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CAPTIVE CONSUMPTION

Ramkrishna (Accountant) (325 Points)

10 May 2007

WHAT IF CAPTIVE CONSUMPTION IS OF FINISHED GOODS FOR MFR. PROCESS OR FOR BURN AS FUEL WITHIN THE SAME UNIT . PLZ SUGGEST ON BOTH THE CASES.

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13 Replies

The One (379 Points)
Replied 10 May 2007

The One Says:

Suggest what? Is the CAPS lock key stuck on your keyboard?

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CA Vishwanath SR (ACA - Practice) (85 Points)
Replied 10 May 2007

Hi Rams,

Please be clear about your question..................

Rajesh Bajaj (433 Points)
Replied 10 May 2007

[b]Captive Consumption means[/b] uses the goods himself (e.g. machinery for own use or raw material for further manufacture) and does not sell to another person,

[b]Q [/b] How will valuation be done in cases of captive consumption (i.e consumed within the same factory) including transfer to a sister unit or another factory of the same company/firm for further use in the manufacture of goods?

[b]Ans[/b] For captive consumption in one’s own factory, valuation would be done as per rule 8 of the Valuation Rules i.e. the assessable value will be 115% of the "cost of production" of the goods.
If the same goods are partly sold by the assessee and partly consumed captively, the goods sold would be assessed on the basis of "transaction value" [provided they meet the conditions of sec.4(1)(a)] and the goods captively consumed would be valued as per Rule 8 of the Valuation Rules. This is because, as per new section 4, transaction value has to be determined for each removal.
Where goods are transferred to a sister unit or another unit of the same company valuation will be done as per the proviso to rule 9.

With Regard

Rajesh

Ramkrishna (Accountant) (325 Points)
Replied 10 May 2007

sorry dear The one

As i want to know the excise treatment of captive consumptions of any final product, which is either burn as FUEl or for making another product by blending to another product of the company ( remember- captive consumption is not of intermediate product) . Should i have to do the valuation of that material in both the cases and raise a invocie /seperate invoice & reverse the duty or duty valued be paid in PLA.

plz.

Sumit (CA Practice ) (675 Points)
Replied 10 May 2007

check out the latest judgement of supreme court in this issue at www.pdicai.org

bye

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Ashish Sharma (Chartered Accountant) (57 Points)
Replied 10 May 2007

Plz see that captive consumption is exempt vide some notification of Excise department.. so there is no need to pay any duty....

(I Would check for notification no. & revert)

Thanks & Regards,

Ashish

(Guest)

Our co is manufacturing unit. In 2004-05 it make body of trolla which is used in transportation .Transporat Segement is also part of our company . Now i want to know that it is chargeable for excise duty in 2004-05 if yes give the notification no.

S.P.Mahanta (Internal Auditor) (647 Points)
Replied 29 December 2008

Excise duty is duty on Production irrespective of finished products are removed for sale/ despatch/ remain in stock or are used for captive consumption.

Rajesh Kumar (Advocate- Tax) (7806 Points)
Replied 07 January 2009

Captive consumption is always of intermediate product made by a unit. If it made by another unit, and you are buying it- it is a raw material used in your unit.

Problem of Captive Consumption in excise:

Central Excise is on manufacture. Whenever you manufacture anything, duty liability arises, it is immaterial whether you sell it on not. Sometime it happens that what you manufacture, you dont sell it and you use it captively in your unit for some purpose. Say, Maruti is making Cars- maruti will be using some car for own use. Such cars will not be sold. However, central excise duty will be paid on such car as the cars are manufactured and duty liability arises.

Sometimes such intermediate product are used captively for further manufacture on which central excise duty is paid. In such cases, the intermediate products used in further manufacture is exempted from payment of central excise vide Notification 67/95.

However, if

-If intermediate procudt are used captively, but not in manufacturing process, like maruti example

-intermediate product is used in manufacture process, manufacturing exempted goods

the notification 67/95 does not apply, and duty is to be paid on intermediate product manufactured.

BRIJ LAL AGARWAL (CEO) (24 Points)
Replied 16 September 2009

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BRIJ LAL AGARWAL (CEO) (24 Points)
Replied 16 September 2009

We are manufacturer of Hose Assembly. Manufacturing process envolved 1) Rubber Hose(Bought out item) 2) End Fittings are produced in Hose. 3) Rubber Hose is cut to size and end fittings are fixed with Hose which produces Final product Hose Assembly. End fittings are also sold by charging E.D. Dept says it is a captive consumptiuon. Please clarify .