NTN NEI Manufacturing India Pvt. Ltd. Vs Commissioner of Central Excise and Service Tax (CESTAT Chandigarh)
Summary: The Customs, Excise and Service Tax Appellate Tribunal, Chandigarh Regional Bench, allowed the appeal filed by M/s NTN NEI Manufacturing India Pvt. Ltd. and set aside the impugned adjudication order confirming central excise duty of ₹23,58,248/- along with interest and an equal penalty. The adjudicating authority had dropped the remaining demand of ₹6,66,80,956/-. The dispute concerned whether the value of drawings/designs supplied free of cost by Maruti Suzuki India Ltd. (MSIL), together with royalty paid by MSIL to Suzuki Motor Corporation, Japan, could be included in the assessable value of automobile components manufactured by the appellant.
The appellant is an Original Equipment Manufacturer supplying automobile components to MSIL. MSIL provided specifications and drawings to prospective vendors. The Department alleged that the drawings/designs supplied free of cost constituted additional consideration and that royalty paid by MSIL to Suzuki Motor Corporation indirectly related to those drawings and therefore required proportionate loading into the assessable value under Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.
The appellant contended that the drawings supplied during the vendor-selection/tender process were only indicative specifications intended to enable prospective vendors to understand the required quality, dimensions and standards and quote their prices. They were not detailed manufacturing drawings used for production. The appellant further contended that the royalty paid by MSIL related to intellectual property rights concerning MSIL’s manufacture, marketing and sale of motor vehicles and had no nexus with the manufacture or clearance of the appellant’s goods. It was also submitted that there was no evidence of any additional consideration flowing directly or indirectly from MSIL to the appellant.
