Carpet, Jack Assembly and Rear Visual Barriers are accessories & not required to be added in AV of 3-wheeler - Rs.3.57 Cr demand set aside
THE appellant is a manufacturer of Three Wheelers. Model 601 was cleared by including the value of Rear Visual Barrier, Jack Assembly and Carpet for the purpose of payment of excise duty.
In respect of the other models, the appellant did not supply the aforesaid accessories from the Manufacturing unit but supplied the same from the Spare Parts Division situated outside the factory to the dealers directly and the dealers while selling the Three Wheelers supplied these accessories to the buyers and obviously the cost of these were not included in the AV while discharging CE duty.
The Warranty Manual supplied with the 3-wheeler indicated that Tool Kit, Rear Visual Barrier, Jack and Handle were provided during the vehicle delivery by the dealers.
As per Rule 191(3) of Maharashtra Motor Vehicle Rules, 1989, it is laid down that "every motor vehicle other than the motorcycle, shall at all times be furnished with an efficient jack and other tools necessary to change a wheel or rim and tyre and with the equipment to repair a puncture.”
So, the department booked a case of evasion of CE duty. Out of the duty demand of Rs.3.57 Crores for the period April, 2001 to May, 2006, the assessee paid Rs.2.61crores Under Protest. However, they refused to pay the balance duty of Rs.96 lakhs in respect of the ‘carpets' supplied.
The demand was confirmed in its entirety by the CCE, Pune-III and so the 3-wheeler manufacturer is before the CESTAT.
The appellant adverted to the Rule 138(4) of the Central Motor Vehicle Rules, 1989 and the Rule 191(3) of the Maharashtra Motor Vehicle Rules, 1989 and submitted that these are to be complied with at the time of the plying the vehicle on road and it is not stipulated that the manufacturer should supply these items compulsorily when the vehicles are cleared from the factory. Further, jack assembly, rear visual barrier, carpets etc. are optional accessories and their value cannot be added into the AV of the 3-wheelers in view of the decisions in Amkar Engg. Works, Maruti Udyog Ltd., Daewoo Motors India Ltd. & Bajaj Auto Ltd. and hence the appeal may be allowed.
The Bench observed -
+ These MV Rules, no doubt, specify that while plying the vehicle the driver should ensure that he has the tool kit and jack assembly necessary for change of tyres and rim. However, this is a condition which needs to be met at the time of using the vehicle on the road.
+ The Motor Vehicle Rule does not deal with supply of tool kits by the manufacturer. The tool kits may be supplied by either the manufacturer or by the dealer. Therefore, from the Motor Vehicle Rules, it does not emerge that the manufacturers are mandatorily required to supply the tool kits or jack assembly along with the vehicle.
+ In the large number of decisions cited supra, this Tribunal has consistently held that the value of tool kits and jack assembly are not includable in the assessable value of the motor vehicle.
After setting aside the order, the appeal was allowed with consequential relief.