Government of India
Ministry of Finance
Department of Revenue, New Delhi
Subject: Central Excise – Clearance of Intermediate goods for captive consumption for use in export goods, without payment of duty under Rule 13(1)(b)- Clarification regarding.
I am directed to draw your attention to new Rule 13(1)(a) of Central Excise Rules,1944 effected by Notification No. 40/94 dated 22.9.94. A doubt has been expressed whether erstwhile facility which was provided to the industry by the Board by clarification through letter F.No. 209/41/88-CX. 6 dated 6.3.89, (i.e. intermediate excisable goods manufactured in the factory could be used captivity without payment of duty for the production of goods exported under bond) would continue to be available or not.
2. In this connection, it has been reported that duty was not chargeable under erstwhile Rule 13 on the intermediate goods by virtue of clues (ii) of Explanation – II of the said rule. This Explanation provided that the term “goods” includes excisable goods used in the manufacture of goods which are exported. This clause is, however, not appearing in the new rule.
3. In has been further reported that even though all intermediate goods can be removed from the place of manufacture or storage for use (including those manufactured and used captivity) in the further manufacture of finished goods exported under bond, without payment of duty under Rule 13(1)(b) of Central Excise, Rules, 1944 read with Notification No. 47/94-CE dated 22.9.94, it is observed that all provisions of Chapter-X procedure, as envisaged in the above mentioned Notification, cannot be followed in cases where such intermediate goods are being captivity consumed.
4. The matter has been examined by the Board.
5. It is observed that rule 13(1)(b) of Central Excise Rules, 1944 is an omnibus provision to cover the situations where manufacture in – bond is to be carried out, and the intermediate goods used in the manufacture of export goods can be brought in such place of manufacture without payment of duty in terms of Notification No. 47/94-CE (NT) dated 22.9.94, as amended. Merely because certain provision of Chapter -X (viz. generation of CT3) cannot be followed in cases of intermediate goods which are being manufactured within the factory premises where the in-bond manufacture is taking place, the facility of clearance without payment of duty to such intermediate goods cannot be taken away.
6. In view of foregoing, it is clarified that intermediate goods are allowed to be cleared without payment of duty for captive use in the in-bond manufacture of export goods in terms of Notification No. 47/94-CE. ibid, even if CT3 is / has been not generated but other provisions of Chapter-X are/ have been substantially followed. However, the Commissioner may prescribe any conditions or make en enquiry, and deemed fit, to ensure that such intermediate goods are properly accounted for and revenue is safeguarded.