Certification of Cost of Production for Captive consumption (CAS-4)

Certification of Cost of Production for Captive consumption (CAS-4)

     Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000,

Where the excisable goods are not sold by the assessee but are used for consumption by him or on his behalf in the production or manufacture of other articles, the value shall be one hundred and ten per cent of the cost of production or manufacture of such goods.

Now how to calculate this cost of production ? And what is the period?

The Institute of Cost Accountants of India [ICAI] had developed the Cost Accounting Standards, CAS-4 for determining the Cost of Production.

The CBEC in CIRCULAR NO. 692/08/2003-CX, Dated: 13th February, 2003, had clarified that cost of production of captively consumed goods will henceforth be done strictly in accordance with CAS-4.

Type of Organizations and Type of Goods Covered under CAS-4 :

CAS-4 applies to following type of organizations registered with Excise Department if goods manufactured are for captive consumption:

  • Proprietorship
  • Partnership Firm
  • Cooperative Societies
  • Private/Public Limited Companies

SSI units registered with Excise Department are exempt from payment of excise duty as per registration conditions.

Type of GoodS:

  • Following type of goods are covered under CAS-4:
  • Goods manufactured not sold but captively consumed
  • Goods manufactured partly sold and partly captively consumed
  • Goods manufactured sold to related party for captive consumption


 The responsibility of preparation of cost sheet is that of the management. After cost sheet has been authenticated by company’s authorized representative, cost accountant in practice has to certify the same as per certificate appended below the cost sheet. Cost accountant shall carry out test checks with reference to books of account, cost records and other records required for the purpose. Records required under Excise relating to receipt, purchases, manufacture storage, sales or delivery of goods inputs, etc may be scrutinized. He should ensure that cost data reflect true and fair view of the cost of production.

 Test checks will depend upon the type of organization i.e. covered under maintenance of cost accounts records as required under Section 148 of the Companies Act 2013. Cost accounting records and cost report may be examined and other organisations. In case of organisations covered under above provisions, the Cost Accountant certifying the cost sheet of cost of production for captive consumption shall verify and reconcile the product cost arrived at for certification with that worked out to comply with provisions of Section 148 of the Companies Act, 2013 and cost audit report thereof.

 Periodicity of Certification

 If significant changes in cost or Prices of major materials change frequently and very widely

 In all other cases OR As per Excise Dpt. Summons.

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