Fabrication of machinery for captive consumption

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

03 July 2012 We have fabricated a machinery for use inside the factory. My query:

1) what will be the valuation basis? will it be cost or should I declare 115% of cost?

2) What are the documents to be sumbitted to central excise for this purpose?

3) What will be the rate of duty?

pl clarify

RENGARAJ R.K

RENGARAJ R.K (Expert)
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04 July 2012 1) Is it made of new items or from the available scrap? The valuation is based on cost.

2) An intimation will have to be given to the Range superintendent about machinery fabrication and purpose and use of the machinery

3) The general rate under Chapter 84 for machinery is 12.36%

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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24 July 2024 Based on your query regarding the fabrication of machinery for captive consumption within your factory, here are the responses to your specific questions related to central excise:

1. **Valuation Basis**:
- The valuation basis for excise duty on goods manufactured for captive consumption is generally based on the "transaction value." According to Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, when goods are not sold but used for captive consumption, the value can be determined based on cost plus a certain percentage.
- In your case, you mentioned declaring 115% of cost. This can be an acceptable method if you maintain proper records and it reflects the true value of the goods. However, it's essential to ensure compliance with the specific rules and guidelines provided by the Central Excise authorities.

2. **Documents Required**:
- For central excise purposes, you would typically need to maintain records and submit documents such as:
- Manufacturing records showing the details of fabrication.
- Costing records indicating the cost of materials, labor, overheads, etc.
- Consumption records of inputs used in the fabrication process.
- Any other relevant documents specified by the excise department for verification.

3. **Rate of Duty**:
- The rate of excise duty applicable will depend on the classification of the machinery under the Central Excise Tariff Act, 1985. Machinery may attract different rates of duty based on its classification and whether any exemptions or concessions apply.
- As of the latest update, excise duty rates are not directly provided here due to their specific nature and changes over time. It's advisable to refer to the Central Excise Tariff Act or consult with a tax professional to determine the precise rate applicable to the machinery being fabricated.

**Additional Considerations**:
- Ensure compliance with all central excise rules and regulations regarding the manufacture and valuation of goods for captive consumption.
- Maintain accurate records and documentation to substantiate the valuation declared for excise purposes.
- Any changes in excise duty rates or regulations should be regularly monitored to ensure ongoing compliance.

For precise guidance tailored to your specific circumstances and the machinery being fabricated, it's recommended to consult with a qualified tax advisor or chartered accountant familiar with central excise laws and procedures. They can provide detailed advice and assistance in complying with excise duty requirements effectively.

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