Excise & service tax on repairing / reconditioning

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This query is : Resolved

Keval Katkoria (Querist)

24 August 2012 We are a manufacturing company registered with Central Excise and Service tax Dept. We have received an enquiry of repair and reconditioning of a product similar to we manufacture.

Suppose we received a damaged product from our Customer for repairing. In this repair process 60% is of Material Input and 40% is of Labour Charges for repair and reconditioning.

THE QUESTION IS CAN WE ISSUE AN INVOICE FOR BOTH MATERIAL INPUT SALE AND MACHINING CHARGES IN ONE INVOICE AFTER CHARGING EXCISE DUTY AND VAT ON MATERIAL VALUE AND SERVICE TAX ON LABOUR CHARGES.
OR
ISSUE A SEPERATE INVOICE FOR MATERIAL AND MACHINING CHARGES AFTER CHARGING EXCISE AND VAT ON MATERIAL AND SERVICE TAX ON MACHINING.
OR
IF WE ISSUE AN INVOICE OF TOTAL COST WITH SERVICE TAX CHARGED, THAN WHAT HAPPENED TO MY CENVAT AMOUNT AGAINST WHICH I HAVE TAKEN THE CREDIT.

Also what type of queries likely to be come from Excise & Service Tax DepartmentS?

PLEASE SUGGEST LEGAL OPINION IN THIS REGARDS

THANKS IN ADVANCE

U S Sharma

U S Sharma (Expert)

25 August 2012 1) repair and maintainence of any old machine is allowed with following :
a) sell spare parts to the party after paying duty / vat/cst.
b) repair the old machine without any materials from your side and charge service tax on repair works without materials.

a+b would be billed separate and in diff series also.

if cleared a reconditioned machine, then department will treat the brought out machine as your input and insist you to pay duty on the whole value of the machine like new one.

department belive that such goods were scrapped before bringing into your factory and whole manufacturing is done at your end, and now its to be cleared as new machine after paying full duty.

so keep caution during billing and maintanance of records to avoid any unpleasent situation.

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