CENTRAL EXCISE DUTY INTRODUCTION AND OVERVIEW CENTRAL EXCISE

CENTRAL EXCISE DUTY INTRODUCTION AND OVERVIEW

CENTRAL EXCISE DUTY : It is a duty levied on the production or manufacture of excisable goods in India. It is a tax levied upon manufacture and not upon sale of goods. In In order to attract levy of excise duty, three condition must be fulfill: a) There should be goods. b) The goods should be excisable goods. c) Goods must have been produced/manufactured in India. Central excise duties contribute approximately one-third share to the Union Exchequer. These duties from the single largest source of revenue for central govt. central excise duty is levied and collected through the machinery of Central Excise Act, 1994.

Goods can be non-excisable in any of the following situations: a) If it is immoveable. b) If it is non-marketable. c) If it has not been specified in the schedule to central excise and Tariff Act.

TYPES OF EXCISE DUTIES Basic Excise Duty Additional duty National Calamity Contingent Special Duty of Excise Cess

TYPES OF EXCISE DUTIES 1. Basic excise duty (BED) or CENVAT This is levied u/s 3(1) of the central excise Act 1944. this duty is levied on all excisable goods produced /manufactured within India at the rates specified in the first schedule to central excise Traffic Act 1985. presently the rate is 10%. The basic duty proceeds are shared by upon and states these rates do not apply in the case of petroleum and tobacco products, pan masala and items attracting specific duty. 2. Special duty of excise It is levied u/s 3 (i)(b) of the CE Act 1944. SED also known as auxiliary duty is levied as surcharge on basic excise duty. The objecting of imposing SED is to generate additional resources for some specified object. SED is livable at the rates specified in schedule second to Central Excise Tariff Act 1985.

importance 3. Additional duty on goods of special

Education Cess 1% secondary and higher education Cess Finance Act 2004 provided for education cess @of 2% w. e. f 9. 7. 2004. education cess is duty of excise to be calculated on aggregate of all duties of excise including special excise duty or any other duty of excise , but excluding cess on excisable goods. A secondary and higher education cess @1% of the aggregate duties of custom excise and service tax has been imposed. It is applicable in respect of custom and excise from 1. 3. 2007 and in respect of service tax from date when finance act 2007 enacted. 1. Method of calculation will be same as for 2%education cess. 2. In case of excise duty , this cess which be changeable on aggregate duties of excise. 6. DUTY LEVIABLE UNER OTHER ACT For levy and collection of duties livable under other acts , some times, the machinery of central excise dept. is used.

N E E TY W U T E D B M N O O T I S S I U X R C A A , T P Y S T M E L U O C e D SA s & i c x E

EXCISE DUTY 1. BASIS OF CHARGES Excise duty is a tax on manufacture of goods. 2. Central excise CLASSIFICATI Tariff ACT 1985 ON OF GOODS classifies goods for the purposes of levy and rates of duty. CUSTOM DUTY SALES TAX Custom is charged sales tax is tax on on import/export sale on goods with of goods from in India. Custom Tariff Act 1985 classifies goods for the purposes of the levy and rates of duty. CSR Act classifies goods for C. S. T. on inter-state sales and states tax on sales within a particular states for the purpose of determine rates of sales tax.

3. TAXABLE EVENT Taxable event for levy of tax is production or manufacture of goods within India Taxable event is entry inward/outward of goods into /from India. 4. VALUE Excise duty is Custom duty is Sales tax is charged on also charged on sales assessable value. price. 5. RATE OF TAX Excise duty is uniform. Custom duty rate in respect of specific goods is also uniform Taxable event is sale of goods within inter – state. C. S. T. at the rate 5% is also uniform but the rates of sales tax very.

6. COLLECTIO Excise duty on N POWER most of items is levied by central govt. except on certain specify goods e. g. . (alcoholic liquors). State excise on above mentioned items is levied and collected by state govt. Custom duty on import /export is levied collected and retained by central govt. CST levied by central govt. but collected and retained by state govt. collection of state sakes taxes sole prerogative of concerned state. 7. TIME OF PAYMENT It is payable on before custom clearance. It is payable after sales take place. It is payable on removal of goods from factory / go down.

N I E C T N S N E E E I R R E T E F U F F I F D I D D SE I C X E

BASIS Basis Special excises duty excise duty (BED) (SED) National calamity contingent duty(NCC D) Additional duty of excise (ADD) 1. Charging section/rule This is also known as CENVAT and is imposed under section 3 (1) of central excise Act 1944 This was levied under finance Act 2001 This is levied under (a) Goods of Special Importance Act 1957(b) Textile and Textile Article Act 1978 This is levied under section 3(1)(b) of Central Excise Act, 1944.

