Payment of Excise duty

[PRAVEEN BANSAL]

We are manufacturers of Auto Parts for Auto Industries. We have made some Die's on behalf of the customer and received full payment for the same. We have detained the Dies for production on behalf of our customer. But the customer is asking commercial invoice for the die's as he has paid full amount for the same. Whether Excise Duty is leviable on issuing the invoice. If we have kept the die for production on behalf of customer than is that necessary to pay Excise Duty at the time of issuing of commercial invoice.

Excise duty will be leviable on issuing the Invoice. Customer's name should be mentioned under the heading on A/C of and self name should be mentioned under the heading of consignee.After than Customer will be issued a Job Challan in your name and the details of invice and use of dies will also be mentioned in the challan. Customer will take CENVAT after receiveing the dies in his registered premises.

Excise duty will be leviable on issuing the Invoice. Customer's name should be mentioned under the heading on A/C of and self name should be mentioned under the heading of consignee.After than Customer will be issued a Job Challan in your name and the details of invice and use of dies will also be mentioned in the challan. Customer will take CENVAT after receiveing the dies in his registered premises.

[RAKESH R]

Mr. Praveen Bansal You have not mentioned whether the dies are developed within your factory or made outside and fully bought out. If dies are developed within your factory, then you are liable to pay excise duty on the sale price. However, you can claim exemption from excise duty under Notification No. 67/95 CE dated 16.3.95 since there is no physical removal of such dies from your factory and instead, the same are retained and used within the factory for manufacture of other excisable goods on which duty is payable. To transfer the ownership, you may raise excise invoice on your customer with Excise duty NIL 'quoting Notn 67/95 CE dated 16.3.95 - No physical removal, retained and used within the factory for captive consumption in the manufacture of excisable goods'. However, you have to amortise the total value of the dies over the components manufactured by you and you have to add the proportionate dies cost in each component to arrive at the Trnsaction value for the components cleared to your customer and pay duty on the compoents accordingly. This procedure has been approved by Hon'ble CESTAT in various cases. S. Gokarnesan, Advocate, Chennai - 98400 87349

ok. but if the die developed fully out the factory. purchase by payment of duty. after that we invoice to it to our customer with excise duty taxes but the die would not moved from our factory to customer.we retained the die with us for further manufuring activies.in this case shall we levy the excise duty or not.

[RAKESH R]

Mr Vaideeswaran easwaran

You need not reverse the credit already taken by you at the time of procurment..  You can retain the credit since there is no physical removal of tools / dies from your factory and instead the same is ratained within the factory and used in the manufacture of excisable goods on which duty is payable.  Further, the ownership of capital goods is not the criteria for eligibility of cenvat credit.  The only condition is ' such capital goods should be used in or in relation to the manufacture of dutiable excisable goods'  In the present case the above condition is satisfied.

Reversal of credit is required only when the capital goods are either removed as such or removed after use in terms of Rule 3(5) of Cenvat Credit Rules.

Hence, you may raise an invoice to your customer for the basic agreed value without charging any excise duty but charging applicable sales tax.  You may mention in the invoice as "there is no physical removal of such capital goods and instead the same is retained within the factory in the manufacture of excisable goods on which duty is payable.  This invoice is raised only to pass on the ownership of the same.

However, subseqently  if the tools/ dies are returned back to the customer for any cancellation of order or for any other reason, at the time of removal, you have to reverse the credit in terms of  the proovision of cenvat credit rules 3(5A) (b) which is applicable for 'removal of used capital goods'

S. Gokarnesan

Advocate

12.9.2012

 

AI Summary

Excise duty on transfer of dies may be nil if retained for in factory use; follow amortisation and CENVAT rules.
Excise duty is generally leviable on invoiced transfers of dies, but where dies are retained and used within the factory for manufacture of dutiable goods, an excise invoice with duty NIL may be raised under Notification 67/95 CE. The die's capital cost must be amortised into component transaction values and duty paid on those components. CENVAT credit on capital goods may be retained while dies remain in factory use; if dies are removed later, CENVAT must be reversed per Cenvat Credit Rules.