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TMI Blog2024 (4) TMI 1225X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, whereby the duty was partly confirmed and partly dropped. Since both these appeals arise out of the same impugned order, they are being disposed of together. Appeal No. E/55230 of 2023 2. The appellant is engaged in the manufacture of motor vehicle parts for M/s. Maruti Suzuki India Ltd.('MSIL'), who are manufacturer of passenger cars. 'MSIL' is a subsidiary company of M/s. Suzuki Motors Corporation ('SMC'), Japan and had entered into royalty agreements with 'SMC' for production, sales, distribution and marketing of their products. Under the licensed agreement, MSIL is making royalty payments to SMC as lump sum royalty and running royalty for the right to use licensed information and licensed trade mark pertaining to vehicles. Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise Act, 1944 ('Act') whereby demand of excise duty along with penalty and interest was raised. 4. The Adjudicating Authority by the impugned order decided 23 show cause notices (including the two show cause notices involved in the two appeals here), whereby the duty demand relating to running royalty was dropped, however, the amount of lump sum royalty was held to be includible in the assessable value as notional cost of specifications provided by MSIL. Consequently, demand of Rs. 21,19,762/- was confirmed against the appellant. Being aggrieved, the present appeal has been filed before this Tribunal. Appeal No. E/50008/2014 5. The present appeal also arises from the same order-in-original and the facts of the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the issue involved is whether the notional cost of specifications/drawings and designs supplied free of cost by MSIL is includible in the assessable value of parts or components of motor vehicles manufactured by the appellant and on that basis, the demand towards the differential amount of central excise duty is sustainable. 7. Learned counsel for the appellant has placed on record the Final Order Nos. 55140-55337/2024 dated 12.03.2024 in the case of Denso India Pvt. Ltd. Vs. Additional Director General (Adjudication), Directorate General of GST Intelligence, New Delhi, whereby the Principal Bench decided almost 200 appeals on the identical issue after considering at length the provisions of Section 4 of the Act and Rule 6 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 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 facts and circumstances of the present case. ............................ ............................ 42. In the present case, Maruti provided specifications of the parts or components to be fitted in the motor vehicles manufactured by Maruti to the potential vendors. The parts or components have necessarily to be manufactured as per the requisite dimensions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ........................ 50. 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." 8. We are of the considered view that the decision in Denso India Pvt. Ltd. (supra) squarely applies to the facts of the present case. MSIL is making vehicles of several models in its factories. For manufacturing these vehicles, MSIL is required to purchase various OE components from several vendors. The components for any vehicle have to be made as per the OEM requir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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