Circular No. 229/63/96-CX dated 8/7/96
Sub: Central Excise -Clearance of Intermediate goods for captive consumption
for use in export goods, without payment of duty under Rule 13(l)(b) -
Clarification
I am directed to draw your attention to new Rule 13(l)(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. 20.9/41/88-CX. 6 dated 6.3.89, (i.e.
intermediate excisable goods manufactured in the factory could be used cap-tively
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 clause (ii) of Explanation-11
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. It 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 captively) in the further manufacture of finished goods exported under bond,
without payment of duty under Rule 13(l)(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 captively 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 lo be cari"ivd 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 provisions 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, tile Commissioner may prescribe any conditions or make an enquiry, as deemed
fit, to ensure that such intermediate goods are properly accounted for and revenue is
safeguarded.
Sd/-
(P.K. Sinha)
Under Secretary (CX.6)
F. No. 209/14/96-CX.6Presented by eximkey.com