Case Law Details
Hero Motocorp Ltd Vs Commissioner of Central Excise (CESTAT Chandigarh)
Introduction: This analysis focuses on the case “Hero Motocorp Ltd vs Commissioner of Central Excise,” which was heard in the CESTAT Chandigarh. The case involves the admissibility of CENVAT credit on helmet locks supplied along with motorcycles. The dispute revolves around whether helmet locks qualify as essential accessories and are eligible for credit under the Central Excise Act.
Analysis: In this case, the appellant, Hero Moto Corp I Ltd, was demanded a CENVAT credit by the Revenue for an amount of Rs.2,82,34,630/- on helmet locks supplied along with motorcycles. The Revenue contended that CENVAT credit on helmet locks is not admissible as they are not essential accessories of excisable goods. The appellant’s argument was based on the provisions of the Motor Vehicle Act, North Zone Tariff, and Circular No. 24/90-CX. They highlighted that helmet locks are classified under the heading of “accessories” for motorcycles and are therefore eligible for CENVAT credit.
The CESTAT examined the legal provisions and case precedents. It observed that the definition of “input” during the relevant period included accessories of final products. As long as an input qualifies as an accessory to the manufactured and cleared excisable goods, the credit cannot be denied. The CESTAT emphasized that the definition does not require the accessory to be essential. The Revenue’s contention that helmet locks are not accessories contradicted the classification approved by the CBEC. The CESTAT also noted that the Motor Vehicle Act mandates the supply of helmets (including locks) along with motorcycles, making them statutory requirements for manufacturing.
The CESTAT referenced various decisions and provisions, such as the Motor Vehicle Act, to establish that helmet locks are indeed accessories necessary for motorcycles. The fact that the Revenue accepted the CENVAT credit for helmet locks in subsequent periods further supported the appellant’s claim.
Conclusion: The CESTAT’s decision in the “Hero Motocorp Ltd vs Commissioner of Central Excise” case reinforces the eligibility of CENVAT credit on helmet locks supplied with motorcycles as accessories. The court’s interpretation of the legal provisions and reliance on previous decisions showcase the importance of understanding and applying statutory regulations accurately. This case sets a precedent for the admissibility of credit on accessories that are integral to the manufacturing process, even if they are not deemed “essential” in the strictest sense.
FULL TEXT OF THE CESTAT CHANDIGARH ORDER
Vide the impugned order, dated 19/03/2012, passed by Commissioner Central Excise Delhi-03 Gurgaon, Revenue demands CENVAT credit of Rs.2,82,34,630/- from the appellant, M/s Hero Moto Corp I Ltd. Revenue argues that CENVAT credit is not admissible on Helmet lock, supplied along with the Motorcycles as the same is not an essential accessory of the Excisable goods. A Show Cause Notice was issued and the demand raised was confirmed along with interest and penalties.
2. Shri Sriniwas Kotni assisted by Shri Akshay Kumar, Learned Counsel, for the appellants submits that the provision of Helmet is as per the requirement of provisions of Motor Vehicle Act and Rules made there under; Helmet lock falls under the definition of “input” being used in relation to manufacture of final product. He submits that North Zone Tariff –Cum- General conference held on 07th and 08th June 1990 , suggested the that the Helmet locking device is an essential accessory for two-wheelers and accordingly merits classification under heading no. 87.14 of Central Excise Tariff Act, 1985; CBEC vide Circular No. 24/90-CX-4 dated 11/07/1990 has accepted the said classification; Commissioner, Delhi-III, in the appellants own case , for a subsequent period , allowed the CENVAT Credit on Helmet locks, vide order dated 23/08/2012; Revenue has not appealed against this order and therefore, the issue attained finality . Learned Counsel submits that in view of the above the impugned order is liable to be set aside. Learned council relies on the following:
(i) Order No.53-55/ SA/CEE/2012 dated 23.08.2012 passed by the learned Commissioner, Delhi-III
(ii) Mehra Bros. Vs Joint Commissioner Officer, Madras- 1991 (51) ELT 173 (SC).
(iii) Pragati Silicons Pvt. Ltd. Vs CCE, Delhi- 2007 (211) ELT 534 (SC).
(iv) Annapurna Carbon Industries Vs State of A.P. (Civil Appeals No.630-631 of 1971 decided on March 9, 1976)
(v) Circular No.24/90-CX dated 11.07.1990 on Helmet Locking Device.
(vi) Commissioner Vs Hero Motocorp Ltd.- 2015 (315) ELT A88 (P&H)
(vii) Hero Motocorp Ltd. Vs CCE, Delhi-III, Gurgaon-2012 (285) ELT 318 (Tri. Del.)
(viii) CCE Vs Hero Honda Motors Ltd.- 2015 (329) ELT 930 (Tri. Del.)
(ix) CCE Vs Honda Motorcycle & Scooter India P. Ltd.- 2014 (303) ELT 193 (P&H).
(x) Honda Motorcycle & Scooter India P. Ltd. Vs CCE– 2012 (282) ELT 533 :: 2012 (27) STR 473.
(xi) Interim Order dated 22.09.2015 passed by the Hon’ble Madras High Court in the case of R. Muthukrishnan Vs R. Mallika and Ors.
3. Shri Siddharth Jaiswal assisted by Ms. Shivani, Learned Authorized Representative, appearing for Revenue, reiterates the findings of the impugned order and submits that the appellants have also cleared some motorcycles without the helmet locking systems; therefore, helmet lock is not an essential accessory of the Motorcycles and therefore CENVAT credit has been rightly denied.
4. Heard both sides and perused the records of the case. On going through the records of the case we find that CBEC Circular, cited above, classifies the helmet locks under heading no. 87.14 of CETA, i.e as part of Motorcycles. We find that the definition of “input” during the relevant period includes accessories of the final products; as long as an input is an accessory to the Excisable goods manufactured and cleared, credit cannot be denied. Moreover, contrary to the contention of the learned Authorized Representative, the definition does not prescribe the part/component to be an essential accessory. As long as the “input” in question is an accessory, it qualifies to be an “input” as per Section 2(k) of Central Excise Act, 1944. It is not Revenue’s case that the Helmet lock is not an accessory. Such a conclusion runs contrary to the classification approved by CBEC; Moreover, we find as per the various decisions cited, by the learned Counsel for Appellants, and the provisions of Motor Vehicle Act, Helmet (and lock thereof) is required to be supplied along with the motorcycles. This being a statutory provision, the department cannot argue that it is not an “input” for the manufacture of Motorcycles .Lastly, we find that the Revenue themselves, accepted the contention of the appellant and allowed the CENVAT credit for the subsequent period. As there is no change in the legal provisions for the subsequent period, credit is admissible in the previous period which is impugned in this case. Therefore, we are of the considered opinion that the impugned order is not legally sustainable and therefore, liable to be set aside.
5. In the result, the impugned order is set aside and the appeal is allowed with consequential relief, if any, as per law.
(Pronounced in the open Court on 01/08/2023)
