CESTAT ruled that specifications, drawings, and designs provided ...

Manufacturer Wins Appeal: Technical Specifications Provided Pre-Contract Not Includable in Excise Duty Assessable Value Under Section 4(1)(b)

February 13, 2025

Case Laws     Central Excise     AT

CESTAT ruled that specifications, drawings, and designs provided by Company M to appellant manufacturer should not be included in assessable value for excise duty calculations. The Tribunal determined these items did not constitute 'additional consideration for sale' under Section 4(1)(b) of Central Excise Act and Rule 6 of Valuation Rules. Key reasoning centered on consideration principles - for inclusion, items must be provided at promisor's desire after formation of seller-buyer relationship. Here, specifications were provided before contractual relationship establishment, when parties were merely prospective seller-buyer. Following precedent from similar vendor cases, CESTAT allowed appeal, concluding specifications and designs fell outside assessable value scope for excise duty purposes.

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