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Excise on sale of tool with no movement

arkaushal (Job) (32 Points)

23 April 2014

Hi We are into manufaturig of automobile components. We need to sale tools which are used in manufacturing of these componens to our customers. Some tools are at our factory and some are at our suppliers factory and there will be no movement of these tools.

Please advice as a manufacture how i can raise the invoice to my customer for sale of these tools...whether it will be excise invoice and excise duty will be applicable? or will it be VAT/CST invoice without excise duty?

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4 Replies

Harendra Kumar (Tax Advisor ) (1326 Points)
Replied 28 April 2014

Sir,

Good movement is provided as per Excise Rule and Cenvat credit rules. Question is created how to you send such tools i.e. challan or invoice duty paid or not. If you send the tools as per challan the time limit not more 180 days in both rules i.e. Excise, 2002 & Cenvat Credit rule, 2004.

Further in this regard brought to tools on challan and paid such excise duty and also charged the VAT/CST and make the invoice and sell the same. If you having some observation plz forward the same.

arkaushal (Job) (32 Points)
Replied 12 May 2014

Originally posted by : Harendra Kumar
	Sir, Good movement is provided as per Excise Rule and Cenvat credit rules. Question is created how to you send such tools i.e. challan or invoice duty paid or not. If you send the tools as per challan the time limit not more 180 days in both rules i.e. Excise, 2002 & Cenvat Credit rule, 2004. Further in this regard brought to tools on challan and paid such excise duty and also charged the VAT/CST and make the invoice and sell the same. If you having some observation plz forward the same.

Thnx Harendra, but here issue is that there is no movement of tools either from supplier to our plant or our plant to customer location. So in view of this fact what would be applicability and compliances for excise and VAT/CST for this transaction.

Harendra Kumar (Tax Advisor ) (1326 Points)
Replied 13 May 2014

There are no movement then how reached the tools other premises, plz clear it.

arkaushal (Job) (32 Points)
Replied 15 May 2014

Let me expain you in detail...

We are in Maharashtra and have a supplier "A" in Haryana, who develops tools to manufacture our components. Now we need to fund these tools which will remain in his factory in Haryana. So "A" has to sale these tools to us without moving these tools from his factory in Haryana, only ownership will transfer to us and we are in Maharashtra.

Further, we have customer "B" in Tamilnadu who then fund these tools to us. So accordingly we need to sale these tools to "B" who is in Tamilnadu, but again these tools will remain in the factory of "A" at Haryana and only ownership will transfer to "B".

So, my queries are:

1. What wouold be tax structure when we buy these tools from our supplier in respect of VAT/CST and Excise?

2. What would be tax structure when we sale these tools to our customer in respect of VAT/CST and Excise?

3. Will this sale be considered as sale in Haryana for me instead of sale in Maharashtra?

4. Are we liable to charge excise on both transactions?

Hope above facts will help to understand complete tranaction.

Thnx.