Cenvat credit cannot be denied on Inputs forming ‘parts’ of the final product, and more so when value thereof is included in the value of final products
Hero Honda Motors Ltd. (Assessee) is engaged in the business of manufacture of Motor Cycles. The Assessee availed Cenvat credit of mirror assembly, sari guard and tool kit (impugned goods) treating them as Inputs. However, the Department denied Cenvat credit so availed on the ground that the said items were not used in or in relation to manufacture of Motor Cycle and therefore, not eligible to be called ‘Inputs’ for the period prior to March 1, 2011[when the definition of Inputs under Rule 2(k) of the Cenvat Credit Rules, 2004 (Credit Rules) was amended vide Notification No. 3/2011-CE(NT) dated march 1, 2011]and accordingly, ineligible for Cenvat credit under the Cenvat Credit Rules, 2004 (Credit Rules).
Later on, the Adjudicating Authority allowed Cenvat credit in respect of the impugned goods to the Assessee. Being aggrieved, the Department filed the appeal before the Hon’ble CESTAT, Delhi.
The Hon’ble CESTAT, Delhi relying upon the following judgments:
held as under:
Accordingly, the Hon’ble Tribunal allowed Cenvat credit on the impugned goods to the Assessee on the ground that the same are ‘parts’ of the Motor Cycle and eligible for Cenvat credit as ‘Inputs’.