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TMI Blog2025 (4) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... es to power steering systems Maruti. 2. The appellant supplied the power steering systems to Maruti as per its requirements and for this purpose, Maruti provided drawings and designs of parts and invited quotations. Based on the quotations, Maruti placed orders on the appellant who sold the goods to Maruti after paying excise duty on the transaction value. 3. Maruti, in turn, obtained the designs and drawings from its principal M/s. Suzuki Motor Corporation Limited, Japan Suzuki. Suzuki carrys out the Research and Development and Maruti pays Suzuki for the specifications, drawings and designs. However, Maruti did not charge its vendors (including the appellant) for the specifications, drawings and designs. 4. Show cause notice was issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n), 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 set of facts as in the present case. Further, in support of his submissions the learned counsel for the appellant set out in detail the process of procurement of desired part or components by MSIL. The short listed potential vendors provide their price quotation for a particular part or component. The specifications of the desired part or components, for which MSIL does not charge any amount, are shared through the web-bases software with all the potential vendors. The process is known as Request for Quotation ("RFQ"). The specifications are n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly shows the intent of MSIL and the appellant that specifications provided by MSIL merely contained their requirements and not the detailed drawings and designs which were required to complete the manufacturing of the final products. Therefore, the notional cost of MSIL‟s specifications is not includable in the assessable value of the final products manufactured by the appellant. 9. 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 apprec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... something over and above the price agreed, either in cash or in kind to the manufacturer. Thus, anything which is supplied by the buyer to the manufacturer before even identifying the potential manufacturer as the supplier can never be treated as an additional consideration for sale. It also transpires that the specification drawings and designs were supplied by Maruti to the potential vendors free of cost before the letter of intent was issued and after the letter of intent was issued to the appellant the price of goods was paid by Maruti to the appellant and no other amount was paid, and it is not even the allegation made in the show cause notice that the buyer had paid any amount to the appellant over and above the consideration price af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rules. Thus, clauses (ii) or (iv) to Explanation (1) of rule 6 of the 2007 Valuation Rules cannot be invoked in the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olved in the manufacture of any products and the process involved in the manufacture is a patented one, the equipments required have to be compatible with the patented process and assistance may be required before ordering such equipments. In such a case, the Engineering services utilized for preparing tender documents will be in the nature of "buyers' assist" and the same cannot be treated as necessary in the hands of the manufacturer of the equipments for the purpose of manufacture of such equipments." 11. The aforesaid decisions are squarely applicable to the facts of the present case and, therefore, the specifications in the nature of design/drawings provided by MSIL were merely layout or dimensions of the desired parts and components ..... X X X X Extracts X X X X X X X X Extracts X X X X
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