Dear experts,
we are the manufacturers of automobile components and as per the instruction our supplier making the tooling from outside India and paid by us. Subsequently we get order from customers with the help this tooling we are making the goods and selling to local as well export. My question is that, tooling cost is borne by the seller only. In this scenario we need to charge amortization cost to my customer who is in India as well abroad. And collect excise duty and remit to the department. Can anyone explain it as per the provision of central excise with suitable case laws.
Automobile component manufacturers must include tooling costs in product price unless tooling is free, per Rule 6, Central Excise Valuation Rules. A manufacturer of automobile components queried about whether to charge amortization costs to customers for tooling made outside India and paid for by them. The first reply clarified that amortization applies only if the tool is supplied free by the customer; otherwise, the cost should be included in the product price. The second reply confirmed that if the tooling cost is borne by the seller, amortization costs should be charged to customers, referencing Rule 6 of the Central Excise Valuation Rules, 2000. The original poster expressed gratitude for the responses. (AI Summary)
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