Tool shifting and excise procedure

[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 andSUN]

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.

[Guest]

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 andSUN]

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.

[Guest]

Understood Sir,

Thank you for sharing knowledge.

 

Thanks & Regards,

RSK

AI Summary

Guidelines for Transferring Tools Between Suppliers: Challan Requirement and CENVAT Credit Considerations A participant in a discussion forum inquired about the procedure for shifting a tool from Supplier A, who closed their business, to Supplier B for further production, specifically regarding the handling of excise duty. The response clarified that a challan must be prepared to indicate the tool's transfer, and Supplier B should include the tool's amortization cost in the assessable value for Central Excise Duty. In a scenario where Supplier A invoices Supplier B directly, it was noted that issuing a challan is still necessary, and CENVAT credit can be availed based on the tool's usage, not ownership.