2024 (10) TMI 1633 - AT - Central Excise

Valuation of Excise Duty - inclusion of notional cost of drawings and designs supplied free of cost by Maruti to the vendors in the assessable value - HELD THAT - This issue was examined at length by this bench of the Tribunal in Denso India Private Limited versus Additional Director General (Adjudication) 2024 (3) TMI 686 - CESTAT NEW DELHI and it has been held that The inevitable conclusion therefore that follows from the aforesaid discussion 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. Conclusion - The notional cost of drawings and designs provided by Maruti cannot be included in the assessable value of parts manufactured by vendors. For the reasons stated in Denso India Private Limited these three appeals would have to be allowed.

Summary

The case involves the question of whether the notional cost of drawings and designs provided free of charge by Maruti to vendors should be included in the assessable value of parts or components manufactured by the vendors for payment of central excise duty. The vendors argued that the specifications enable them to understand requirements and provide accurate price quotations, with the final products manufactured based on these specifications incurring development costs. The department contended that the cost of specifications should be included in the assessable value. In a previous case, Denso India Private Limited, it was held that the notional cost of drawings and designs provided by Maruti cannot be included in the assessable value of parts manufactured by vendors. Following this precedent, the Tribunal allowed the appeals, setting aside the orders and ruling in favor of the vendors.