2000 (4) TMI 207 - AT - Central Excise

Summary

Issues:
1. Entitlement to take credit of duty paid on rear view mirrors.
2. Interpretation of rules regarding fitment of mirrors on motor vehicles.
3. Marketability of vehicles with rear view mirrors.
4. Comparison with previous judgments regarding essential parts of vehicles.

Entitlement to Take Credit of Duty Paid on Rear View Mirrors:
The appellant manufactures motor vehicles and clears them along with rear view mirrors. The issue at hand is whether the appellant can claim credit for the duty paid on these mirrors and use it for duty payment on the vehicles. The Collector (Appeals) initially denied this claim, stating that the mirrors are not used in or in relation to the manufacture of the vehicles as the vehicles are complete without them. However, the appellant argued that the mirrors are necessary for the marketability of the vehicles, citing the Maharashtra Motor Vehicle Rules and Central Motor Vehicle Rules.

Interpretation of Rules Regarding Fitment of Mirrors on Motor Vehicles:
The Maharashtra Motor Vehicle Rules and Central Motor Vehicle Rules play a crucial role in determining the necessity of rear view mirrors on motor vehicles. The Collector (Appeals) contended that the mirrors were not required for two or three-wheelers manufactured by the appellant. However, Rule 161 of the Central Motor Vehicle Rules mandates the fitting of mirrors on three-wheel motor vehicles externally, contradicting the Collector's view. The existence of rules by both the Central and State Governments regarding rear view mirrors adds complexity to the situation, but ultimately, the Central Government rules prevail, making it mandatory to fit rear view mirrors on all motor vehicles.

Marketability of Vehicles with Rear View Mirrors:
The marketability of vehicles with rear view mirrors is a key point of contention. The appellant argued that a substantial part of their manufactured vehicles is sold outside Maharashtra, where rules mandate the fitting of mirrors. Selling vehicles without mirrors would violate the law, making the mirrors necessary for marketability. Additionally, the mirrors are not optional accessories, as indicated by the lack of choice given to customers regarding their inclusion with the vehicles.

Comparison with Previous Judgments Regarding Essential Parts of Vehicles:
A comparison with previous judgments, specifically the Patna High Court case and the Supreme Court case, sheds light on the essentiality of rear view mirrors. Unlike tool kits, which are not integral to the operation of a vehicle, rear view mirrors are crucial for safety and maneuvering on the road. The judgment emphasizes that the mirrors are essential for the marketability of the vehicles, as evidenced by the appellant's historical practice of fitting mirrors on vehicles long before it became mandatory by law. Therefore, the mirrors are considered inputs, and the appellant is entitled to credit for the duty paid on them.

In conclusion, the Appellate Tribunal allowed the appeals and set aside the impugned orders, recognizing the rear view mirrors as essential inputs for the manufactured vehicles and affirming the appellant's entitlement to credit for the duty paid on them.