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2019 (8) TMI 471

..... duction and supply - HELD THAT:- The CBIC in its Circular No 47/21/2018-GST dated 08.06.2018 has clarified that Moulds and dies (Tools) owned by OEM that are provided to a component manufacturer on FOC basis do not constitute supply as there is no consideration and in such cases, the value of goods provided on FOC basis shall not be added to the value of supply of components. However, in case the contractual obligation is cast upon the component manufacturer to provide moulds/ dies but the same have been provided by the OEM on FOC basis, then the amortized cost of the moulds/dies is required to be added to the value of the components supplied. The issue raised by the applicant is covered under Issue number I and Clarification 1.1 and 1.2 of .....

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..... in form GST ARA-01 discharging the fee of ₹ 5,000/ - each under the CGST Act and the KGST Act, 2017. 2. The Applicant is a Private Limited Company, involved in the manufacture and sale of plastic moulds, press tools, Jigs/ Fixtures / Gauges, Injection moulded parts and Design services, as per the specific orders & requirements of their customers. The Injection moulded parts (Tools), as per specific order from customer, are manufactured using plastic Granules as Raw material and using in-house injection moulding machines. The Applicant submits that the Tool is either manufactured by them or supplied by the customers free of cost, for production of parts , on returnable basis. 3. The Applicant further submits that the Injection moul .....

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..... omer. FINDINGS & DISCUSSION We have considered the submissions made by the Applicant in their application for advance ruling as well as the submissions made by Sri. Shyam Bhat, Managing Director and authorised representative of the applicant during the personal hearing. We have also considered the issue involved, on which advance ruling is sought by the applicant and relevant facts. In response to the request to submit a copy of the contract with their customer, the applicant submitted a copy of the purchase order having the conditions of supply mentioned therein. 7. The Applicant seeks advance ruling as follows: Clarification regarding applicability of Tool Amortisation cost (Transaction Value) in GST Regime on Capital Goods received f .....

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..... cture of parts, on returnable basis are classified under Capital goods. The mould (Tool) has specific life and can produce only certain volume of total production. Every part produced has incurred a portion of the mould (Tool) cost that appears as Transaction value, if the Tool is provided by the Applicant. In the instant case the customer is supplying the Tool on free of cost basis and hence the applicant is not charging any portion of the cost of the Tool to the customer. 9. In response to the request to the applicant to submit a copy of the contract to examine the nature of supply of tools/ dies/ moulds etc the applicant submitted a copy of the purchase order placed on them by Tata Autocomp Systems Ltd.. The purchase order has standard t .....

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..... e. Here the applicant contends that the tool/mould is received free of cost and on returnable basis. This implies that the tool is provided free of cost by Tata Autocomp Systems Ltd., and the applicant is bound to return the same to them after completion of the supply or as instructed. In other words the applicant is not under contract to supply components made by using the tools/moulds belonging to them but the same have been supplied by Tata Autocomp Systems Ltd., on FOC basis, 12. The CBIC in its Circular No 47/21/2018-GST dated 08.06.2018 has clarified that Moulds and dies (Tools) owned by OEM that are provided to a component manufacturer on FOC basis do not constitute supply as there is no consideration and in such cases, the value of .....

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