2013 (12) TMI 699 - AT - Central Excise

Inclusion of the value of accessories in the value of three wheelers supplied Held that - Central Motor Vehicle (Amendment) Rules, 1989 and the Maharashtra Motor Vehicle Rules, 1989 specify that while plying the vehicle the driver should ensure that he has the tool kits and jack assembly necessary for change of tyres and rim - this is condition which needs to be met at the time of using the vehicle on the road - The Motor Vehicle Rule does not deal with supply of tool kits by the manufacturer. -The tool kits may be supplied by either the manufacturer or by the dealer - from the Motor Vehicle Rules, it does not emerge that the manufacturers are mandatorily required to supply the tool kits or jack assembly along with the vehicle - Following COLLECTOR OF CENTRAL EXCISE, PUNE Versus BAJAJ AUTO LTD. 1996 (10) TMI 401 - CEGAT, NEW DELHI - the value of tool kits and jack assembly are not includable in the assessable value of the motor vehicle order set aside Decided in favour of Assessee.

Summary

Issues:
Inclusion of value of optional accessories in assessable value of three wheelers for excise duty calculation.

Detailed Analysis:
The appeal challenged an Order-in-Original passed by the Commissioner of Central Excise regarding the inclusion of the value of optional accessories in the assessable value of three wheelers for excise duty calculation. The appellant, a manufacturer of three wheelers, was accused of evading excise duty by not including the value of certain accessories in the assessable value of the vehicles. The dispute centered around the inclusion of Rear Visual Barrier, Jack Assembly, and Carpet in the assessable value of the three wheelers. The appellant contended that these accessories were optional and not integral parts of the vehicles. The department argued that as per the Motor Vehicle Rules, these accessories were required to be carried in the vehicle, making them mandatory. A show-cause notice was issued demanding the duty amount along with penalties. The appellant paid a portion of the demanded amount under protest. The Tribunal was tasked with determining whether the value of these optional accessories should be included in the assessable value of the three wheelers.

The appellant argued that the optional accessories were not mandatory components of the vehicles and were sold separately by dealers to buyers. They cited legal precedents where it was held that the value of tool kits and jack assembly should not be included in the assessable value of motor vehicles. The appellant emphasized that there was no direct relation between the sale of three wheelers and the optional accessories, as buyers could choose whether to purchase them. They contended that since the vehicles were cleared from the factory without these accessories, their value should not be included in the assessable value of the three wheelers. The appellant sought relief based on previous court decisions supporting their stance.

The Revenue, represented by the Addl. Commissioner, maintained that the optional accessories' value should be included in the assessable value of the three wheelers. They argued that the appellant included the value of these accessories for certain models and in exports, indicating inconsistency in their approach. The Revenue contended that as per the Motor Vehicle Rules, these accessories were necessary to be carried in the vehicle, making them non-optional. They urged the Tribunal to uphold the duty demand and penalties imposed.

After considering the arguments from both sides, the Tribunal analyzed the relevant Motor Vehicle Rules and legal precedents. The Tribunal noted that the Motor Vehicle Rules did not mandate manufacturers to supply tool kits or jack assembly along with the vehicles at the time of clearance from the factory. Citing previous decisions, the Tribunal affirmed that the value of tool kits and jack assembly should not be included in the assessable value of motor vehicles. Based on this interpretation and consistent legal precedent, the Tribunal concluded that the optional accessories' value, including jack assembly, rear visual barrier, and carpets, should not be included in the assessable value of the three wheelers supplied. Therefore, the impugned order was set aside, and the appeal was allowed with consequential relief, if any.

This judgment highlights the importance of distinguishing between mandatory components and optional accessories in determining the assessable value for excise duty calculation, emphasizing legal precedent and relevant statutory provisions in reaching a decision.