AMORTIZATION

[DEEPAK SHARMA]

X is manufacturer of plastics moulding products and Y is buyer of X. Y is regular procuring goods from X. once a day Y approached X for a new products, X told to Y that for this producys we needed mould.

Y got agree with X and said that you have insfrastucture for production of mould, you (x) please make a mould for this products and shipped us the said mould with charging excise duties.

X produced mould for that product, and shipped on excise invoice and charged appropriate excise duty at the rate of 12.36 percent  from Y and deposite the same and shown in ER-1.

Further Y Send the same mould to the X for further manufacturing of that products for which it was prepared on job work challan.

Excise Audit held and officer is asking duty on die cost. under valuaation act.

Please advice us.    

 

AI Summary

Notional value of customer-supplied tools must be added to assessable value when tools are supplied free for manufacture.
Where a sale of a mould (with excise paid) is followed by the buyer supplying that mould free of cost for manufacture, the notional value of customer supplied tools supplied FOC must be added to the assessable value under the valuation rules. In job work contexts, if mould plus raw material are given to the job worker and the outputs are used in further dutiable manufacture, separate amortisation need not be added; if the job worker uses his own material and supplies components, die amortisation per piece based on mould life must be included in valuation.