Commercial invoice - chargiability of excise duty

[PRAVEEN BANSAL]

We have received an order for making of Die's from a customer of Austria. The customer will pay die cost in foreign currency. The above customer is asking from us to supply the cmponent from the above die to their supplier of India i.e. we have to supply the component to his supplier on form ARE-3. Whether we can raise commericial invoice to customer of Austria and retain the die with us for production to give supplies to his supplier in India on form ARE-3. Whether Excise Duty has to be charge on issuing invoice of Die. Also whether we have to amortize die cost on supplies.

[Guest]

Dear Sir, You would have to amortise the cost of die in the assessable value and also would have to charge excise duty on that value. Further, no vat will be paid on the amortised value, as the apex court has pronounced judgement in this regard. for this purpose you'll have to two ass. value one for calculating excise duty under Section 4 and other for sale of goods purpose. Regards, Pradeep Khatri, Consultant - Indirect Taxation, [email protected]

[Guest]

Supply of components on ARE-3 appears that the same would be in the nature of export. The making of dies are subject to duties of excise but since you are using such dies for the purpose of manufacturing of components, the same would be entitled to the benefit of notification no. 64/95 i.e. captive consumption and you would be escaped from payment of excise duty on such dies. Moreover since there is no physical removal of such dies from yours premises and used in export of goods you are not required to pay excise duty. The issue of amortization is good since, the value is diminished on use of dies and whenever you would require to pay excise duty in future, the same amortization would help you determine the exact assessable value on which duty would be payable in future.

[Prabhakar Vennalaganti]

The issue is the technical aspect of compliance of law. Hence, advise / decission is to be based on factual information with supporting documentary evidence.

AI Summary

Amortisation of die cost affects assessable value and can trigger excise duty unless captive consumption exemption applies. Die cost should generally be amortised into the assessable value and excise duty charged on that value, with separate assessable-value calculations for excise and sale purposes; however, where dies are retained and used for manufacture of components destined for export or supplied on ARE-3, a captive consumption exemption may apply, potentially avoiding immediate excise, and factual documentary evidence is necessary to determine applicable treatment.