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TMI Blog2025 (2) TMI 621X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be treated as additional consideration for sale. It was, therefore, held 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 sale between two parties and in terms thereof the buyer pays something over and above the price agreed. In other words anything which is supplied by the buyer to the manufacturer even before identifying the potential manufacturer can never be treated as an additional consideration for sale. The Tribunal, therefore, 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. Conclusion - The specifications in the nature of design/drawings provided by MSIL were merely layout or dimensions of the desired parts and components as they have to be necessarily manufactured as per the requisite dimensions so that they can be fitted in the vehicle manufactured by the Maruti. The impugned order deserves t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med the duty demand relating to inclusion of the cost of specifications supplied by the MSIL along with interest and penalty. 4. Being aggrieved, the appellant has preferred the present appeal before this Tribunal. 5. We have heard Ms. Soumya Malhotra learned Counsel for the appellant and Shri S.K. Ray, learned 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 Order No. 55140-55337/2024 dated 12.03.2024] where DGGI has raised the demand of differential duty on the vendors of MSIL involving the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... final products manufactured by the appellant. 8. The issue raised in the case of Denso India Pvt Ltd. (supra) was whether the notional cost of specifications in the form of drawings and designs supplied free of cost by Maruti to the potential vendors should be included in the assessable value of the parts or components manufactured by the vendors and cleared to Maruti for their motor vehicles. To appreciate the said issue, the Principal Bench considered the provisions of section 4 of the Central Excise Act, 1944 [The Act] and Rule 6 of the Valuation Rules and observed that anything which is supplied by the buyers to the manufacture before even identifying the potential seller/ manufacturer cannot be treated as additional consideration for sale. It was, therefore, held 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 sale between two parties and in terms thereof the buyer pays something over and above the price agreed. In other words anything which is supplied by the buyer to the manufacturer even before identifying the potential manufacturer can never be treated as an additional conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue 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 which are necessary for the production of such goods. 36. Even if Maruti had to spend some amount for getting these drawings by making payment of royalty to Suzuki Maruti Corporation, Japan, the position would not change as this cannot be said to form an additional consideration for sale of parts or components. It also needs to be noted that these specification drawings provided by Maruti to the potential vendors cannot be said to be used in the production of the components or necessary for the production of the components in terms of rule 6 of the 2000 Valuation R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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