1993 (10) TMI 161 - AT - Income Tax

Summary

Issues:
1. Availability of MODVAT Credit for tool kit supplied with Hydraulic Excavator and vibrating components.

Analysis:
The appeal was filed by the Revenue challenging the lower appellate authority's decision that MODVAT Credit should be available for the tool kit supplied along with Hydraulic Excavator and vibrating components. The Department argued that previous Tribunal decisions, including the case of Sundaram Clayton Ltd., held that tool kits could not be considered inputs for MODVAT Credit under Rule 57 of the Central Excise Rules. The Respondent's counsel, however, cited a case where the East Regional Bench allowed MODVAT Credit for a tool kit. The Tribunal noted the conflicting decisions and the Departmental instructions disallowing the benefit for tool kits.

The Tribunal referred to the case of Sundaram Clayton Ltd., where it was stated that tool kits, being supplied as accessories and not integral parts of the final product, did not qualify for MODVAT Credit as they did not participate in the manufacturing process. Despite the East Regional Bench's decision in favor of the assessee, the Tribunal emphasized that the Departmental authorities had previously disallowed MODVAT Credit for tool kits. The Tribunal concluded that MODVAT Credit was not available for tool kits and allowed the Revenue's appeal. However, the Respondents were granted the opportunity to contest the exclusion of tool kits from the assessable value of the vehicle under Section 4 of the Act before the appropriate authority.