Tool amortisation.

[SANTHANA KRISHNAN]

we had provided our tools to our vendor. the tool cost is say ₹ 100000 and 10000 pcs can be made out of the tool. Vendor made the tools and we paid for the tool and the tools are retained at the vendor end to supply components to us.

pl explain us

1; Excise duty on tool amortisation - how to handle? pl explain with various scenarios ..

2. after some time say after supply of 2000 pcs, I prefer to shift the tool to another vendor? how to handle - any payment of excise duty.

3. After 5000 pcs, I intend to scrap the tool. what is theprocedure.

4. after 8000 pcs, I intend to take the tool to my premise. what is the procedure on excise.

pl help us with your inputs.

regards

J Ramamurthy

TAFE.

AI Summary

Tool amortisation: residual value attracts excise duty on transfer, return or scrapping, with cenvat credit implications.
Tool amortisation for tooling provided to a vendor forms part of central excise valuation when components are cleared on payment of duty; the vendor may amortise the tool's cost pro rata over expected pieces and avail cenvat credit if duty was paid. If the tool is transferred between vendors or returned to the principal, duty is payable on the depreciated/residual value and may be credited by the transferee. On scrapping, duty consequences follow either on clearance at transaction value or by destroying the tool and claiming remission. VAT/CST is not applicable to the amortised value.