Excise Duty on Tooling developed by Supplier

[Pradeep Jain]

Dear Sir,

Our supplier has developed / buy tools on our behalf for and will be captive comsumed by him for supply components to us, within number of years . Tooling amount is paid to the supplier,since the said tools are laying with the supplier and there is no phycical movement of above said Tools from supplier premises to our premises hence no excise duty is charged on the said toolings invoice.

Now instead of the amortised the cost of said tools , we want to pay whole exise duty of the tools , on the excise invoice raised by supplier at time of first supply of components.

In that case, will be able to get the CENVAT credit of the said tools which is paid through above manner?.

Is there is any other issue / implications for follow the above procedure ?

Please reply

Regards

Pradeep

AI Summary

Excise duty on tooling: paying duty does not remove amortisation obligation, but duty paid may be claimed as credit.
Excise is ordinarily leviable on removal; tools retained by the supplier do not automatically attract excise. If duty is paid on tools manufactured or procured by the supplier on the buyer's account, that duty is admissible as CENVAT credit and may be used against duty on final products. Irrespective of duty payment or exemption, the amortised cost of tooling must be included in the assessable value of finished goods, with apportionment based on expected life/output and supporting certificate where needed. Practical VAT/CST and waybill implications should be examined when tools do not physically move.