As per the provisions of Central Excise Valuation Rules, in case goods are captively consumed, the value of such goods shall be 110% of the cost of production irrespective of value charged to independent buyer.
Now, in case instead of valuing the goods at 110%, if those are valued at more than 110% (say around 150 to 200%) of cost of production then what will be consequences of such higher valuation. There is no intention of transferring CENVAT credit.
Valuation of Goods for Captive Consumption: Excise Duty Must Be 110% of Production Cost, Excess Not CENVAT Credit Eligible. A discussion on the valuation of goods for captive consumption under Central Excise Valuation Rules highlights that goods should be valued at 110% of the cost of production. A query was raised about the consequences of valuing goods at 150-200% of the cost. It was clarified that excise duty should be calculated at 110% of the cost, and any excess duty paid would not be eligible for CENVAT credit unless unjust enrichment is disproved. The discussion referenced amendments and judicial precedents, emphasizing that higher payments are revenue-neutral but not legally supported for credit. (AI Summary)
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