Requirement of Excise Invoice for Captive Consumption

[Ashish Bansal]

Dear Experts,

Please, suggest whether goods used as captive consumption require any excise invoice or we can consume it without raising any excise invoice ?

Regards

Ashish

[Rajagopalan Ranganathan]

Sir

Proviso to rule 52 A (2) of Central Excise Rules, 1944 provided that in case of captive consumption within factory in a continuous process, manufacturer may make a single invoice at the end of the factory day. However Central Excise Rules, 1944 was replaced by Central Excise rules, 2002 which came into force on 1.3.2002. rule 11 of 2002 rules is corresponding to rule 52 A of 1944 Rules. The above mentioned provision of issuing invoice is not found in rule 11 of 2002 Rules. Therefore if the duty payable on captively consumed goods are nil no invoice need be issued by the manufacturer.

[YAGAY andSUN]

Perfect reply.

[KASTURI SETHI]

I concur with views of both experts. Rule 5 and Rule 11 of Central Excise Rules,2002 are silent regarding issuance of invoice. Rule 5 (2) Explanation only talks of the date of removal and not about invoice.It means manufacturer's own record /document would suffice for accountal of goods to be used captively.

[Mahir S]

Yes Sir, I also agree to the above views based on rule 11 of CER, 2002.

Further, I also take this opportunity to add on the above issue and to further clarify the matter, as submitted below in my separate reply.

[Mahir S]

Ashish Ji,

(i) Under the provisions of Central Excise, mere movement of goods within the factory premises would be treated as Captive Consumption.

(ii) If you are using the intermediate manufactured goods into the manufacturing of different articles, you need to check that whether the final product is liable to excise duty?

(ii a ) If the answer is Yes, no need to pay any duty of excise as the same is exempt. However, you need to keep an account on daily basis for such goods manufactured in the factory and further issued for captive consumption, either in the form of register/book/challans/invoices.

(ii b ) If the answer is No, you need to calculate the value as cost + 10 % and pay excise duty on the value thus arrived at; by raising Excise Invoice.

[Mahir S]

Sir,

W.r.t. point (ii b ) above, you may further refer to Rule 8 of valuation rules read with Board Circular no. Circular No. 975/09/2013 - CX dated 25.11.2013.

[Ashish Bansal]

Thanks to all of you experts for your valuable replies and resolving the issue in such a short time.

[KASTURI SETHI]

Sh.Mahir S.,

Thanks for additional information on the issue. Every information has its value. Hence it is natural that such all-round replies will further boost every questioner's belief in Experts and, in turn, towards Discussion Forum of TMI.

[Mahir S]

Yes Kasturi Sir ji , surely agree with your above view point.

[Prabin Swain]

Dear Mahir Ji,

your opinion (iia),

Whether anywhere it is mentioned in Rule/Act/Notification/Circular/Instruction that internal records is sufficient. if yes please guide for that reference

Regards

Prabin

AI Summary

Excise invoice requirement: no invoice needed for captive consumption when duty liability is nil; keep internal records. Captive consumption within a factory does not require issuance of an excise invoice where excise duty on the captively consumed goods is nil; the Central Excise Rules, 2002 are silent on an end-of-day invoice provision previously found in earlier rules, so manufacturers may rely on internal records for accountal. If captive use gives rise to duty, valuation rules apply and an excise invoice must be raised.