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TMI Blog2025 (1) TMI 1372X X X X Extracts X X X X X X X X Extracts X X X X ..... ntelligence, New Delhi, whereby the cost of specifications provided by the manufacturer were included in the assessable value of the final products manufactured by the appellant and cleared to the manufacturer along with interest and penalty by revoking the extended period of limitation. 2. Brief facts of the case are that the appellant is vendor of Maruti Suzuki India Pvt. [MSIL] and is engaged in the manufacture of and clearance of passenger car parts and components, namely oil seal, input shaft seal, valve stem seal, shift tower seal, fuel tank gasket and real axle seal ("final products"). The final products are sold by the appellant to different automotive manufacturers including MSIL on payment of central excise duty. During the perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arts 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p of detailed drawings and designs as well as the moulds after amortizing the cost of moulds and cleared the final products to MSIL upon payment of appropriate central excise duty. The development cost incurred towards the development of the detailed drawings and designs was incorporated in the assessable value of the final products. The schedule followed in this regard clearly 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was received by the vendors from MSIL. The observations of the Tribunal in this case are as follows: "29. It clearly transpires from the aforesaid provisions 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 sell between the two parties and in terms of such an agreement the buyer pays 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anation (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 compon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether it should be window type or split type and also specify the tonnage besides the brand name. He may consult a specialist to identify such requirements. These specifications are in the nature of "buyers' assist" and the cost incurred for getting such specifications cannot become part of value of the goods in the hands of the supplier. 9.4 When a sophisticated technology is involved 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" a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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