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.
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