On a similar issue, the Allahabad High Court has held that replacement of worn-out parts does not by itself bring in a new asset. In considering the nature of expenditure one should consider the productive unit as a whole, and not pick out parts therein which are new. If the productive unit to the assessee remains the same but a part of it which has become unsuitable for its use is replaced by something which makes it possible for the existing set-up to function efficiently, the cost incurred on such replacement would be revenue expenditure. [TS-5129-HC-1974 (Allahabad)-O].
I don’t think the problem is with the Rules of Origin. It is difficult to say how the competitor of your supplier is able to get CoO, whereas your supplier is unable to do so. Bring the matter to the attention of the Department of Revenue Intelligence. Visit its website (dri.nic.in) for more details.
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