CESTAT Allows CENVAT Credit To Hero Motocorp On Helmet Locks Supplied Along With Motorcycles

The Chandigarh Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has allowed the CENVAT Credit to Hero Motocorp on helmet locks supplied along with motorcycles.

The bench of S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) observed that as per the provisions of the Motor Vehicle Act, a Helmet and lock are required to be supplied along with the motorcycles. It is a statutory provision, helmet lock is an “input” for the manufacture of Motorcycles.

The respondent/department has demanded CENVAT credit of Rs.2,82,34,630 from the appellant, M/s Hero Moto Corp I Ltd.

The department argued that CENVAT credit is not admissible on the Helmet lock, supplied along with the Motorcycles as it 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.

The appellant contended that the provision of Helmets is as per the requirement of provisions of the Motor Vehicle Act and Rules. Helmet lock falls under the definition of “input” being used in relation to the manufacture of the final product.

The appellant submitted that the North Zone Tariff –Cum- General conference held on 07th and 08th June 1990, suggested that the Helmet locking device is an essential accessory for two-wheelers. The merits classification under heading no. 87.14 of Central Excise Tariff Act, 1985.

The department contended that the appellants have also cleared some motorcycles without helmet locking systems. Therefore, a helmet lock is not an essential accessory of the Motorcycles and therefore CENVAT credit has been rightly denied.

The CESTAT has noted 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.

“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,” the CESTAT ruled.

Case Title: M/s Hero Motocorp Ltd. Versus The Commissioner of Central Excise, Delhi-III

Case No.: Excise Appeal No.1375 Of 2012

Date: 01.08.2023

Counsel For Appellant: Sriniwas Kotni

Counsel For Respondent: Siddharth Jaiswal

Click Here To Read The Order