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Vat on tooling cost
TOOLING COST CHARGED TO FOREIGN CUSTOMER. Billing in USD. Payment received through bank against invoice raised .Tooling property belongs to the foreign customer. However these tools are used for manufacture of goods as per the specification of foreign customer and these goods are exported. I want to know whether VAT will attract on such tooling cost as they are not physically exported. If tooling cost is amortized and shown in each export bill, whether VAT will attract in this case. Please guide.
Replies (2)
As we understand in this case there would be 2 order- 1) for tool 2) for product. Once tool ready you could raise a local invoice as goods are not moving at all. There is a constructive delivery of tool by you to customer outside India and you continue to hold the tool on his behalf. Tools would not be actually exported ever. Therefore on the day of the invoicing you are liable for VAT on the tool.
On the components now there is no tooling amortisation as already tool cost VAT paid.
Sir,
I am very much thankful to you for the reply and agree with your views.
I had gone through your various articles on excise and they are very useful for us. Last year I had even bought your book on excise "Central Excise Law and Procedure" and I use it as a reference book.
I would also like to know that whether excise duty on such tooling cost would attract or will be exempt as tools are used for manufacture of export goods.
Thanks and Regards,
S.S.Balande
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