13 October 2009
Where any unit is producing excisable intermediate product all of which is being used (Captively Consumed) in manufacture of excisable finished goods within the same factory, what will be treatment of intermediate product for excise purpose? Will the assessee be required to maintain captive consumption invoices? Also tell if benefit of notification no. 67/95 will be available to assessee or not? If available then intermediate products are exempt then also will the assessee be required to issue invoices for material captively consumed(which is exempted as per notification)?
13 October 2009
Thanks. Please also clarify whether Invoice also have to be issued for each lot of intermediate material issued for captive consumption.
18 July 2024
In the context of excise duty and captive consumption of intermediate products used within the same factory, here are the clarifications:
### Treatment of Intermediate Products for Excise Purpose
1. **Captive Consumption and Excise Duty:** - When an intermediate product is manufactured and captively consumed within the same factory for the production of excisable finished goods, it is typically exempt from excise duty under the principle of captively consumed goods. - Captive consumption refers to the use of goods manufactured or produced within the premises of a factory for any purpose other than for sale.
2. **Maintenance of Captive Consumption Records:** - While the intermediate product used captively may be exempt from excise duty, it is generally required to maintain records of such captive consumption within the factory. - These records ensure compliance and may include details such as quantities produced, quantities consumed captively, and any other relevant information necessary for audit or verification purposes.
3. **Invoicing Requirements for Captive Consumption:** - Invoices are typically not required for materials captively consumed, especially when they are exempt from excise duty. - However, internal documentation or records indicating the movement of goods from production to consumption within the factory premises should be maintained.
4. **Notification No. 67/95 Benefit:** - Notification No. 67/95-Central Excise, dated 16th March 1995, provides exemptions under certain conditions. - If intermediate products are exempted under this notification, the assessee may not need to pay excise duty on these goods. - Even if exempted, maintaining records of captive consumption is advisable for compliance and internal control purposes.
### Specific Clarifications:
- **Issuance of Invoices for Captive Consumption:** Invoices are generally not required for goods captively consumed within the factory, especially when they are exempt from excise duty. However, internal documentation and records are necessary to track the movement and usage of goods.
- **Lot-wise Invoicing:** There is no requirement to issue invoices for each lot of intermediate material used for captive consumption within the same factory. Internal records sufficing for captive consumption purposes are typically adequate.
### Conclusion:
For excise purposes, when intermediate products are produced and used captively within the same factory: - Ensure compliance with maintaining records of captive consumption. - If exempt under Notification No. 67/95, excise duty may not apply, but documentation of captive consumption remains essential. - Invoices are not mandatory for captively consumed goods unless specified otherwise by specific regulations or notifications.
It is recommended to consult with a tax expert or chartered accountant familiar with excise laws and notifications to ensure proper compliance and understanding of specific requirements applicable to your manufacturing unit.
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