Custom, Excise & Service Tax Tribunal
Hi Tech Arai Pvt Ltd vs Director General Of Gst Intelligence ... on 7 May, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
New Delhi
PRINCIPAL BENCH
Excise Appeal No. of 55384 of 2023
(Arising out of the Order in Original- 157-166-2023-CE, dated 04.05.2023 passed by
Director General (Adjudication) GST Intelligence, New Delhi)
Hi Tech Arai Pvt Ltd ...... Appellant
Plot No. -33, Sarojini Street Chinnachokkikulam,
Madurai
Tamil Nadu-625002
Versus
Directorate General of GST Intelligence ...... Respondent
Adjudication Cell - New Delhi West Block-VIII, Wing-6, 2nd Floor, R. K. Puram New Delhi- 110022 APPEARANCE:
Mr. Hredai H.S., Advocate for the Appellant Shri Rakesh Agarwal, Authorised Representative for the Department With Excise Appeal No. of 55413 of 2023 (Arising out of the Order in Original- 157-166-2023-CE, dated 04.05.2023 passed by Director General (Adjudication) GST Intelligence, New Delhi) West India Power Equipments Pvt Ltd ...... Appellant Located At Plot No. C-29/30 Sector-20, Jagdishpur, Industrial Estate, Sultanpur, Uttar Pradesh-209870 Versus Directorate General of GST Intelligence ...... Respondent Adjudication Cell - New Delhi West Block-VIII, Wing-6, 2nd Floor, R. K. Puram New Delhi- 110022 APPEARANCE:
Mr. Sachin Agarwal, Advocate for the Appellant Shri Rakesh Agarwal, Authorised Representative for the Department With
2 E/55384/2023 & others Excise Appeal No. of 55446 of 2023 (Arising out of the Order in Original- 157-166-2023-CE, dated 04.05.2023 passed by Director General (Adjudication) GST Intelligence, New Delhi) Jaya Hind Industries Private Limited ...... Appellant Mumbai Pune Road, Akurdi, Pune Maharashtra-411035 Versus Directorate General of GST Intelligence ...... Respondent Adjudication Cell - New Delhi West Block-VIII, Wing-6, 2nd Floor, R. K. Puram New Delhi- 110022 APPEARANCE:
None for the Appellant Shri Rakesh Agarwal, Authorised Representative for the Department With Excise Appeal No. of 55456 of 2023 (Arising out of the Order in Original- 157-166-2023-CE, dated 04.05.2023 passed by Director General (Adjudication) GST Intelligence, New Delhi) Furukawa Minda Electric Private Limited ...... Appellant (Formerly, Minda Furukawa Electric Private Limited)., Plot No. 325-326, Sector-3, Industrial Growth Centre, Phase-II, IMT Bawal, Rewari, Haryana-123501 Versus Directorate General of GST Intelligence ...... Respondent Adjudication Cell - New Delhi West Block-VIII, Wing-6, 2nd Floor, R. K. Puram New Delhi- 110022 APPEARANCE:
Mr. S.C. Vaidyanathan, Advocate for the Appellant Shri Rakesh Agarwal, Authorised Representative for the Department With Excise Appeal No. of 55459 of 2023 (Arising out of the Order in Original- 157-166-2023-CE, dated 04.05.2023 passed by Director General (Adjudication) GST Intelligence, New Delhi)
3 E/55384/2023 & others Ahresty India Private Limited ...... Appellant Plot No. 194, Sector-4, Phase-II, IMT Bawal, Rewari, Haryana-123501 Versus Directorate General of GST Intelligence ...... Respondent Adjudication Cell - New Delhi West Block-VIII, Wing-6, 2nd Floor, R. K. Puram New Delhi- 110022 APPEARANCE:
Shri Manish Sachdeva, Advocate for the Appellant Shri Rakesh Agarwal, Authorised Representative for the Department With Excise Appeal No. of 55505 of 2023 (Arising out of the Order in Original- 157-166-2023-CE, dated 04.05.2023 passed by Director General (Adjudication) GST Intelligence, New Delhi) JKET India Limited ...... Appellant 38/6 Delhi-Jaipur Road, Narsingpur, Gurugram Haryana-122001 Versus Directorate General of GST Intelligence ...... Respondent Adjudication Cell - New Delhi West Block-VIII, Wing-6, 2nd Floor, R. K. Puram New Delhi- 110022 APPEARANCE:
