Service tax on Tools and Dies

[varun arora]

Dear Experts,

If I manufactures the tools and dies on customised basis, suppose My customer provides me the drawing and specification of tools and I procures raw material at my end and manufactures the tools and dies.

And My customer will approve the Dies after testing process and modification, if required.

Please suggest me whether this is a Works Contract and chargeable to Service tax OR covered under Central Excise as under Manufacturing Activity??

Thanks in Advance.

AI Summary

Manufacture of tools and dies treated as excisable manufacture, attracting excise duty; invoiced development charges may attract service tax.
Manufacture of customer specified tools and dies is treated as manufacture for excise and the goods are excisable under Chapter 82; the transaction value must include the value of drawings supplied by the customer. A professional valuation certificate should be obtained and such value amortized on clearance of finished goods. Conditional exemptions under general exemption notifications and small scale exemption may apply. If charges are invoiced as modification or tool development fees they may attract service tax, and factual record examination is required to determine tax character.