What is Captive Consumption:
Captive consumption means the consumption of goods manufactured by one division
and consumed by another division(s) of the same organisation or related
undertaking for manufacturing another product(s).
Liability of excise duty arises as soon as the goods covered
under excise duty are manufactured but excise duty is collected at the time of
removal or clearance from the place of manufacture even if such removal does
not amount to sale. Assessable value of goods used for captive consumption is
based on cost of production.
According to the Central Excise Valuation (Determination of
Price of Excisable Goods) Rules 2000, the assessable value of goods used for
captive consumption is 110% of cost of production of such goods, and as may be
prescribed by the Government from time to time.
COST OF PRODUCTION:
Cost of production shall consist of Material Consumed,
Direct Wages and Salaries, Direct Expenses, Works Overheads, Quality Control
Cost, Research and Development Cost, Packing cost, Administrative Overheads
relating to production.
To arrive at cost of production of goods dispatched for
captive consumption, adjustment for stock of work-in-process, finished goods,
recoveries for sales of scrap, wastage etc shall be made.
The cost sheet should be prepared in below given format or
as near thereto as possible.
Name of the Manufacturer:
Address of the Manufacturer:
Registration of No. of Manufacturer:
Description of Product captively consumed:
Excise Tariff Heading:
Statement of Cost of Production of _________________ manufactured/to
be manufactured during the period _________________ .
Qty
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Q1
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Quantity Produced (Unit of Measure)
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Q2
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Quantity Despatched (Unit of Measure)
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Particulars
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Total Cost
Rs.
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Cost/Unit
Rs.
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1
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Material Consumed
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2
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Direct Wages and Salaries
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3
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Direct Expenses
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4
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Works Overheads
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5
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Quality Control Cost
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6
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Research & Development Cost
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7
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Administrative Overheads (relating to production activity)
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8
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Total (1 to 7)
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9
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Add: Opening stock of Work-in-Progress
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10
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Less: Closing stock of Work-in-Progress
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11
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Total (8+9-10)
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12
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Less: Credit for Recoveries/scrap/By-Products/misc income.
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13
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Packing cost
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14
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Cost of production(11-12+13)
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15
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Add: Inputs received free of cost
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16
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Add: Amortised cost of Moulds, Tools, Dies &Patterns etc received
free of cost
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17
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Cost of Production for goods produced for captive consumption
(14+15+16)
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18
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Add: Opening stock of finished goods
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19
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Less: Closing stock of finished goods
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20
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Cost of production for goods dispatched (17+18-19)
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