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Clarification regarding central excise clearance of intermediate goods
for captive consumption for use in export goods without payment of duty under
Rule 13 (1) (b)
Circular
No. 229
dated 8th July 1996
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.
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