Notional Cost Of Maruti’s Free Designs Supplied To Vendors Not Dutiable Under Central Excise: CESTAT
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has said that notional value of Maruti’s free designs provided to distributors not dutiable underneath Central Excise.
The Bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) was addressing the difficulty whether or not the notional value of drawings and designs provided freed from value by Maruti to the seller needs to be included within the assessable worth of elements or parts manufactured by vendor and cleared to Maruti for the aim of fee of central excise responsibility.
In this case, the seller of Maruti Suzuki India Restricted is engaged within the manufacture of motor autos and procures the specified elements and parts from distributors.
In accordance to the seller, elements or parts, being an engineering product, are required to be made as per the requirement of Maruti and it is because of this that Maruti offers the specs of the elements or parts within the type of drawings freed from value to the potential distributors and seeks quotations.
As soon as the seller is chosen and a letter of intent is issued, the seller prepares detailed drawings and designs for the merchandise to be provided, equivalent to the specs acquired from Maruti.
The last merchandise are then manufactured with the assistance of detailed drawings and designs ready by the distributors.
In accordance to the distributors, the fee incurred by them in the direction of the manufacturing exercise contains the event value incurred within the preparation of the detailed drawings and designs by them.
As per the division the price of the specs provided by Maruti to the vendor freed from value needs to be included within the assessable worth of the ultimate merchandise manufactured by the distributors by way of rule 6 of the Central Excise Valuation (Willpower of Worth of Excisable Items) Guidelines, 2002.
The bench referred to the sooner choice in Denso India Personal Restricted versus Extra Director Basic (Adjudication) Excise Attraction No. 52419 of 2022 the place it was held that notional value of drawings and designs provided freed from value by Maruti to the distributors can not be included within the assessable worth of the elements and parts manufactured by distributors and cleared to Maruti for the aim of fee of central excise responsibility.
In view of the above choice, the Tribunal allowed the attraction.
Case Title: M/s Bosch Ltd. v. Commissioner of CGST & Central Excise, New Delhi
Case Quantity: Excise Attraction No. of 50587 of 2025
Counsel for Appellant: S.C. Vaidyanathan
Counsel for Respondent: Rakesh Agarwal
