ORDER
Gowri Shankar, Member (T)
1. The appellant manufactures and clears motor vehicles, scooters and three wheel vehicles. Rear view mirrors for fitment of these vehicles are cleared with these motor vehicles. The cost of these mirrors is included in the assessable value of the vehicles for the purposes of assessment. The question for consideration in these appeals is whether the appellant is entitled to take credit of the duty paid on these mirrors, and utilised such credit for payment of duty on the motor vehicles. In the impugned orders, the Collector (Appeals) has confirmed the view of the Assistant Collector that this is not permissible.
2. The reasoning that has influenced his decision is common. It is that the motor vehicle, scooter or the auto-rikshaw, as the case may be, is complete without a rear view mirror and that therefore the mirror is not used in or in relation to the manufacture of the motor vehicles. The Collector (Appeals) has rejected the contention that the fact that rear view mirror may be necessary to render this motor vehicle marketable justifies this being treated as an input, and relied upon the decision of the Patna High Court in TELCO v. Union of India 1994 (72) ELT 525. He did not accept the contention that the statute required fitment of such mirrors on the scooters.
3. The advocate for the appellant questions the view that the Maharashtra Motor Vehicle Rules, 1989, Rule 161 of which, the Collector (Appeals) found did not make it mandatory to fit them does not apply. His contention that these matters relating to fitment of mirrors outside the Central rules that will apply has to be accepted.
4. Section 110 of the Motor Vehicles Act, 1988, specifies in Sub-section (1) the rule making power to the Central Government including amongst these signalling appliances, lamps and reflectors.
5. Rule 161 of the Central Motor Vehicle Rules does in fact require a three wheel motor vehicle, to be fitted either internally or externally with a mirror. Any transport vehicle is required to be fitted externally with a mirror. Therefore, the Collector (Appeals) contention that the mirror did not require either to a two or three wheeler manufactured by the appellant is incorrect. The fact that there are rules with regard to the provision of rear view by the Central and State Governments is somewhat puzzling. Section 110 of the Act specifically delienate varies whether the Central Government is required to make rules, the state being empowered under Section 111 with regard to all motor vehicles other than those specified in Section 110 (1). It would therefore appear that in respect of motors regulating construction, equipment, and maintenance of motor vehicles there, has to be either the Central Government or the State rules and there cannot be rules made by both the Central and State Governments. However, the fact remains that rules have been made with regard to rear view mirrors both by the State and Central Governments. The Central Motor Vehicle Rules, 1989 which were amended in 1993, dealt with rear view mirrors. Amended Section 125 provides in Sub-section (2) six months from the date of commencement of this amendment, rear view mirrors shall be fitted to all motor vehicles. The Central Government Rules which are later to the State rules therefore will have to prevail in this…. In any event, the State rule is limited to the State of Maharashtra. It is contention of the appellant that substantial part of its manufacture is ultimately sold outside Maharashtra. There were rules to indicate that the rules come into effect from 26-3-1993. It would therefore appear that by application of these rules, it is mandatory for a rear view mirror to be fitted on to these vehicles. Since by selling such vehicles without fitting such mirrors the appellant would be contravening the provisions of law, these mirrors are therefore necessary to make the scooter marketable.
6. The conclusion that these are required to make it marketable would in fact lead independently without recourse to the rules. It is not in dispute that the mirror is not an optional accessory. While there is a suggestion in the notices that the mirror is an optional accessory, there is no option given to the customer which he can exercise to buy a scooter or an auto rickshaw without a mirror. The notices also indicate that as long as the mirrors are cleared with the vehicles as the number of vehicles. If that is the case, the mirror is required to render the scooter marketable.
7. The departmental representative relies upon the judgement of the Patna High Court in TELCO v. Union of India. In that judgment, the High Court had noted that the tool kit supplied with the motor vehicle chassis manufactured by the appellant before it was not a part of the motor vehicle. Therefore, it was not used in or in relation to the manufacture of the motor vehicle specifically that these goods do not add to the marketability of the finished goods.
8. However, the mirrors in question require a different consideration than tool kits. The motor vehicle can be run and operated without least danger to safety during such operation without a tool kit. A tool kit is only required for repair or maintenance of the vehicle. That however cannot be said so of the rear view mirrors. It is necessary, in the interest of safety for the driver of such a vehicle to be able to see with reasonable clarity to traffic behind him before he undertakes manoeuvre such as overtaking or turning to the right. Even the density of the Indian roads particularly in city roads, it would be unwise to claim that rear view mirror is not required for the operation of vehicles. We note that the Patna High Court in its judgment has found although in passing driver’s seat and wind screen wiper machine to be essential parts of motor vehicles. The fact which emerged during the hearing that the appellant had been clearing these vehicles fitted with rear view mirrors for quite some time i.e. long before the Maharashtra Motor Vehicle Rules made it mandatory itself shows that they are essential for the marketability. Therefore, the ratio of the judgment of the Supreme Court in CCE v. Jay Engineering Works – 1989 (39) ELT 169 that fitment of the name plate to the electric fan is manufactured for the reason that it lend marketability would apply to the facts of this case,
9. The mirrors in question therefore are inputs and credit was available of the duty paid on it.
10. The appeals allowed. Impugned orders set aside.