2. LEVY This is levied on all excisable goods produced or manufacture d within India. This is levied at the rate specified in the First schedule to Central Excise Act, 1985 This is levied only on those excisable goods which are specified in the second schedule to the Central Excise Tariff Act, 1985 It is a kind of surcharge It has been levied on items specified in the seventh schedule to the finance act The additional excise duty in lieu of sales tax are levied on specified items of textile, sugar.

C X E L A S R T W N A E L C E IS

Central Excise Law is not one enactment. The provisions regarding Central excise r governed mainly by the Central excise Act, 1944, Central Excise Rules 2002 and Central Excise Tariff Act, 1985. Further, some provisions of Customs Act, Criminal Procedure Code, Indian Penal Code, etc. apply to Central Excise. The list of various Acts and Rules is as follows: 1. Central Excise Act, 1944. (as amended from time to time) provides for the basis of charging of excise duty, valuation of goods for excise purposes, powers of officers, penalties etc. This is the basic Act governing Central Excise. 2. Central Excise Rules, 2002. These rules have been framed, amended and notified by the Central Government from time to time under powers granted to it by Section 37 of the Central Excise Act 1944. The rules prescribe the procedures to be followed, forms to be filled for clearance and storage of goods, their accounting, licensing procedures, procedures for refund of duty, appeals against orders of excise authorities etc.

3. Central Excise Tariff Act 1985. (CETA). This Act classifies all the goods under various heads and sub-heads for prescribing different rates of duties. Each head has a specific code assigned to it. 4. Central Excise (Valuation) Rules 2000. Section 4 of the Central Excise Act contains provisions regarding determination of value for charging excise duty. These rules have been framed to supplement Section 4. 5. Cenvat Credit Rules 2004 6. Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods)Rules 2001. 7. C. E. (Determination of Retail Sale Price of Exciseable Goods)Rules 2008. 8. Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules 1982. CEGAT ( PROCEDURE ) RULES PRESCRIBE ROCEDURE OF FILING AND HEARING APPEALS TO CEGAT (now CESTAT). 9. Additional Duties of Excise (Goods of Special Importance) Act, 1957. This Act provides for imposition of additional excise duty in lieu of Sales Tax on goods of special importance. Such goods are known as ‘Declared goods’ under the Central Sales Tax Act.

10. Central Excise (Appeal Rules) 2001. 11. Central Excise (Compounding of Offences) Rules 2005. 12. Notifications. Section 5 A and 11 C of Central Excise Duty 1944 grant powers of Central Government to issue notifications granting partial or full exemptions from Central Excise. These notifications have full legislative backing. which has power to amend or modify these. So, these rules and notification have full legislative support and are treated as pert of the Act itself. The Central Excise Act, 1944 # The Central Excise Act, 1944(CEA) is the basic Act providing for charging of duty, time and manner of payment of duty, execution of bonds, procedure for appointment and powers of officers, provisions of arrest, penalty etc. # In the Act, the detailed procedures regarding levy of duty on unmanufactured (from bulk pack to retail pack) products and manufactures products like matches, sugar, manufactures, tobacco, tyres etc. have been given. # It came into force on 28 th February, 1944 and extends to whole of India.

THE SCHEME OF THE ACT IS AS UNDER : No. Chapter Sections 1 Titles and Definitions ( 1 to 2 A ) 2 Levy and Collection of Duty ( 3 to 12 ) 2 (a) Amount of Duty ( 12 A to 12 D ) 3 Powers and Duties of Excise Officers ( 12 E to 23 ) 3 (a) Advance Rulings ( 23 A to 23 H ) 4 Transport by Sea ( 24 to 30 ) 5 Settlement of Cases ( 31 to 32 A ) 6 Adjudication of Confiscations and Penalties ( 33 to 34 A ) 6 (a) Appeals ( 35 to 36 ) 6 (b) Presumption as to Documents ( 36 A & 36 B ) 7 Supplementary Provisions ( 37 to 40 )

DEFINITIONS # Adjudicating authority means any authority competent to pass any order or decision under this Act, but does not include the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 Commissioner of Central Excise (Appeals) or Appellate Tribunal (CESTST); [Section 2 (a)] An adjudicating authority can never go back on his order but the appellate authority can revise orders of Adj. authority. # Appellate Tribunal means the Customs, Excise and Gold (Control) Appellate Tribunal constituted under section 129 of the Customs Act, 1962. [Section 2 (aa)] # Broker or commission agent means a person who in the ordinary course of business makes contracts for the sale or purchase of excisable goods for others ; [Section 2 (aaa)] # Central Excise Officer means the Chief Commissioner of Central Excise

