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Accounting for captive consumption

anita (trainee) (514 Points)

28 October 2014

hello,

I am mfring a product "x" which will be used captively in the manfucture of another product "y"(mfred by me) , the final product "y" is taxable hence I believe I don't have to pay any duty on the mfr of "X", but how should I account for the mfr. of x in my records.

As per my understanding I will be adding the details (qty etc of "x") in the er1 and er6 returns only.

Is there any thing that I am missing on.

please guide

thanks in advance

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2 Replies

Kishor Bhat (CA final CS executive (from Bangalore)) (1881 Points)
Replied 28 October 2014

For the purpose of excise duty, Valuation of captively consumed goods has to be made by Rule 8 of central excise valuation rules, 2000. Further, there is a rule for availing cenvat credit etc. Read rule 8. U wl come to knw. If u dint get then wil try to send it by mail.

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Kishor Bhat (CA final CS executive (from Bangalore)) (1881 Points)
Replied 28 October 2014

While ascertaining the value of captive goods..say u used raw material(direct material) 'Z' which was used in manufacturing captive goods.Then whether we have to consider portion of excise duty on raw material 'Z' , which is further depends on whether cenvat credit taken on inputs(raw material) . Accordingly, we have to account cenvat credit on raw material portion. One more important thing is..after applying rule 8 i.e as per this rule..assessable value is 110% of the cost of production. So, some other accounting of cenvat credit aspects comes when captively consumed goods is a capital goods. If u r interest to knw, send u the details by mail. Max i can say 3 pgs content.