Tool shifting and excise procedure

[Asked by Guest]

Hello All,

I am having qurey regarding Tool shifting procedure..

If  A supplier has developed Tool and using that tool for part production and we have paid the Tool price to the supplier , now  A supplier closed buisness and we need to shift this Tool for further production to Supplier B then how excise duty will be handled in this case..

1.  Supplier A submitted Tooling invoice with excise duty and we paid full to A and shifted tool to supplier B

2. IS B supplier eligible to charge amortisation for excise duty calculation while producing part from Tool which we shifted to him from Supplier A

Waiting for your valuable reply.

 

Thanks & Regards,

RSK

[YAGAY and SUN]

First of all you would have prepare a challan by clear mentioning that this particluar tool is being shifted from existing supplier to a new supplier.

The new supplier will include the amortisation cost of the tool [on the basis of remaining capacity for producing of parts/inputs from such tool] in the assessable value for the purpose of charging Central Excis Duty.

No VAT/CST would be payable on such amortisation cost since this value is not treated as flow consideration from customer to supplier of parts/inputs.

Dear Sir,

 

Thank you very much for your reply. Here i would like to ask about one more scenario ..

what if , Supplier A issued tool invoice directly to supplier B as consignee and supplier B takes credit for the same.

but, we as a purchaser paid supplier A full cost of  tool invoice ie basic+Tax+sales tax.

Thanks & Regards

RSK

[YAGAY and SUN]

Even in, Bill to Ship to transactions, you are required to issue a challan for supporting the movement of goods directly to the supplier of inputs/parts.

For availing the CENVAT credit, ownership is not criteria, usage of capital are sufficient for availment of CENVAT credit.

If your supplier avails the CENVAT credit then you would have to capitalized such capital goods net off CENVAT credit.

Understood Sir,

Thank you for sharing knowledge.

 

Thanks & Regards,

RSK

AI Summary

Amortisation of tool can form assessable value for excise, with CENVAT credit affecting capitalisation treatment.
A tool shifted to a new supplier must be accompanied by a challan identifying the tool. The new supplier may include amortisation based on remaining capacity in the assessable value for central excise; that amortisation is not subject to VAT/CST. In bill to/ship to cases a challan is still required. CENVAT credit depends on usage rather than ownership; if the supplier avails CENVAT credit, the purchaser should capitalize the tool net of that credit.