Commissioner of Central Excise, Commissioner of Central Excise (Appeals), Additional Commissioner of Central Excise, Joint Commissioner of Central Excise, Deputy Commissioner of Central Excise, Assistant Commissioner of Central Excise, Any other officer of the Central Excise Department or Any person ( including an officer of the State Government) invested by the Central Board of Excise and Customs constituted under the Central Board of Revenue Act, 1963. 1. Curing includes wilting, drying, fermenting and any other process for rendering an unmanufactured product fit for marketing or manufacture ; [Section 2 (c)] 2. Excisable goods means good specified in the Schedule to the Central Excise Tariff Act, 1985 as being subject to a duty of Excise [Section 2 (d)] 3. Exempted Goods : Goods specified in CETA 1985 for prescribed cenvat rate but due to exemption notification issued by Cental Government, there is exemption from duty liability 4. NIL Rated Goods: Excisable goods specified in CETA 1985 but rate of duty

mentioned against them is NIL. SC in Nandi printer case decided that goods are excisable if specified in CETA even though rate of duty is nil. 5. Factory means any premises, including though precincts thereof, wherein or in any part of which excisable goods other than salt are manufactured, or wherein or any part of which any manufacturing process connected with the production of these goods is being carried on or is ordinarily carried on [Section 2 (e)] 6. Manufacture includes any process. Incidental or ancillary to the completion of a manufactured product ; which is specified in relation to any goods in the First Schedule of the Central Excise Tariff Act, 1985 as amounting to manufacture, or which in relation to goods specified in the 3 rd schedule involves packing or repacking of such goods in a unit container or labeling or relabeling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer. 7. Manufacturer: The word manufacturer has not been defined by a separate sub section. The latter part of the Sec. 2(f) has been used to define manufacturer.

8. Sale and Purchase with their grammatical variation and cognate expressions, mean any transfer of the possession of goods by one person to another in the ordinary course of trade or business for cash or deferred payment or other valuable consideration. [Section 2 (h)] 9. Wholesale dealer means a person who buys or sells excisable goods wholesale for the purpose of trade and manufacture and includes a broker or commission agent who in addition to making contracts for sale or purchase of excisable goods for others, stocks such goods belonging to others as an agent for the purpose of sale. [Section 2 (k)]

DIFFERENCE BETWEEN GOODS AND EXCISABLE GOODS Basis goods Excisable Goods 1. Definition Goods are not defined under Central Excise Act but Finance Act defines it. Excisable goods are defined under section 2 (d) of Central Excise Act 2. Essential character To be called goods, a commodity must be movable and marketable. To be called excisable goods, a commodity must be specified in 1 and 2 schedule of Central Excise and Tariff Act 1985 3. Scope Wider term Narrow term

DIFFERENCE BETWEEN DUTIABLE AND EXCISABLE GOODS Basis Excisable goods Dutiable goods 1. Charging section Under section 2(d) of Central Excise Act No section 2. Meaning Goods specified in schedule 1 and 2 of Central Excise Tariff Act 1985 as being subject to duty Goods on which actual excise duty is paid 3. Scope Goods which are exempted or are at nil rate are still excisable goods Goods which are exempted or are at nil rate are not dutiable goods 4, Point of levy Goods are excisable at the Goods become dutiable at time of manufacture the time of removal of goods

D N N A IO Y T V C E E L LL O C

MEANING OF LEVY Levy means imposition of tax. Once a tax or duty is imposed b, it is quantified and then collected. The term levy includes both imposition of tax as well as assessment , however , it does not include collection.

DIFFERENCE BETWEEN LEVY AND COLLECTION BASIS LEVY COLLECTION MEANING Levy means imposition of duty When excise duty is actually realized , it is called collection APPLICABLE PROVISION Section 3 is the charging Rule 8 prescribes that section excise duty shall be collected at the time of removal POINT OF LEVY The levy is on production or manufacture of excisable goods C collection at the time of removal

POINTS of Distinction Levy under the Act Levy Under Finance act Nature of levy Such type of levy is a Continuous levy Such type of levy is a yearly levy that is it remains alive only for an year Alteration of Rates The rates remain same unless altered by the finance act Such levy automatically lapse at the end of financial year and continuance of such duty in subsequent yr at the old or new rates shall be treated as a fresh levy Sharing of collection The collection proceeds from such levy are shared by the Union with the states The collection proceeds from such levy are exclusively for government of India

DUTIES SPECIFIED IN THE FIRST AND SECOND SCHEDULE TO THE CENTRAL EXCISE TARIFF ACT , 1985 TO BE LEVIED (a) A duty of excise , called Central Value Added Tax (CENVAT) on all Excisable Goods (excluding good produced or manufactured in SEZ ) (b) A Special duty of excise on Excisable goods in schedule 2 Section 3 is a charging section which determines a taxable event and it also provides the duty shall be levied and collected in such manner as may prescribed. Central Excise rules provides that in case of goods removed from a factory or a warehouse , the date for determination of duty and valuation shall be the date of actual removal of such goods from such factory or warehouse.

