Removal of material under warranty period

[SURYAKANT MITHBAVKAR]

If we removed material to our customer who is having Machine under warranty period for maintaining smooth working of machine. (Additional material free of charge) whether excise duty is applicable.

[Himansu Sekhar]

Yes, the valuation will be 110% of the cost price, under rule 11 of the valuation rules,2000.

[KASTURI SETHI]

Yes. CE duty has to be paid. You may or may not charge for additional material. It is captive consumption. I support the views of Sh.Himansu Shaw, an expert.

AI Summary

Excise duty on warranty-supplied materials applies; valuation treated above cost under valuation rule as captive consumption. Removal of additional material supplied free during machine warranty is liable to excise duty; valuation is to be made under the valuation rules with the assessed value fixed above cost under rule 11, and such transfers are to be treated as captive consumption for excise purposes.