Captive Consumption

Captive Consumption means the consumption of goods manufactured within the same factory or transfer of goods to a sister unit or another factory of the same company/firm for further use in the manufacture of goods.

The goods internally consumed to manufacture the final product is termed as Intermediate Goods.

Now you can account captive consumption transaction in Tally.ERP 9. To record captive consumption transaction a new Nature of Removal - Captive Consumption has been provided.

Duty payable on captive consumption :

• If the Intermediate Goods are used to manufacture Final Product which is duty chargeable, then on the removal of the intermediate goods for internal use Duty is not payable to the Government.

• If the Intermediate Goods are used to manufacture Final Product which is Exempted from Duty, then on the removal of the intermediate goods for internal use Duty is payable to the Government.

Invoice for Removal of Goods for captive consumption

As per Excise Rules even for Removal of intermediate goods from factory for Captive Consumption excise unit has to raise Rule 11 invoice in the name of the excise unit.

Case 1: Captive Consumption of Intermediate Goods to manufacturer Duty Chargeable Final Products

Example: On 6-9-2010, ABC company removed 1000 liters of water -  AquaSure – 1 Ltr for using in the production of Final Products.

 To record the above transaction

Go to Gateway of Tally > Accounting Vouchers > F8: Sales

1. In Voucher Type sub form select Excise – Sales as the voucher type.

2. Ensure that the Sales Voucher is in Item Invoice Mode.

3. Enter the Date as 6-9-2010

4. Skip Ref field

5. In Excise Unit field Tally.ERP 9 displays ABC Company as selected during voucher type creation.

6. Excise Book Name field displays the name of the excise invoice book (ABC/Rule11/Book1/08-09) created for the Excise Unit.

7. Serial No. field displays the Rule 11 invoice Number e.g. ABC/1004

8. In Party A/c Name field select ABC company from the List of Ledger Accounts. (Use Alt+C to create the ledger in the Name of the Excise Unit)

9. In Party Details sub form accept the other default details.

10. In Nature of Removal field select Captive Consumption form Type of Removal list

11. In Notification Number field enter the notification under which the goods are exported. If the Notification number is already specified while creating the party ledger application will capture the details from party ledger.

12. In Notification Serial Number field enter the serial number of the notification if any.

13. In Sales Ledger field select Sales - Captive Consumption (Use Alt + C create the ledger. Set Used for VAT Returns NO)

14. In Name of Item field select AquaSure – 1 Ltr from the List of Stock Items

15. In Quantity field specify the quantity as 1000

16. Rate is not specified as the goods are removed for captive consumption.

The completed Captive Consumption invoice appears as shown

Note: To record a Zero valued entry enable Allow Zero valued entries to Yes in F11: Features (Accounting Features).

Rule 11 Invoice of Captive Consumption appears as shown below

Case 2: Captive Consumption of Intermediate Goods to manufacturer Final Products Exempted from Duty

Example: On 8-9-2010, ABC company removed 2000 liters of water -  AquaSure – 1 Ltr for using in the production of Final Products.

 To record the above transaction

Go to Gateway of Tally > Accounting Vouchers > F8: Sales

1. In Voucher Type sub form select Excise – Sales as the voucher type.

2. Ensure that the Sales Voucher is in Item Invoice Mode.

3. Enter the Date as 8-9-2010

4. Skip Ref field

5. In Excise Unit field Tally.ERP 9 displays ABC Company as selected during voucher type creation.

6. Excise Book Name field displays the name of the excise invoice book (ABC/Rule11/Book1/08-09) created for the Excise Unit.

7. Serial No. field displays the Rule 11 invoice Number e.g. ABC/1005

8. In Party A/c Name field select ABC company from the List of Ledger Accounts.

9. In Party Details sub form accept the other default details.

10. In Party Details sub form, in Sl. No. in PLA/RG 23 field enter the PLA Entry number - 587 and accept the other default details.

11. In Nature of Removal field select Captive Consumption form Type of Removal list

12. In Notification Number field enter the notification under which the goods are exported. If the Notification number is already specified while creating the party ledger application will capture the details from party ledger.

13. In Notification Serial Number field enter the serial number of the notification if any.

14. In Sales Ledger field select Sales - Captive Consumption

15. In Name of Item field select AquaSure – 1 Ltr from the List of Stock Items

16. In Quantity field specify the quantity as 2000

17. In Rate field enter Rs 20. Amount will be calculated and displayed automatically.

11. Select Basic Excise Duty @ 16% ledger and press enter to view Excise Duty Allocation screen

12. In the Excise Duty Allocation screen accept the default details as ABC company is paying the duty on the transaction assessable Value. If the assessable Value or Rate of duty is different then specify the same in Excise Duty Allocation screen

13. Similarly select Education Cess and Secondary Education Cess Ledger. Accept the default Excise Duty Allocations.

The completed Captive Consumption invoice appears as shown

14. Press Enter to save.