Excise Duty not paid on Captive/Internal Consumption

[rajendra rohit]

The company has been engaged in the manufacturing of dutiable goods & exempted goods, dutiable goods are internally consumed for manufacturing of exempted goods.

At present we are availing of Cenvat credit on inputs of dutiable goods and utilised the same on removal of dutiable goods on following transaction;

1. Domestic Sales
2. Sample / Demo Sales
3. Captive Consumption
4. Control Sample etc...

Now, we want to know that, If we are not availing of Cenvat credit on inputs of dutiable goods and no duty has been paid on removal of goods on below such transaction;

1. Sample / Demo Sales
2. Captive Consumption
3. Control Sample etc...
4. Will pay the duty on Domestic Sales or Export Sales (if Export without Bond)

What the procedure for below mentioned transaction is? Please suggest.

[YAGAY andSUN]

Dear Rajendra

On Sample/Demo Sales, Control Sample and Domestic Sales you are under Statutory Obligation to pay the Central Excise Duty. On captive consumption no need to pay the duty until unless such goods are removed out of factory on an Invoice. On exports you need to pay duty if export of without Bond or UT-1 Declaration but on such duty amount you can claim rebate.

Regards,

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

[Suryanarayana Sathineni]

Dear Rohit,

In addition to the clarification given by our learned friends, I want to add the below :

1. Availing or not availing Cenvat credit is nothing to do with payment of duty on dutiable products manufactured.

2. For availing exemption (captive consumption) under Notification 67/95-CE, the final product in which your so called dutiable product meant for use should be dutiable. If the final product is exempted, then you have to necessarily pay duty on your so called dutiable products.

3, It is not clear about your logic of not to avail credit and to pay duty on Domestic sales or export clearances without LUT. However, if you have already taken such a call , you have no option to pay duty on these two specific clearances from PLA

Best Regards

Surya

[KASTURI SETHI]

Sh.Surya Narayana Ji I agree with all the three views.

AI Summary

Excise duty on captive consumption: not payable unless removed; samples and domestic sales attract duty; exports may require duty. Excise duty is payable on sample/demo sales, control samples and domestic sales regardless of Cenvat credit status; captive consumption is duty free only while goods remain in factory and are not invoiced or removed. Exports without bond or LUT attract duty at clearance but duty paid may be claimed as rebate. The exemption for captive consumption operates only if the final product is dutiable; if the final product is exempt, duty must be paid on the intermediate product. Payment for clearances made without export documentation must be effected from PLA.