Mould Invoicing process

[R MUTHURAJ]

Dear Sir / Mam,

An automobile parts manufacturing company gets an order from the customer to make some automobile parts.

Since the cost of the moulding machine is very high, the customer has agreed for reimbursing the purchase of moulds by the manufacturing company.

The following question / doubts raised for treatment:

1. Whether Cenvat Credit is available to the manufacturer on the purchase of Moulds on behalf of the customer?

2. Whether reimbursement of the mould cost should be under an invoice with excise duty? if so, what would be the invoicing pattern?

3. Whether the customer can take cenvat credit of the excise duty paid as per the invoice issued by the manufacturer?

3. How this should be treated in the Final products valuation. Whether mould amortization cost to be included or not to be included?

4. At the end of the life of the mould, whether it should be scrapped on payment of duty by the company or send to the customer?

Thanks in advance for your kind reply.

 

[YAGAY andSUN]

Reply to your query No. 1:  You can avail the CENVAT credit on the Mould which are in your possession as who is the own of the capital goods, does not matter.

Reply to your query No. 2:  Since you are availing the CENVAT credit then net off CENVAT credit amount should be re-imbursed to you.

Reply to your query No. 3:  Any of you can avail the CENVAT credit.

Reply to your query No.4:- Yes, it has to incorporated in the value of the finished goods for the purpsoe of calculation of Central Excise Duty.

Reply to your query No. 5: - You can dispose it off as per the terms and condition of the agreement.  If capital goods are in workable condition then No Excise Duty will be paid and if it will be removed as waste/scrap then duty on transaction value should be paid.

 

 

 

AI Summary

Cenvat credit on moulds: manufacturer may claim credit and recover net credit when invoicing customer. Availability of CENVAT credit on moulds is recognised when moulds are in the manufacturer's possession and treated as capital goods, regardless of customer reimbursement. Net CENVAT amounts should be reimbursed and reflected in invoices. Either party may claim CENVAT credit. Mould amortisation must be included in the assessable value of finished goods for excise purposes. End of life disposal follows contractual terms: transfer of working capital goods does not attract duty under the stated position, whereas removal as waste/scrap requires duty on the transaction value.