Tooling Cost Amortisation

[Guest]

Dear Friends,

I am proud to become a member TMI Family and I wish you everyone A Happy New Year in advance.

I have two queries on Tool Amortisation; 1) I will be amortising the Tool Cost as Cost Accountact certificate for the product manufactured out said tool. As per CA tool life is 50000 nos but Tool gets spoiled after completion of 10000 nos. Now whether I require to pay duty balance tool cost!!??

2) Secondly,  First I make the supplies to customer and after some months I realise the tooling cost from customer for the goods supplied earlier. In this senario how to treat the excise duty liability!!?

Thanks in advance for your valuable replies

[r.rajkumar kumar]

1.yes the balance duty is payable.total duty forthe tool less already amortized and balance tobe paid.

 

2.as per the p.o. from customer tools cost is payabale by the customer . hence amortisation of tool cost must charge from the begning. if your supplied with out amortisation now amortisation cost must charge for the earlier spplies and pay duty with interest. for the arrears.

AI Summary

Tooling amortisation shortfall creates excise duty liability requiring payment of unpaid duty and interest. Where amortisation claimed on a tool based on an accountant's certified life is undermined by earlier failure, the residual excise duty (total duty for the tool less duty already amortised) is payable. If tooling cost is recovered from customers after goods were supplied without prior amortisation, the supplier must treat amortisation as chargeable from the start, recover the amount for earlier supplies and pay the corresponding excise with interest on arrears.