Activity of designing and development of tools as per specification indicated by recipient of supply and getting same manufactured from third parties for eventual supply to overseas customers amounts to supply of goods and not composite supply

[Rajeev Jain]

Whether activity of design and development of patterns/tools used for manufacturing camshaft for overseas customer amounts to composite supply

APPELLATE AUTHORITY FOR ADVANCE RULINGS, MAHARASHTRA held in the case of IN RE: M/S. PRECISION CAMSHAFTS LIMITED - 2023 (1) TMI 1093 - APPELLATE AUTHORITY FOR ADVANCE RULING, MAHARASHTRA that:

• As per purchase order, overseas customer intended to receive manufactured pattern/tools as per their specification from appellant
• Appellant undertook in-house drawing, design, modelling, simulation and documentation for manufacture of tools and had hired third party for manufacturing said tools
• Third party had delivered tools and had raised invoice on applicant for such manufacturing
• Appellant had raised another invoice on overseas client indicating description of goods (tools) with quantity and rate
• Tools supplied to such customers are supplied on own account
• Appellant had not facilitated supply between overseas customer and third party vendor in order to treat transactions as intermediary
• Although tools were not exported to customers and have been retained by appellant for manufacturing camshaft, ownership over such tools was transferred to customers
• Such transaction amounts to supply of goods and not composite supply
• Advance ruling is modified. 

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