16 October 2012
My client being a Proprietorship Concern engaged in Manufacturing Activities & also covered under Excise.He is manufacturing Machine Items like Hydraulic Pressing Machine & its Parts. Generally My client given 1 Year Warranty for replacement of machine parts at free of cost after dispatch of Goods if any defects found or damaged.As the Machine Item is excisable therefore how to dispatch such item within warranty period i.e. what's the procedure for sending free replacement of Machine part to the Customer at free of cost. Please reply urgently.
16 October 2012
Maybe better to receive the damaged part and sent back after availing credit and sending again on payment of duty. The returned part maybe remanufactured and resent on payment of duty.
16 October 2012
Sir,Thanks for Reply. Still my confusion is whether my client supposed to issue excise invoice with certain value along with Excise duty at the time of dispatch of free replacement of the part after reconditioning or re-manufacturing. But the customer is not ready to pay any amount so far the terms of Purchase order i.e. free repacement of Machine Item within warranty period at free of cost.Moreover how to square the account in our Books so far such Excise invoice is concerned. Please clarify the matter.
21 October 2012
Duty will be payable on parts supply as replacement. if some spare parts are supplied as free replacements for defective parts, excise duty is payable on such sparing pars. however, excise duty is not payable on labour cost involved in replacement of parts during warranty period. If you have to replace the machine then duty will be payable on the assassable value of the free replacement machine and take the cenvat credit on return goods.
CAclubindia
