Dear Expert,
We procured an item and directly supply it to third party lab for testing. after testing a product will be manufactured and it will be supplied us back. we will then distribute it into the market as free sample. Here, while purchasing supplier has charged excise duty on invoice. My question is whether excise duty is applicable on a) supplying goods to third party lab. b) distributing as free sample. c) set off eligibility.
Important is that invoice is done at our Head office address as buyer and third party lab as consignee.
seeking your export comment in this regard,
regards,
ganeshan
Excise Duty Applicable on Free Samples Unless Exempt; Duty Credit Claimable if Samples Returned Intact After Testing A query was raised regarding the applicability of excise duty on items procured and supplied to a third-party lab for testing, which are later distributed as free samples. The responses clarified that excise duty is applicable on free samples unless exempted by a notification. If samples are returned intact after testing, duty credit can be claimed. No excise duty is applicable when goods are directly supplied to a third party, but it applies to free samples. Cenvat credit is admissible upon receipt of processed goods from the third party. (AI Summary)
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