Exclusion from levying excise duty

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

27 May 2013 Dear Experts,

we have manufactured dies and tools as per the customer requirement. Now we want to recover the cost chaging excise and vat. but customer is telling that as per the notification no- 67/1995 of central excise, 16-3-1995 if the tools are lying with you and use for manufacturing dutiable goods, duty can not be charged. [Pls note that the cost of dies & tools not included in the basic price of manufactured goods].
As per our generic pratice we are not sending the tools physically to the customer and keeping it under 57F4. pls help to act lawfully & correctly.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
Follow

13 July 2013 Central Excise Updates
Important Notification:
Notification 6/2009-CE: Amends Notification No .64/95-CE dated 16.4.95 (which
exempts goods supplied for defence and other specified purposes from whole of
duty of excise and additional duty thereon) to provide exemption to machinery,
equipment, instruments, components, spares, jigs, fixtures, dies, tools, accessories,
computer software, raw materials and consumables required for Program AD of
Ministry of Defence if supplied to the program AD of the ministry of Defence and a
certificate from the member secretary is obtained prior to the clearance of the
goods Program Management Board, Program AD or Program Director AD, Defence
Research and Development Laboratory, Hyderabad , to the effect that such goods
are intended for the said Program AD, and is produced to the proper officer.
Important Case Laws:
1. M/s EID Parry India Ltd Vs Commissioner Of Central Excise , Thrichy:
2009-TIOL-711-CESTAT-MAD
Facts: Cenvat Credit was taken on turbine, boiler, Electrostatic precipitator, water
treatment plant and equipments used to set up captive power plant in sugar factory
of appellants. The plant generated electricity, which was used to manufacture
sugar, which is a dutiable final product.
Issues: Credit had been denied on the ground that captive power plant is
immovable property and therefore not taxable.
Decision: The appeal allowed. Credit available.

Querist : Anonymous

Querist : Anonymous (Querist)

14 July 2013 Dear Sir,
Thanks for the reply. but My question is about charging excise duty on transfer of ownership. we are not physical removing the dies & tools [Chapter head: 8207/3/2/1]. only recovering cost of the dies & Tools. The dies and tools were manufactured in the factory and will be used to manufacture excisable goods for the customer. is excise applicable?
if not, then under which rule / excise norms?
Pls. help..

Upgrade to CAclubindia Pro. Subscribe Now!

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
Follow

21 July 2024 Based on your description, it appears that you are transferring ownership of dies and tools (Chapter heading: 8207/3/2/1) that were manufactured in your factory. These dies and tools are not physically removed but are being sold to recover the cost incurred in their production. Here’s a clarification regarding the applicability of excise duty in such a scenario:

### Applicability of Excise Duty

Excise duty is typically levied on the manufacture of goods in India under the Central Excise Act, 1944. The key point to determine whether excise duty applies in your case revolves around whether the transfer of dies and tools constitutes a "manufacture" under the excise laws.

According to the Central Excise Act, "manufacture" includes any process:

1. **Incident of Ownership**: If the transfer of ownership of dies and tools is considered part of the manufacturing process of excisable goods, then excise duty may be applicable. This determination hinges on whether the dies and tools are considered essential and integral to the production of excisable goods.

2. **Nature of Transfer**: Since you mentioned that the dies and tools are not physically removed but are being transferred along with the recovery of costs, the nature and purpose of this transfer would need to be assessed:
- If the transfer is integral to the production process and forms part of the overall manufacture of excisable goods, excise duty could potentially be applicable.
- On the other hand, if the transfer is seen as merely a recovery of costs for dies and tools that are not integral to the manufacturing process of excisable goods, excise duty may not apply.

### Rules and Excise Norms

Specific rules and norms governing the applicability of excise duty in such cases are detailed under the Central Excise Act, 1944 and relevant notifications or circulars issued by the Central Board of Indirect Taxes and Customs (CBIC). These would provide specific guidelines on what constitutes excisable goods and the circumstances under which excise duty is leviable.

### Conclusion

To determine the exact applicability of excise duty on the transfer of dies and tools in your case, it is recommended to:
- Consult with a qualified excise consultant or tax advisor who can analyze the specific details of your situation.
- Review relevant provisions under the Central Excise Act and any applicable notifications or circulars.
- Ensure compliance with excise laws based on the nature and purpose of the transfer of ownership of dies and tools.

This approach will help clarify whether excise duty needs to be charged on the transfer of ownership of dies and tools under your specific circumstances.