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Issues:
Whether the value of tool kits should be included in the assessable value of passenger cars under the Central Excise Act. Analysis: The case involved an appellant engaged in manufacturing motor vehicles, with the central issue being the inclusion of the value of tool kits in the assessable value of passenger cars. The Excise Department issued show cause notices to the appellant, seeking to add the value of tool kits to the assessable value of the cars. The appellant contested this, arguing that tool kits were not essential for registration or running of cars, did not enhance marketability, and were not mentioned in the Central Excise tariff entry for vehicles. The adjudicating officer confirmed duty and interest against the appellant, which was challenged in appeal. The lower appellate authority allowed Modvat credit on tool kits subject to proof of duty payment. The main question before the Tribunal was whether the value of tool kits should be added to the car price for excise duty. In a previous case, the Patna High Court had ruled that tool kits supplied with motor vehicle chassis were not 'inputs' for Modvat credit. This decision was upheld by the Supreme Court, confirming that tool kits did not contribute to the value of chassis. However, a Larger Bench of the Tribunal in a separate case found that tools supplied with vehicles were 'inputs' eligible for Modvat credit. This decision was followed in another case where Modvat credit was allowed on duty paid for jack and tool kits. The Tribunal emphasized the necessity of these items for making vehicles marketable. The appellant argued that rules under the Motor Vehicles Act did not mandate tool kits and jacks for cars to be marketable. Referring to previous judgments, it was established that tool kits and jack assemblies were not integral parts of cars and were not essential for their use. The Tribunal concluded that manufacturers were not required to include the value of tool kits and jack assemblies in the assessable value of automobiles, and the Department's demand for differential duty was unfounded. Therefore, the orders adding the value of tool kits and jack assemblies were set aside, and the appeals were allowed. In summary, manufacturers of automobiles are not obligated to include the value of tool kits and jack assemblies in the assessable value of vehicles, and they are entitled to avail Modvat credit for duty paid on such items. The Department cannot enforce including the value of tool kits and jack assemblies as they are not essential accessories for automobiles.
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