Valuation of goods.
This query is : Resolved
02 July 2015
Respected Experts.
My Doubt.
I manufacture a Wooden House. My house will consist of both immovable items and movable items like furnitures. Movable items are Excisable goods and hence Excise is to be paid. On immovable goods, my doubt is as under :
1. If i manufacutre ceiling, flooring, sidewalls etc. in my factory seperately and install the same in my site where it becomes an immovable item, should i pay excise duty to in my factory?
2. Am manufacturing the wooden houses only for my project. Should i go by normal valuation or should i assume i manufacture these goods for captive consumption?
My Doubt.
I manufacture a Wooden House. My house will consist of both immovable items and movable items like furnitures. Movable items are Excisable goods and hence Excise is to be paid. On immovable goods, my doubt is as under :
1. If i manufacutre ceiling, flooring, sidewalls etc. in my factory seperately and install the same in my site where it becomes an immovable item, should i pay excise duty to in my factory?
2. Am manufacturing the wooden houses only for my project. Should i go by normal valuation or should i assume i manufacture these goods for captive consumption?
03 July 2015
The cenvat credit will not be available on any goods used for construction or execution of works contract of a building or a civil structure or a past thereof; or (b) laying of foundation or making of structures for support of capital goods.
03 July 2015
Sir,
My clarification is not in relation to cenvat credit.
I just want to clarify how to value the goods i manufacture? should i adopt captive consumption principles since i use the wooden houses i manufacture in my factory at my project site.
My clarification is not in relation to cenvat credit.
I just want to clarify how to value the goods i manufacture? should i adopt captive consumption principles since i use the wooden houses i manufacture in my factory at my project site.
03 July 2015
For the purpose of valuation of goods the value of the goods will be inputs, processing charges and profit will be inclue in the transaction value. The cost of house is your capital of the business.
02 August 2025
Great question! Here's the clear-cut approach for **valuation of goods** when you manufacture wooden houses comprising excisable movable items and immovable items (like ceiling, flooring, walls installed on-site):
---
### 1. **Excise Duty on Movable vs Immovable Goods**
* **Movable goods** (like furniture, wooden panels made in factory) are excisable and duty applies at factory level.
* **Immovable goods** (once installed on-site, like ceiling, flooring fixed to structure) generally do **not attract excise duty** because excise duty applies only to movable goods.
So, if you manufacture components in factory which become immovable after installation, excise is generally payable **only on the goods at factory stage** before installation.
---
### 2. **Valuation of Manufactured Goods**
* **If goods are manufactured and sold to an unrelated party:** normal valuation rules apply — transaction value (price at which goods are sold), or valuation rules under Central Excise (including cost of inputs, processing charges, profit, etc).
* **If goods are manufactured for captive consumption** (i.e., you manufacture goods and use them within your own project, like installing in your own building or project):
* The valuation is done on **notional basis** — you need to assess **transaction value as if you had sold the goods to a third party**.
* This is to ensure excise duty is paid on the "value" of goods consumed internally.
* The value would include cost of inputs, labor, and profit element as applicable.
---
### 3. **Should You Use Captive Consumption Valuation?**
**Yes.** Since you are using the wooden houses or components in your own project (captive consumption), you should value them as if sold to an unrelated party, and pay excise duty accordingly.
---
### Summary:
| Situation | Excise Duty Applicability | Valuation Method |
| -------------------------------------------------------- | ----------------------------------------- | -------------------------------------------------------------------------------------------- |
| Movable goods manufactured & sold | Duty applicable at factory | Normal transaction value or rule-based valuation |
| Goods manufactured for own project (captive consumption) | Duty applicable on goods at factory stage | Valued at transaction value as if sold to unrelated party (includes inputs + labor + profit) |
| Goods converted to immovable at site | No excise duty on immovable goods | Not applicable |
---
If you want, I can help you draft a valuation method or do more research on relevant case laws and notifications on this point.
Does this help? Would you like references to excise circulars or case laws on captive consumption?
---
### 1. **Excise Duty on Movable vs Immovable Goods**
* **Movable goods** (like furniture, wooden panels made in factory) are excisable and duty applies at factory level.
* **Immovable goods** (once installed on-site, like ceiling, flooring fixed to structure) generally do **not attract excise duty** because excise duty applies only to movable goods.
So, if you manufacture components in factory which become immovable after installation, excise is generally payable **only on the goods at factory stage** before installation.
---
### 2. **Valuation of Manufactured Goods**
* **If goods are manufactured and sold to an unrelated party:** normal valuation rules apply — transaction value (price at which goods are sold), or valuation rules under Central Excise (including cost of inputs, processing charges, profit, etc).
* **If goods are manufactured for captive consumption** (i.e., you manufacture goods and use them within your own project, like installing in your own building or project):
* The valuation is done on **notional basis** — you need to assess **transaction value as if you had sold the goods to a third party**.
* This is to ensure excise duty is paid on the "value" of goods consumed internally.
* The value would include cost of inputs, labor, and profit element as applicable.
---
### 3. **Should You Use Captive Consumption Valuation?**
**Yes.** Since you are using the wooden houses or components in your own project (captive consumption), you should value them as if sold to an unrelated party, and pay excise duty accordingly.
---
### Summary:
| Situation | Excise Duty Applicability | Valuation Method |
| -------------------------------------------------------- | ----------------------------------------- | -------------------------------------------------------------------------------------------- |
| Movable goods manufactured & sold | Duty applicable at factory | Normal transaction value or rule-based valuation |
| Goods manufactured for own project (captive consumption) | Duty applicable on goods at factory stage | Valued at transaction value as if sold to unrelated party (includes inputs + labor + profit) |
| Goods converted to immovable at site | No excise duty on immovable goods | Not applicable |
---
If you want, I can help you draft a valuation method or do more research on relevant case laws and notifications on this point.
Does this help? Would you like references to excise circulars or case laws on captive consumption?
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