Appeals allowed, design drawings value added to goods per Rule 6, Chartered Engineer's assessment pivotal

The Tribunal allowed the appeals filed by the appellant, setting aside the impugned order passed by the Commissioner, Central Excise & Service tax, Raipur. The Tribunal held that the value of the design drawings supplied by the customer should be added to the value of the goods as per Rule 6 Explanation-I of the Central Excise Valuation Rules, 2000. Given the old age and public availability of the design with no copyright applicability, a "nil" value was deemed appropriate by the Chartered Engineer, leading to the decision in favor of the appellant.

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Issues:
Valuation of design drawings supplied by the customer - Applicability of Rule 6 of Central Excise Valuation Rules, 2000.

Analysis:

The case involved appeals against an order passed by the Commissioner, Central Excise & Service tax, Raipur, for the period from 01.04.2008 to 31.12.2012. The dispute centered around the valuation of design drawings supplied by the customer in the manufacturing process. The appellant, engaged in manufacturing casting items, argued that the 22-year-old drawings had no value, even as per a Chartered Engineer's certificate. However, the department applied a 15% value of the design to the goods, leading to the appeals being filed.

During the proceedings, the appellant's advocate referred to a Tribunal case precedent where it was discussed whether drawings and designs supplied by customers should be treated as additional consideration under Rule 6 of the Central Excise Valuation Rules, 2000. The Tribunal's view in the precedent case was that the value of such drawings should be included in the assessable value of the goods. The appellant contended that the department's adoption of 10% value of the drawing was arbitrary, unreasonable, and lacked justification. In contrast, the appellant claimed the cost of drawings to be 0.1% of the value of the goods based on the Chartered Engineer's Certificate.

The Revenue justified the impugned order, emphasizing that the design was supplied by the customer. However, after hearing both parties and examining the record, the Tribunal held that the value of the design should be added to the value of the goods as per Rule 6 Explanation-I of the Central Excise Valuation Rules, 2000. In this case, since the design was old and available in the public domain with no copyright applicability, a "nil" value was deemed appropriate by the Chartered Engineer. Consequently, the Tribunal set aside the impugned order and allowed the appeals filed by the appellant.

In conclusion, the Tribunal's decision clarified the applicability of Rule 6 in including the value of design drawings supplied by customers in the assessable value of goods. The judgment emphasized the importance of justifying the valuation adopted and considered factors such as the age and availability of the design in the public domain.

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