1998 (10) TMI 207 - AT - Central Excise

Summary

Issues Involved:
Whether Modvat Credit is available for clock assembly, audio system sets, radio sets, speaker sets, etc. used in the manufacture of delux models by a specific company.

Analysis:
The appeal filed by the Revenue questioned the availability of Modvat Credit for certain items used in manufacturing delux models by a company. The Revenue argued that these items were not essential or integral to the motor vehicle and did not contribute to its operation. They relied on previous decisions to support their stance that items not used in or in relation to the manufacture of the final product do not qualify for Modvat credit. The Revenue also contested the inclusion of the cost of accessories in the assessable value of the motor vehicle. However, the Commissioner in the impugned order found these items to be an absolute necessity for making the delux models commercially viable and marketable.

In response, the company's counsel argued that the majority of the demand raised was time-barred, and only a small portion was within the time limit. They emphasized the Commissioner's observation that the items in question were essential for the delux models' commercial viability, a point not disputed by the Revenue. The counsel cited various decisions to support the claim that once items are deemed essential for marketing a particular model, Modvat credit is admissible.

The Tribunal considered both sides' submissions and found that the disputed products were indeed used in manufacturing the delux models, as confirmed by the Commissioner. The Tribunal agreed with the Commissioner's findings that these items were essential for producing the delux models, distinguishing them from a standard motor vehicle. They referenced previous cases where Modvat credit was allowed for items integral to the final product's design or commercial viability. Ultimately, the Tribunal found no fault in the Commissioner's order and rejected the Revenue's appeal based on the established principles and precedents cited in support of the company's eligibility for Modvat credit.