85) E.L.T. 102 (T)
3. Collector of Central Excise v. Shree Pipes Ltd. 1993 (63) E.L.T. 565 (T)
4. Eureka Forbes Ltd. v. CCE, Meerut 1996 (83) E.L.T. 334 (T)
5. Devilog Systems (I) Ltd. v. CCE, Bangalore 1997 (89) E.L.T. 183 (T)
7. As regards tool kit and jack assembly Counsel relies on the following judgments relating to includibility of cost of tool kits and jack assembly or tool bags, in the assessable value of the vehicles.
1. Amkar Engineering Works v. Superintendent, Central Excise 1979 (4) E.L.T. J145 - Gujarat High Court]
2. Steel Craft v. CCE, Belgaum 1995 (75) E.L.T. 897 (T) He also refers to Tribunal's Final Order No. 399/89-A dated 29-8-1989 in Indian Automotives Ltd. v. CCE in which the Tribunal had held that tool kit for moped/motorcycle is not includible in the value of moped. The said decision had also been confirmed by the Apex Court.
8. We have considered the submissions and perused the case law. We find that the case law relied on by the Commissioner in the impugned order as well as these cited by the Counsel for the Respondents before us fully cover the Respondent's case in respect of all the disputed questions in their favour. To the extent the Respondents have shown that clock assembly and antenna assembly are fitted in their export and Deluxe models, they have to be considered to be essential components for purposes of making these vehicles marketable. Further, in view of the Tribunal decision in India Automotive case confirmed by the Apex Court [vide 1998 (98) E.L.T. A72] the ground taken by the Department against including the value of tool kits and jack assembly in the assessable value of the vehicles manufactured by the respondents cannot be accepted.
9. Accordingly, the impugned order is upheld and the appeal rejected.