Amortisation charges on tooling, Central Excise

[THYAGARAJAN KALYANASUNDARAM]

Dear experts,

we are the manufacturers of automobile components and as per the instruction our supplier making the tooling from outside India and paid by us. Subsequently we get order from customers with the help this tooling we are making the goods and selling to local as well export. My question is that, tooling cost is borne by the seller only. In this scenario we need to charge amortization cost to my customer who is in India as well abroad. And collect excise duty and remit to the department. Can anyone explain it as per the provision of central excise with suitable case laws.

Posts / Replies

[Rajagopalan Ranganathan]

Sir,

Amartization will apply only when the tool is supplied free of cost by your customer. If you make the tool at your cost you siply built the cost of such tool in the cost of your final product and sell to your customer in India or export it to your foreign customer.subject to the condition that the price mutually agreed by you and your customer.

[Mahir S]

Sir,

you have mentioned in your query that : tooling cost is borne by seller only.

In such case, you have rightly mentioned that you need to charge amortization cost from your customers.

Regarding the provision of central excise for such matter, you may refer Rule 6 - (Price is not the sole consideration for sale) - Central Excise Valuation (Determination of Price of Excisable goods) Rules, 2000.

[THYAGARAJAN KALYANASUNDARAM]

Dear sir,thank you so much for your valuable reply.