TaxTMI 
TaxTMI 
2025 (2) TMI 73
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....ellant (Appeal Nos.E/50755, 51892 & 51893/2024) Present for the Respondent: Shri Rakesh Agarwal, Authorised Representative ORDER The appellant has challenged Order-in-Original No.24-43/2024-CE dated 29.02.2024 passed by the Additional Director General (Adjudication), Directorate General of GST Intelligence, New Delhi, whereby the cost of specifications provided by the manufacturer were included in the assessable value of the final products manufactured by the appellant and cleared to the manufacturer along with interest and penalty by revoking the extended period of limitation. 2. Brief facts of the case are that the appellant is vendor of Maruti Suzuki India Pvt. [MSIL] and is engaged in the manufacture of automotive parts and ....
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....authorized representative appearing for the department. 6. 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. 7. Learned counsel for the appellant has submitted that the issue involved is no longer res integra and has been decided in favour of the appellant in a recent decision of the Tribunal in Denso India Pvt Ltd. and Others vs. Additional Director General (Adjudication), Directorate General of GST Intelligence, New Delhi [Final O....
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.... procurement of moulds, the appellant had sent such moulds to MSIL for fitment testing and sold the same to MSIL upon payment of central excise duty. The MSIL had supplied such moulds to the appellant on free of cost on returnable basis thereafter the appellant manufactured the final products with the help of detailed drawings and designs as well as the moulds after amortizing the cost of moulds and cleared the final products to MSIL upon payment of appropriate central excise duty. The development cost incurred towards the development of the detailed drawings and designs was incorporated in the assessable value of the final products. The schedule followed in this regard clearly shows the intent of MSIL and the appellant that specifications ....
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....herefore, concluded that the drawing and designs supplied by MSIL at the time of identification and short listing of potential vendors for supply of parts and components, the provisions of section 4 1(b) of the Act read with Rule 6 of the Valuation Rules, could not have been invoked as no consideration was received by the vendors from MSIL. The observations of the Tribunal in this case are as follows: "29. It clearly transpires from the aforesaid provisions that something can be treated as an additional consideration for sale of goods only when there exists a contract of sale or an agreement to sell between the two parties and in terms of such an agreement the buyer pays something over and above the price agreed, either in cash or ....
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....ehalf of the seller-manufacturer and relieves the seller-manufacturer from incurring such expenses. Thus, the expressions 'drawings, blue prints, technical maps and charts and similar items' mentioned in clause (ii) of Explanation (1), and 'design work and plans and sketches' mentioned in clause (iv) of Explanation (1) can only mean those drawings and designs which a manufacturer would have prepared for use in the manufacture of the product but were prepared by the buyer and supplied to such manufacturer on free of cost or at reduced cost. This is clear from the language used in clauses (ii) and (iv) of Explanation (1) to rule 6 of the 2000 Valuation Rules. It covers drawings which are used in the production of such goods and those designs ....
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....roduced below: "9.3 When a person buys a product available, off-the-shelf, he need not be concerned with the Engineering Design and services which have gone into the manufacture of such product. He has to merely order by giving the specifications. If a person wants to buy an air-conditioner, he may specify whether it should be window type or split type and also specify the tonnage besides the brand name. He may consult a specialist to identify such requirements. These specifications are in the nature of "buyers' assist" and the cost incurred for getting such specifications cannot become part of value of the goods in the hands of the supplier. 9.4 When a sophisticated technology is involved in the manufacture of any product....