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

AI Summary

Clarification on Customs Duty: Tool Development Costs Abroad May Incur Service Tax, Not Customs Duty, Per Agreement. A query was raised regarding the payment of customs duty on tool development costs incurred abroad. The tools were purchased and developed by a foreign supplier, who issued separate invoices for tooling and tool development costs. Customs duty was paid on the tooling cost, but there was uncertainty about whether it should also be paid on the development cost, given there was no physical movement of goods. The response clarified that, typically, customs duty is based on the CIF value of the tools. However, for the tool development cost, service tax under reverse charge might apply instead of customs duty, depending on the agreement.