Notional Cost of Maruti-Supplied Designs Not to Be Included in Excise Valuation: CESTAT

The Delhi Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has ruled in favor of Bosch Ltd., a vendor for Maruti Suzuki India Ltd., setting aside a central excise duty demand linked to the notional cost of designs and drawings provided free of charge by the automaker.

The bench of Justice Dilip Gupta, stated “the inevitable conclusion… is that the notional cost of drawings and designs supplied free of cost by Maruti to the vendors cannot be included in the assessable value of the parts and components manufactured by vendors and cleared to Maruti for the purpose of payment of central excise duty.”

The core issue before the Tribunal was whether the notional cost of drawings and designs supplied by Maruti Suzuki to Bosch Ltd. — and other vendors — should be included in the assessable value of the manufactured parts for the purpose of central excise duty. Maruti provides these specifications free of cost to vendors as part of the procurement process to ensure parts are manufactured to exact requirements.

The Department had argued that these specifications, though supplied free of charge, formed an essential part of the manufacturing input and should therefore be included in the valuation under Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. Consequently, duty demands were raised and confirmed by the adjudicating authority.

However, Bosch Ltd. contended that while Maruti does provide initial specifications, the final manufacturing involves the vendor’s own detailed design and engineering work. The development costs incurred by the vendor are already factored into the quoted price, and the free drawings from Maruti merely serve as a technical guideline.

Referring to its earlier decision in the Denso India Private Limited vs. Additional Director General (Adjudication) case, the Tribunal reiterated that notional costs of such inputs cannot be artificially added to the transaction value for the purpose of excise duty.

The Tribunal allowed the appeal and quashed the earlier order imposing additional duty on Bosch Ltd.

Case Details

Case Title: M/s. Bosch Ltd. Versus Commissioner of CGST & Central Excise, New Delhi

Case No.: Excise Appeal No. of 50587 of 2025

Date: June 27, 2025

Counsel For Appellant: Advocate S.C. Vaidyanathan

Counsel For Respondent: Authorised Representative Rakesh Agarwal

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Mariya Paliwala

Mariya is the Senior Editor at Juris Hour. She has 5+ years of experience on covering tax litigation stories from the Supreme Court, High Courts and various tribunals including CESTAT, ITAT, NCLAT, NCLT, etc. Mariya graduated from MLSU Law College, Udaipur (Raj.) with B.A.LL.B. and also holds an LL.M. She started as a freelance tax reporter in the leading online legal news companies like LiveLaw & Taxscan.

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