Payment of Customs duty on Tools development Cost paid at Abroad

[Pradeep Jain]

Dear Sir,

We have purchsed some Tools from abroad . After that said tools was developed by the said supplier . In this case supplier has raised 2 bills one for Tooling and another is for Tooling Development Cost . Tooling cost is paid and Customs Duty paid thereon.

Now we need to pay tools development cost ,the same was incurred by supplier on the above said tools. But there is no physical movement .Do we need to pay Customs Duty on that value .

Regards

Pradeep Jain

[Suryanarayana Sathineni]

Dear Pradeep

Generally, customs duty is required to be paid on CIF value after conversion in INR and adding of landing charges. The CIF value is based on the invoice accompanied the tools.

It is understood that the tool development cost is not included in the invoice. In this case, if you receive a separate invoice for tool development cost. Based on any agreement,then you may have to pay Service Tax under reverse charge and not the customs duty

The above view is to the extent your query is understood by me

Regards

suryanarayana

AI Summary

Customs valuation: separate tooling development invoices generally attract service tax under reverse charge, not customs duty liability. Customs duty for imported tools is based on the CIF value on the import invoice plus landing charges; a separately invoiced tooling development cost without further physical importation is generally not includible in CIF for customs assessment and may instead be liable to service tax under reverse charge, depending on the parties' agreement and applicable indirect tax rules.