2023 (9) TMI 292 - AT - Central Excise

Denial of CENVAT Credit - input or not - Mirror Assembly (left right) and Sari Guard - whether or not the mirror assembly (right left) and sari guard undisputedly sold by the appellant alongwith Motor Cycle fall within the purview of the definition of Input eligible for cenvat credit under Rule 2(k) of the Cenvat Credit Rules, 2004? HELD THAT - This issue is no more res-integra and has been considered by various benches of the Tribunal in the appellant s own case and cenvat credit on these two items have been allowed - reliance can be placed in COMMISSIONER OF CENTRAL EXCISE, DELHI-I VERSUS HERO HONDA MOTORS LTD. 2014 (10) TMI 931 - CESTAT NEW DELHI . It is found that these two items fall under the definition of input as defined under Rule 2(k) of the Cenvat Credit Rules, 2004 because these two items were cleared along with the motor cycle from the factory by paying the excise duty on the final products - as per the Motor Vehicle Act, it is a statutory obligation of the manufacturers of two wheelers to clear the motor cycle from the factory with mirror assembly (right left) and sari guard. The impugned order is not sustainable in law and is set aside - appeal allowed.

Summary

Issues:
The issues involved in this case are the denial of cenvat credit on Mirror Assembly (left & right) and Sari Guard under the Cenvat Credit Rules, 2004.

Facts and Arguments:
The appellant, engaged in manufacturing two wheelers and spares, faced a demand for cenvat credit on Mirror Assembly and Sari Guard. The appellant contended that the denial of cenvat credit was not sustainable as per the definition of 'input service' under the Cenvat Credit Rules. They cited various decisions where cenvat credit on these items was allowed. The appellant argued that these items qualify as accessories to the final product and are covered under the definition of 'input'. They also highlighted statutory requirements under the Motor Vehicle Rules for manufacturers to include mirror assembly and sari guard in two wheelers. The appellant emphasized that they had not evaded any duty and recovery was not justified.

The Departmental Representative argued that these items were optional attachments and did not have a direct nexus with the manufacturing process. They contended that the appellant had suppressed facts to evade excise duty, justifying the extended period of limitation.

Judgment:
The Tribunal considered the definition of 'input' under the Cenvat Credit Rules, which includes accessories cleared with the final product. Previous decisions in the appellant's case and statutory requirements supported the eligibility of Mirror Assembly and Sari Guard for cenvat credit. The Tribunal noted that these items were cleared along with the final product and were integral to the motor cycle. Therefore, the impugned order denying cenvat credit was deemed unsustainable in law. The appeals of the appellant were allowed, providing consequential relief as per law.

Conclusion:
The Tribunal ruled in favor of the appellant, allowing cenvat credit on Mirror Assembly (left & right) and Sari Guard. The decision was based on the items meeting the definition of 'input' under the Cenvat Credit Rules and being essential accessories to the final product. The appellant's compliance with statutory requirements further supported their claim for cenvat credit, leading to the setting aside of the impugned order.