The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), granted relief to M/s Hero Motorcorp Ltd, and ruled that Mirror Assemble and Sari Guard are ‘input’ under Rule 2(k) of Cenvat Credit Rules, 2004 (CCR).
The appellant during the period of dispute was engaged in the manufacture and clearance of two wheelers and spares thereof falling under Chapter No. 87 of the Central Excise Tariff Act, 1985 and were availing the Cenvat Credit of duty paid on inputs/capital goods as per the Cenvat Credit Rules, 2004. The department entertained a view that the appellant is not entitled to avail cenvat credit on Mirror Assemble (left and right) and Sari Guard as per the provision of Cenvat Credit Rules and accordingly, two show cause notices were issued.
The Counsel for the appellant submitted that the impugned order denying the cenvat credit on Mirror Assembly (left & right) and Sari Guard is not sustainable in law as the same has been passed without properly considering the definition of ‘input service’ under Rule 2(k) of the Cenvat Credit Rules during the relevant period and also by not considering the various decisions in the appellant’s own case wherein the cenvat credit on these two items were allowed by the Tribunal.
It was further submitted that following precedent decisions, the Commissioner of Central Excise, in Appellant’s own case vide Order-in-Original No. 72/ SA/ CCE/2014 dated 24.06.2014 has also allowed the Cenvat credit of duty paid on Sari Guard and Mirror Assembly by dropping the penalties initiated vide the show cause notice.
The Departmental Representative submitted that mirror assembly and sari guard were not inputs covered under the definition of Rule 2(k) of Cenvat Credit Rules, 2004 and the final product is complete without use of the Sari Guard and mirror assembly (Right and left) though cleared with the finished goods, is cleared separately with the finished goods hence cannot be termed as a part.
A Two-Member Bench comprising SS Garg, Judicial Member and P Anjani Kumar, Technical Member observed that “We find 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. We also find that 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”.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
