2013 (3) TMI 343 - AT - Central Excise

Cenvat credit denied - as per department the Helmet Lock cleared alongwith motorcycle does not fall within the definition of Input - assessee seeking waiver of pre-deposit of duty demand, interest and penalty - Held that - As per Board Circular No. 24/90-CX.4, dated 11-7-1990 it is apparent that Helmet Lock fitted in the motorcycle satisfies the conditions of an accessory. Admittedly, the value of Helmet Lock is included in the assessable value of motorcycle for the purpose of payment of excise duty. Therefore, there is no escape from the conclusion that the Helmet Lock is squarely covered under the definition of Input under Section 2(k) of the Cenvat Credit Rules, 2004. As Punjab & Haryana High Court has directed all the manufacturers/ dealers in the states of Punjab, Haryana and U.T. of Chandigarh to provide Helmet and Lock for it to the ultimate consumer at the time of sale of two wheeler. From this also prima-facie it appears that the appellant was under legal obligation to provide duly fitted Helmet Lock in the motorcycle cleared to the ultimate customer as such Helmet Lock is an accessory of the motorcycle and covered under the definition of Input. Thus, prima-facie the appellant has rightly availed the Cenvat credit disallowed to him vide impugned order. The appellant has been able to make out a prima-facie case for waiver of pre-deposit of duty demand, interest and penalty. Stay application is, therefore, allowed and condition of pre-deposit of duty demand, interest and penalty is waived and recovery thereof stayed.

Summary

Issues:
- Disallowance of Cenvat credit by the jurisdictional adjudicating Commissioner
- Recovery of wrongly availed Cenvat credit with interest and penalty
- Definition of "Input" under Cenvat Credit Rules, 2004
- Whether Helmet Lock fitted and cleared along with the motorcycle qualifies as an "Input"
- Prima facie case for waiver of pre-deposit of duty demand, interest, and penalty

Analysis:
The appellant appealed against an order disallowing Cenvat credit of Rs. 2,82,34,630/-, ordering recovery with interest and penalty. The appellant, engaged in motorcycle manufacturing, cleared motorcycles with "Helmet Locks" and availed Cenvat credit on the excise duty paid for them. The dispute centered on whether the Helmet Lock qualifies as an "Input" under the Cenvat Credit Rules. The adjudicating authority contended that the Helmet Lock did not fall within the definition of "Input." The appellant argued that the Helmet Lock, being an accessory to the motorcycle, should be considered an "Input" based on a Board Circular and a High Court direction.

The appellant's senior advocate argued that the Helmet Lock was an accessory to the motorcycle, as recognized in a Board Circular and a High Court direction. The revenue representative acknowledged that the Helmet Lock was cleared with the motorcycles but argued against its classification as an accessory. The Tribunal examined the definition of "Input" under the Cenvat Credit Rules, emphasizing that accessories of final products cleared along with them are included. Referring to the Board Circular and the High Court direction, the Tribunal concluded that the Helmet Lock satisfied the conditions of an accessory and fell within the definition of "Input."

Based on the Board Circular, the High Court direction, and the inclusion of the Helmet Lock's value in the motorcycle's assessable value, the Tribunal found that the appellant had a prima facie case for the waiver of pre-deposit. Consequently, the Tribunal allowed the stay application, waived the pre-deposit condition, and stayed the recovery of duty demand, interest, and penalty. The Tribunal's decision was pronounced on 12-9-2012, with the appeal to be listed subsequently.