We are a manufacturing concern,tools dies is supplied by our seller party on loan basis,some dies is obsolote during process and the seller party says that we will issue excisable invoice and treat the same as scrap sales and return the material under rule 11 without applying vat liability.whether issuance of scrap invoice without creating vat liability is as per law.Please make clear the view.
Earlier they have provide you with the tools, now they intend to remove as such by showing a transaction of sale.
The best way would be to return the tools in as is condition to them and then they can dispose of as scrap from their premise by following the procedure under the central excise.
If they intend to remove and treat as sale then you become the buyer and they have to charge appropriate vat on such sale.
CAclubindia
