Scrap used for captive consumption - excise duty?

Excise notification 67/95 not applicable on same.

you have to pay duty on the same as scrap is not intermediate good

I respectfully disagree with CA Ankur Sir.  In Khandelwal Metal & Engineering Works V/s UOI , The apex court held that process waste & scrap was a commercially distinct & indentifiable product which has commercial value. It is chargeable to duty provided it is covered in tariff schedule

Intermediate product itself is one which is complete, identifiable & capable of being sold in the market coming in to existence during the mfg process at intermediate stage.

So i believe you can take the benefit of notification 67/95 dated 16.03.95.

Please correct me if i am wrong on this technicality

1st of all you have to understand what is scrap, scrap is the bye product, which can not be further processed in the factory of manufacture, and is liable to be sold after paying duty on transaction value, or to be destryed under duty remission.

as per you, the scrap is getting used captively, then how you can prove that it is scrap? as scrap means not to be used further............................and if it is to be used further then you have to pay duty on 110% of value of inputs contained in the intermediate goods :)

now coming next, you told "scrap used for construction of an asset", in plain words i am doubtful that such asset is not covered by CCR 2004 under capital goods, as i assume that such scrap is used under basement of any building or piller, not in capital machinery or plant, and goods used in errection or commissioning / building and shed is not to be confirmed as capital goods.

now coming to consequences ............say you have been able to make a graph and claimed the captive consumption, which is doubtful to be allowed under audit, and will get reversed or not is later question.

BUT, you will be barred to declare the value of scrap generated in future at lower price , and it will be fixed @ 110% of input value as you have already shown in your records. so your scraps will be sold at higher price than inputs :) or in plain language, you have to pay duty on 110% of input value at the time of clearance of scrap .

choice is yours 

Hi, dina.vanan,

Please follow U.S.SHARMA ji inputs,

he explained clearely.

Thanks SHRAMA JI.

Hi, dina.vanan,

Please follow U.S.SHARMA ji inputs,

he explained clearely.

Thanks SHRAMA JI.

Hello,

You will have liability of Excise duty on the same as it's coming within the category of consumption & it's again being reused for construction asset so liablity will arise & even there will be liability of Sales Tax also.

Thanks & regards

Amber Jain

Any input or capital goods if consued captively with in the factory of production is not liable for Excise duty,provided the final product is dutiable and duty is paid.[Notification No.67/95-C.E dated 16.3.1995]

thanks to all