sachin (Artical assistant) 27 December 2012

Input credit on full value product on captive consumption

I want to ask

S ltd. manufacturer two products product A and Product B, product A is in composition scheme with a liability of 2% and Product B is in normal scheme with liability of 12.36%.

produt A required raw material R with input credit of 12.36% which is not availed due to composition scheme and

product B required produt A as a raw material for captive consumption

i want to ask the exice liability of S ltd. on product B it can be

1) 12.36% (considering product A as captive consumption on which no duty paid and without input credit on raw material R)

2) 14.36% ( 12.36% on product B + 2% on composition scheme on product A)

3) 10.36% ( 12.36% - 12.36% input credit on raw material R)

4) any other option please suggest me the correct option along with notification/case/rules

THANKS in advance regards

sachin

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2 Replies

Rajeev Kumar Garg ( Self Consultancy of Excise Customs and Service Tax) 27 December 2012

Hello Mr. Sachin,

Duty is payble on final product at the time of clearance from factory not on captive consumption as per Notification no. 67/1995-C.E.; In your query, "A" is intermediate product for Product "B" and "B" is finally sold then duty will be charged and paid @ 12.36% without paying duty on "A" @ 2% and without availing the cenvat credit on "R". Because cenvat is resticted on "A" as per notification 1/2011-C.E. dtd. 01.03.2011 as amended by notification no. 16/2012-C.E. dtd. 17.03.2012.

Further, in my opinion, you should follow its other notification i.e. 2/2011-C.E. dtd. 01.03.2011 as amended by notification no. 19/2012-C.E. dtd. 17.03.2012 by which duty is applicable on the same product "A" is @ 6% with availing the facility of cenvat credit. Still, duty will be charged and paid on "B" is @ 12.36% and then cenvat can be taken on "R".

Thanks.

Rajeev Kumar Garg

(M.Com, L.L.B.)

Consultant (Excise, Customs & S. Tax), Agra.

Ph. No. 7500802402.

1 Like

sachin (Artical assistant) 31 December 2012

THANK YOU Mr Rajeev