Conversion of Stock in RG-1

[Pradeep Jain]

Dear Sir,

Finished goods ( main Product ) lying in RG-1 and ER-1 return but the same is not in a position to dispatch. Now we want to convert this goods in to other product ( components) and will dispatches on payment of Excise Duty.

Query is that:-

- Can the said goods converted in to other product as a Captive Consumption without payment of Excise Duty.

Regards

Pradeep

AI Summary

Captive consumption: conversion within factory avoids excise duty until physical removal, subject to intimation or permission.
Conversion of finished excisable goods within the factory for manufacture of components can be treated as captive consumption, so excise duty is not payable until physical removal of the resulting components. Invoice requirements under Rule 11 apply when duty is payable on removal; if no duty is payable for internal use an invoice is not required. Cost of production must be calculated under CAS-4. It is advisable to intimate or seek permission from the jurisdictional Range Officer and to record the transaction in the RG-1 folio and ER-1 return to avoid disputes.