The Delhi bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the notional cost of free drawings & designs supplied by maruti cannot be added to the assessable value of auto parts.
The bench of Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) has observed that notional cost of specifications in the form of drawings and designs supplied free of cost by Maruti to the potential vendors cannot be included in the assessable value of the parts or components manufactured by the vendors and cleared to Maruti for their motor vehicles.
The appellant/assessee is vendor of Maruti Suzuki India Pvt.1 and supplies manufactured final products to MSIL as an original equipment manufacturer on payment of applicable excise duty. For the said purpose, the appellant receives instructions in the form of specifications/plan from MSIL.
The issue raised was in respect of the demand confirming on the ground that the assessable value of final produces did not include the value of specifications/plan received from MSIL.
Show cause notice was issued on the allegations that cost of specifications supplied by MSIL to the appellant on FOB basis should be included in the assessable value of the final products manufactured by the appellant in terms of Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 read with Rule 11 relying on the decision of the Tribunal in Commissioner of Central Excise Jamshedpur vs. Tata Motors by the adjudicating authority partially confirmed the duty demand relating to inclusion of the cost of specifications supplied by the MSIL along with interest and penalty.
The issue involved in the present appeal relates to demand of differential central excise duty on account of inclusion of the notional cost of drawings and designs supplied free of cost by Maruti Suzuki India Pvt Ltd. in the assessable value of parts and components of motor vehicles manufactured by the appellant and cleared to Maruti Suzuki India Limited.
The tribunal while allowing the appeal held that the specifications in the nature of design/drawings provided by MSIL were merely layout or dimensions of the desired parts and components as they have to be necessarily manufactured as per the requisite dimensions so that they can be fitted in the vehicle manufactured by the Maruti.
Case Details
Case Title: M/s Mag Filters And Equipment Private Limited Versus Additional Director General (Adjudication) Directorate General of GST Intelligence- New Delhi
Case No.: Excise Appeal No. 50375 of 2024
Date: 06/02/2025
Counsel For Appellant: Soumya Malhotra
Counsel For Respondent: V.K. Jain
Read More: GST Weekly Flashback: 2 To 8 February 2025
