Captive consuption to be shown in ER-1 Return filed through ACES system -reg

[vinay wakde]

We have issued some quantity of finished goods for captive consumption (re-cycle) within the factory purposes, as the quality of said goods is deteriorated and not marketable. How to show the quantity of captive consumption in ER-1 to be filed through ACES system. We have observed that these is no option in the format.

Regards,

VINAY

[KASTURI SETHI]

Sh.Wakde Ji,

Under Rule 12 of Central Excise Rules, 2002, ER-1 has been prescribed for production and removal of excisable goods from the factory. You have not removed the defective finished goods from the factory. Hence no column. However, there is Rule 12 BB against serial no. 4 but it does not cover your issue. Captive consumption is for intermediate product to be used in the manufacture of final product (dutiable). Here is not such situation. Rule 12 under which ER-1 return is filed has no mention of captive consumption notification no.67/95-CE and other notification amending 67/95-CE. Your books of accounts and other records including RG.1 (Finished Stock Register) are sufficient for accountal of goods used for captive consumption.

[Ganeshan Kalyani]

Sir, excise duty is on removal of goods from the factory premises. When the goods (now recycled) was not being removed at all then there is no removal happened and therefore no excise duty is applicable. Further after recycling the final product would attract excise duty on removal. Thanks.

[Ganeshan Kalyani]

Sir, I agree with Sri Kasturi Sir's reply. It enriched my knowledge. Thanks.

AI Summary

Excise duty applicability: internal recycling of defective finished goods is not a removal, duty arises only on subsequent removal. Under the Central Excise Rules, ER-1 reports production and removals; finished goods recycled and retained within factory premises are not treated as a removal and thus are not shown in ER-1. Captive consumption rules for intermediate inputs do not apply to internal recycling of finished goods. Proper books of account and finished stock registers suffice to account for internal recycling, while excise duty and reporting obligations arise only if the recycled output is subsequently removed.