EXCISE DUTY ON INTERMEDIATE GOODS

[SURYAKANT MITHBAVKAR]

We have Manufacturing the same products amongest the three different unit situated in different place in one organisation and all unit are registered under Excise. Can we transfer semi finished goods or raw material to other unit to manufacturing the same product without paying excise duty if yes what procedure we have to adopt.

[Snehal Kulkarni]

Captive Consumption means the consumption of goods manufactured within the same factory or transfer of goods to a sister unit or another factory of the same company/firm for further use in the manufacture of goods.

The goods internally consumed to manufacture the final product is termed as Intermediate Goods.

Please note :

·         If the Intermediate Goods are used to manufacture Final Product which is duty chargeable, then on the removal of the intermediate goods for internal use Duty is not payable to the Government.

·         If the Intermediate Goods are used to manufacture Final Product which is Exempted from Duty, then on the removal of the intermediate goods for internal use Duty is payable to the Government.

May please refer the NTF. NO. 67/1995-CE, Dated 16/03/1995

[SURYAKANT MITHBAVKAR]

Whether any premission to be required from Excise Authority to transfer Intermediate Goods to sister concern and what type of record to be maintained

[Snehal Kulkarni]

Obviously you have to take the permission from the Jurisdictional AC/DC.

In your case, you are suppose to clear the semi finished goods from one plant to another sister plant for JOBWORK and you are going to clear from Sister plants' premises.

You have to maintain the Job Work Register and seek the permission from Excise stating the Process Flow Chart.

This we think is not the captive consumption but the Jobwork. In Captive consumption, you are utilising the Semifinished product within the same process and same premises.

Hope the issue is clear.

[Satish Bansal]

Intermediate product arises in same factory  and consumed in manufacture of final product. Final product is exempted from duty by a notification. But final product is exported directly under drawback or Advance authorisation. Still duty on captive consumption  will be levied?/

AI Summary

Excise duty on intermediate goods: captive consumption vs job work determines whether duty applies.
Transfers of intermediate goods between units are treated as captive consumption when consumed within the same manufacturing process and premises, in which case removals used to produce a dutiable final product are not subject to excise; if the final product is exempt, duty is payable. Inter unit transfers constituting job work require permission from the jurisdictional AC/DC and maintenance of a Job Work Register and process flow chart. Reference: Notification No. 67/1995 CE.