We are the manufacturer of Engineering goods, have imported one machine in May 2006 and availed cenvat credit. One of its parts becomes defective. We purchased this parts from the said foreign machine supplier with reduced price with a condition that the said defective parts will be returned to them after receiving the new one. Accordingly the new parts has been imported with payment of CVD, 4% Additional Duty in August 2014 and we availed the cenvat credit .
Now we seek your valued opinion whether the said defective parts could be sent to the foreign supplier under LUT/A.R.E-1/Self sealing or any other simple process.
Regards,
G.Goswami
6.11.2014
Manufacturer Seeks Advice on Returning Defective Part; Consultant Recommends Barter Conditions and Compliance for Cenvat Credit A manufacturer of engineering goods imported a machine in 2006, availing cenvat credit. A defective part was purchased from the foreign supplier at a reduced price, with a condition to return it after receiving a replacement. The new part was imported in 2014 with duties paid, and cenvat credit was availed. The manufacturer sought advice on returning the defective part under LUT/A.R.E-1/Self sealing. A consultant advised that barter conditions should be included in agreements, with proper invoicing and compliance documentation. The manufacturer confirmed following the advice and clarified that availing cenvat credit on the replaced parts was acceptable. (AI Summary)
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