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Procedure for free replacement within warranty period

CA Sanjay Baheti (PROPRIETOR) (1155 Points)

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.

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2 Replies

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 16 October 2012

he has to pay duty on such clearance,

however if the client send the goods for repair/rectification, then he is entitled to clear the same without payment of duty.

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Arun Kumar Singh (GST Advocate) (15203 Points)
Replied 22 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.