Judgment:
1. Appellant, engaged in the manufacture of Tractors, was purchasing Roof Canopy and "Luxury Mud-Guard Seat" for supply along with tractors to those buyers who desire the same. Appellant was however paying duty on the value of the tractor without adding thereto the value of the roof canopy or mud-guard seat. At an earlier stage, the Department raised a contention that the value of roof canopy must be included in the value of the tractor and this contention was negatived by the Tribunal in the decision reported in 1992 (62) E.L.T. 772 (Tribunal).
In respect of the period from 1-9-1981 to 30-4-1982, show cause notice dated 11-6-1981 was issued alleging that the value of Luxury Mud-Guard Seat should have been included in the assessable value of the tractor and proposing demand of duty on this element on the ground that the seat has to be regarded as integral part of the tractor. Appellant resisted the notice contending that seat was only an optional accessory and not an integral part of the tractor, commercially or otherwise, and also on the ground of partial bar of limitation. The Additional Collector overruled these contentions and confirmed the demand. He also imposed penalty of Rs. 10,000/-. Hence, the present appeal.
2. On behalf of the appellant it is explained that "Luxury Mud-Guard Seat" is foam rubber cushion resting on hard board and covered by plastic or rexin and fixed to the horizontal part of the Mud-Guard to enable one or two persons to sit on the Mud-Guard with convenience and comfort. On this basis, it is contended that the seat can never be regarded as an integral part of the tractor and could only be regarded as optional accessory particularly in the light of the fact that out of 8999 buyers of tractors, only 8110 asked for the seat accessory.
3. In reply, it is contended for the Department that Mud-Guard Seat when fitted to the tractor becomes an integral part of the tractor.
Shri K. Srivastava, SDR placed reliance on some decisions of the Tribunal holding that foot rest in a two wheeler would be integral part of the vehicle and Modvat credit is available on the duty paid on Tool Kits and Hydraulic Jack which are supplied along with motor vehicles.
Reference is made to the two cases of Bajaj Auto Ltd. reported in 1989 (44) E.L.T. 763 (Tribunal) and 1993 (68) E.L.T. 448 (Tribunal) followed by two unreported decisions and also a Larger Bench decision in Bajaj Auto Ltd. and Mahindra &Mahindra Ltd. cases reported in 1997 (18) RLT 141 (Tribunal), which dealt with the case of Modvat credit.
4. It was held by Tribunal in several cases that foot rest attached to a motor vehicle would be an essential integral part of the vehicle. The position of Tool Kits and Hydraulic Jack placed in a motor vehicle cannot be equated to the position of a seat placed on Mud-Guard of a tractor. The tractor is complete without the Mud-Guard Seat. Mud-Guard Seat is not fixed to all tractors before delivery but are fitted only in the case of those buyers who desire the same as an optional convenience. Having regard to these circumstances, we are of opinion that it is an optional accessory, value of which is not required to be included in the assessable value of the tractor. In this view, we find it unnecessary to go into the question of limitation.
5. For the reasons indicated above, we set aside the impugned order and allow the appeal.