Tooling procedure

[Mridul Sethi]

Pls clear me the tooling procedure in excise, how we calculate the perunit toolcost & how charge in bills...Mridul

[r.rajkumar kumar]

your question is not very clear. but i understand if your customer pays seprately for tool, to produce

the goods .you have to amoritize the tooling cost and chage excise for the amortize cost  and duduct the

amortize cost while sending the bill to the cusomer. since tools cost has already paid in advnace to produce the final goods . for amortization cost pl calcualte the cost takeing the life of the tools ,and no of the goods can be produced by the tools . this can be costed by cost account or yourself. This is according to the valucation rules of central excise act 2000.tks

[YAGAY and SUN]

Amortisation of tooling cost supplied by buyer is required to be includibe for Central Excise Valuation.
In central excise, if the buyer has supplied toolings, its cost has to be amortised and included in assessable value
for the purpose of calculation of central excise duty.
Exhibit: -
Calculation of Amortisation cost			Rs.
Gross Value of capital Goods (say)			500,000.00
Inputs/shots expected			100,000.00
Amortisation cost per piece to be added in assessable value for calculation of excise duty			5.00
				Description				Rate of  Tax	Ass. Value only for Calculation of Excise Duty	Invoice Value chargable by supplier to customer
Price charged by the supplier for Input 'X'					45.00	45.00
Add: - Amortisatio cost of Machine (per piece of Input)					5.00	-
Assessable value under Section 4 of the Act					50.00	45.00
Excise duty				10.30%	5.15	5.15
Taxable Amount for charging of VAT/CST (as the case may be)					-	50.15
VAT @ 5%				5%	-	2.51
					Total Invoice Value	52.66
Amortisation of tooling cost supplied by buyer not includible for sales tax valuation -
Further, In Morioku UT India v. State of UP (2008) 224 ELT 365 =15 VST 559 (SC), it has been held that
there is no similar provision of adding cost of additional consideration in UP Trade Tax Act and hence
such cost is not to be addible.
Pict

AI Summary

Amortisation of tooling cost included in central excise valuation, increasing assessable value and affecting invoice tax charges.
Central excise valuation requires inclusion of amortisation of tooling cost supplied by the buyer in assessable value; the supplier must divide tooling cost by expected output to obtain a per unit amortisation, add that to the supplier's price to determine assessable value for excise duty, and then compute the excise and downstream tax charges accordingly.