gst treatment on molds

[Madhavan iyengar]

A Component manufacturer had received mold during pre-gst period and it had to deliver 10000 pieces of the component to the OEM

OEM took delivery of 5000 pieces but now no longer wants to the balance 5000 pieces

Issues: OEM wants the mold back from component manufacturer

How should component manufacturer send back the mold can it send under challan so that no gst is applicable

implications of amortisation costs if any on the components which have not been supplied

experts views solicited

AI Summary

Return of supplied tools: returning OEM owned molds without consideration may be done under delivery challan with no GST.
If molds remain the OEM's property and are returned without consideration, they may be transported under a delivery challan with no GST payable; tools supplied free of cost by an OEM need not be included in the value of components where no contractual obligation exists. If transitional time limits under Section 141(1) have lapsed, recovery of input tax credit may arise. Partial use of the mold requires proportionate reversal of credit for the unused component output, and where the OEM refuses remaining goods the job worker may need to clear them as waste or supply, attracting GST on transaction value.