Shri S.C. Vaidyanathan, Advocate for the Appellant Shri Rakesh Agarwal, Authorised Representative for the Department And Excise Appeal No. of 55547 of 2023 (Arising out of the Order in Original- 157-166-2023-CE, dated 04.05.2023 passed by Director General (Adjudication) GST Intelligence, New Delhi) Bridgestone India Private Ltd ...... Appellant Plot Number 12, Kheda Growth Centre, Post. Sagore, Dhar, Madhya Pradesh - 454774 Versus Directorate General of GST Intelligence ...... Respondent Adjudication Cell - New Delhi West Block-VIII, Wing-6, 2nd Floor, R. K. Puram New Delhi- 110022
4 E/55384/2023 & others APPEARANCE:
Shri Rajat Bose and Ms. Shohini, Advocates for the Appellant Shri Rakesh Agarwal, Authorised Representative for the Department CORAM :
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT HON'BLE MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) Date of Hearing/Decision: May 07, 2024 FINAL ORDER NO. 55799-55805/2024 JUSTICE DILIP GUPTA:
The issue involved in all the aforesaid appeals that have been filed by vendors of Maruti Suzuki India Limited1 , which is engaged in the manufacture of motor vehicles and procures the desired parts and components from vendors, is whether the notional cost of drawings and designs supplied free of cost by Maruti to the vendors should be included in the assessable value of parts or components manufactured by vendors and cleared to Maruti for the purpose of payment of central excise duty.
2. According to the vendors, parts or components, being an engineering product, are required to be made as per the requirement of Maruti and it is for this reason that Maruti provides the specifications of the parts or components in the form of drawings free of cost to the potential vendors and seeks quotations. The specifications enable the potential vendors to properly understand the requirements and provide the best price quotations for the manufacture and supply of the desired parts or components. Once the vendor is selected and a letter of intent is issued, the vendor prepares detailed drawings and designs for the 1 Maruti
5 E/55384/2023 & others products to be supplied, corresponding to the specifications received from Maruti. The final products are then manufactured with the help of detailed drawings and designs prepared by the vendors. According to the vendors, the cost incurred by them towards the manufacturing activity includes the development cost incurred in the preparation of the detailed drawings and designs by them.
3. The department, however, believed that the cost of the specifications supplied by Maruti to the vendors free of cost should be included in the assessable value of the final products manufactured by the vendors in terms of rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 20022. Accordingly, show cause notices were issued to the vendors. The adjudicating authority confirmed the duty demand holding that the cost of the specifications provided by Maruti has to be included in the assessable value of the product manufactured by the vendors and cleared to Maruti.
4. It has, therefore, to be determined 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.
5. This issue was examined at length by this bench of the Tribunal in Denso India Private Limited versus Additional Director General (Adjudication)3 and it was held that:
2 the 2000 Valuation Rules 3 Excise Appeal No. 52419 of 2022 decided on 12.03.2024
6 E/55384/2023 & others "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."
6. Thus, for the reasons stated in Denso India Private Limited, these seven appeals would have to be allowed.
7. In the result, the orders impugned in these seven appeals deserve to be set aside and are set aside. All the seven Excise Appeals are, accordingly, allowed.
(Order pronounced in the open court) (JUSTICE DILIP GUPTA) PRESIDENT (HEMAMBIKA R. PRIYA) MEMBER (TECHNICAL) Diksha