1994 (4) TMI 78 - HC - Central Excise

Summary

Issues Involved:
1. Legality and validity of the order dated 19-3-1993 by the Assistant Collector, Central Excise, Jamshedpur.
2. Whether tool kits supplied with motor vehicle chassis can be treated as 'inputs' under Rule 57A of the Central Excise Rules.
3. Availability of alternative remedy under the provisions of the Act.
4. Applicability of the doctrine of estoppel in the context of trade notices.

Summary:

Issue 1: Legality and Validity of the Order Dated 19-3-1993
The petitioners challenged the order dated 19-3-1993 by the Assistant Collector, Central Excise, Jamshedpur, which held that tool kits supplied with motor vehicle chassis cannot be considered 'inputs' under Rule 57A of the Central Excise Rules. The petitioners argued that tool kits are essential for the marketability of motor vehicle chassis and should be treated as 'inputs' for availing modvat credit.

Issue 2: Whether Tool Kits Supplied with Motor Vehicle Chassis Can Be Treated as 'Inputs'
The court examined whether tool kits, which are bought out items supplied along with motor vehicle chassis, could be treated as 'inputs' under Rule 57A. The petitioners contended that tool kits are necessary for the trade and required by law for public service vehicles. However, the court held that tool kits do not participate directly or indirectly in the manufacture of motor vehicle chassis and are supplied only at the request of customers. Therefore, they cannot be considered 'inputs' under Rule 57A.

Issue 3: Availability of Alternative Remedy
The Revenue raised a preliminary objection that the petitioners should not prefer the writ application under Article 226 of the Constitution of India as an efficacious alternative remedy was available under the Act. The court, however, decided to hear the writ application on merits, noting that the application had already been admitted and did not involve disputed questions of fact.

Issue 4: Applicability of the Doctrine of Estoppel
The petitioners argued that the trade notice dated 18-7-1989, which allowed modvat credit on tool kits, should estop the Revenue from denying the credit. The court found that the trade notice was validly cancelled by a subsequent notice on 22-10-1991, which explicitly stated that tool kits cannot be regarded as inputs for modvat credit. Therefore, the doctrine of estoppel did not apply.

Conclusion:
The court concluded that tool kits supplied with motor vehicle chassis at the request of customers cannot be treated as 'inputs' for the purpose of availing modvat credit under Rule 57A of the Central Excise Rules. The writ application was dismissed without any cost.