Relief to Bosch: CESTAT Rules Notional Cost of Free Designs from Maruti Not Part of Excise Duty Valuation [Read Order]
The tribunal referred to its earlier decision in Denso India Pvt. Ltd. vs. Additional Director General (Adjudication), where it had held that such notional costs cannot be added to the assessable value.
![Relief to Bosch: CESTAT Rules Notional Cost of Free Designs from Maruti Not Part of Excise Duty Valuation [Read Order]](https://images.taxscan.in/h-upload/2025/07/07/2060584-bosch-ltd-taxscan.webp "Relief to Bosch: CESTAT Rules Notional Cost of Free Designs from Maruti Not Part of Excise Duty Valuation [Read Order]")
The Delhi Bench of Customs,Excise and Service Tax Appellate Tribunal ( CESTAT ) granted relief to Bosch Ltd and ruled that the notional cost of free design and drawings provided by Maruti Suzuki could not be included in the excise duty valuation of parts and components supplied by vendors. Bosch Ltd.,appellant-assessee, had challenged the inclusion of the notional cost of...
The Delhi Bench of Customs,Excise and Service Tax Appellate Tribunal ( CESTAT ) granted relief to Bosch Ltd and ruled that the notional cost of free design and drawings provided by Maruti Suzuki could not be included in the excise duty valuation of parts and components supplied by vendors.
Bosch Ltd.,appellant-assessee, had challenged the inclusion of the notional cost of free drawings and designs provided by Maruti Suzuki in the excise duty valuation of parts and components supplied to Maruti.
The assessee explained that Maruti had supplied basic specifications free of cost to help vendors understand the product requirements and submit price quotes. Once selected, the vendor prepared its own detailed drawings and designs for manufacturing.
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Since the final products were made using the vendor’s own designs, the assessee argued that the value of Maruti’s initial drawings should not be added to the assessable value for excise purposes.
The department held that the notional cost of drawings and designs provided free of cost by Maruti should be included in the assessable value of the parts supplied by the vendor, as per Rule 6 of the 2000 Valuation Rules. Based on this view, show cause notices were issued.
The adjudicating authority confirmed the demand, stating that the cost of Maruti’s specifications had to be added to the assessable value of the goods cleared to Maruti.
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The main issue was whether this notional cost should form part of the excise valuation of the parts manufactured and supplied to Maruti.
The two member bench comprising Justice Dilip Gupta ( President ) and P.V.Subba Rao( Technical Member) examined the issue in detail in the case of Denso India Private Limited vs. Additional Director General (Adjudication) and held that the notional cost of drawings and designs supplied free of cost by Maruti could not be included in the assessable value of parts and components manufactured by vendors and cleared to Maruti for excise duty purposes.
Relying on this decision, the appellate tribunal allowed the appeal. The impugned order was set aside, and the excise appeal was allowed.
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