Per Jyoti Balasundaram :

The appellants herein are engaged in the manufacture of two-wheeled motor vehicles falling under Chapter Heading 87.11 of the Central Excise Tariff Act and are availing the benefit of Modvat credit in terms of Rule 57A of the Central Excise Rules. Eleven show cause notices, covering the period March 1988 to February 1991, were issued to them proposing to disallow Modvat credit - (a) on item like Tool Kits on the ground that these were not inputs used in or in relation to the manufacture of motor vehicles; (b) on the ground that certain inputs had not been declared in terms of Rule 57G of the Central Excise Rules; and (c) on the ground that credit had been availed on the basis of photocopy of GP1s. The Assistant Commissioner of Central Excise passed a common adjudication order with reference to show cause notice dated 7.4.89, 4.5.90 and 27.3.91, and eight separate adjudication orders regarding other 8 show cause notices, disallowing Modvat credit. Vide order dated 9.5.2000, the Commissioner (Appeals) passed a common Order-in-Appeal confirming the orders passed by the Assistant Commissioner; Hence these appeals.

2. We have heard Shri M.P. Devnath, Learned Counsel and perused the records. Our findings are recorded as under :

Denial of credit on Tool Kit

An amount of Rs. 2,81,831 has been denied on the ground that tool kits cannot be considered as inputs used in or in relation to the manufacture of the final product, namely, two-wheeled motor vehicles. We find that this issue is no longer res integra, having been settled in favour of the assessee in the case of Bajaj Auto Limited reported in 1997 (18) RLT 141(CEGAT-L.B.)=RLT (L.B. - CEGAT) - 960 =1996 (88) ELT 355 (LB), in which it has been held that tool kits supplied along with motor vehicles are eligible to credit in terms of Rule 57A during the period prior to October 1991 applying the CBEC circular of 1988 which was withdrawn only in October 1991. In the present case there is no dispute that tool kits were supplied along with motor vehicles and that their value was included in the assessable value of the motor vehicles manufactured by the appellants and that the period is Prior to October, 1991. Hence, ratio of the Larger Bench decision squarely applies and following the same we hold that the appellants are eligible to credit on tool kits.

Denial of credit on the ground that certain inputs are not covered by the declaration filed under Rule 57G of the Rules.

The items in dispute are -