What is the taxable event calling for the levy ? The event is manufactured or production. If there is no manufacture/production there is no duty to attract duty there must be a process amounting to manufacture/production and the output be excisable goods sale is not a parameter in excise. Who is liable to pay excise duty? Rule 4(1) of central excise rules 2002 provide that every person who produces or manufactures any excisable goods. Or stores such goods What is the relevant date of determination of rate of duty & traffic value under central excise? (rule 5) In case of excisable goods other than khan sari molasses: (a) date on which such excisable goods are removed from factory or a warehouse. (b) Capital consumption : when goods removed from store, then it shall be deemed to be removed from factory.

DUTIES OF EXCISE COLLECTED FROM THE BUYER TO BE DEPOSIOTED WITH CENTRAL GOVERNMENT DUTY OF DEPOSIT EXCISE DUTY Every person who is liable to pay duty under 5 this act or the rules hereunder and has collected any amount in excess of theca duty assessed or determined and paid excisable goods under the acts or the rules made there under from he buyer of such goods bin representing duty of excise shall forthwith pay amount so collected to the credit of central government.

MANNERS PRESCRIBED FOR COLLECTION EXCISE DUTY UNDER THE CENTRAL EXCISE RULES 2002 DUTY PAYABLE ON REMOVAL 1) Every person According To C. E. act excise duty is attracted the moment manufacture is completed but it becomes payable at the time of removal only and the too at the rate application on the date of removal and not at the rate prevalent on the date of manufacture C. E rules 4 & 5. 2) Notice of demand Where any amount of required to be paid to the credit of the central government as above which has not been o paid the central excise officer may serve on the person liable to pay such amount a notice requiring him to show cause why the said amount as specified in the notice should not paid by the credit the central got.

3) Liability The central excise officers shall after considering the representation if any made by the person on whom the notice is served as above determine the amount due from such person. 4) Adjustment against excise duty payable The paid to the credit to the central govern shall beer adjust against the duty of exile payable by the person on finalisation of assessment or any preceding for terming by the duty of excise relating to excisable goods. 5) Refund In accordance with the provision of section 11 B And such person may be make ban application under that in such cases within 6 months from the date of the public notice to be issued by the assistant commissioner of central excise for the refund of such surplus amount.

CENTRAL EXCISE RULES 2002 I Basic rules Rule 2 : definition Rule 3 appointment and jurisdiction

II DUTY RELATED RULES Rule 4 duty payable on removal Rule 5 date for determination of duty and tariff valuation Rule 6 assessment of duty Rule 7 provisional assessment Rule 8 manner of payment Rule 13 duty on matches Rule 13 a utilization of amount paid for procurement of central excise stamp for payment of duty Rule 15 special; producer for payment of duty Rule 17 removal of goods by a unit

III BASIS EXCISE PRODUCER RULE 9 registration Rule 10 daily stock amount Rule 11 goods to be removed on invoice Rule 15 (5) re pre authentication of in voice deleted by finance act 2010 Rule 12 filling of return IV Return and retention and duty plaids goods Rule 16 credit of duty on goods brought to the factory

V Job work Rule 16 a removal of goods for job work etc VI Export procedure Rule 18 rebate of duty Rule 19 export without payment of duty VII Warehousing profession RULE 20 warehousing profession VIII RULE 21 remission of duty

IX POWER OF CEO RULE 22: ACESS TO REGISTERED PREMISES RULE 23 POWER TO STOP AND SEARCH RULE 24 POWER TO DETAIN AN SIZE THE GOODS x PENALITY PROVISION Rule 25 confiscation and penalty Rule 26 penalty for certain officers Rule 27 general penalty Rule 28 on confiscation , property to vest in the general in the central governmental Rule 28 disposal of goods confiscated Rule 30 storage charges I. R. O. goods consifiscated and redeemed.

XI MISCELLANEOUS RULES Rule 31 power to issue Supplement instruction Rule 32 restriction on removal of goods