An Overview on Excise Duty, 1944

Applied Tax

Submitted To:CA MANOJ KUMAR YADAVAstt. Proff. – School of Commerce & MGMT

Submitted By:

Ashim Roy(K13226)

MBA – 2nd Sem

1.Central Excise Act 1994

2.Central Excise tariff Act 1985

3.Central Excise Rules ,1944

The law of Central Excise duties is governed by the following :

This is the basic law related to the levy and collection of duties of central excise .However this Act does not contain the rate at which duties are imposed

Central Excise Act ,1994

This Act classifies various goods on which central excise duties are levied and prescribes the rates a which the duty is payable.

Central Excise Tariff Act ,1985

Background of TariffHarmonized Commodity Description and Coding System

developed by World Customs Organization (WCO).

Based on International convention of Harmonised System of Nomenclature (HSN).

Indian Customs adopted this nomenclature w.e.f. 28-2-1986. Central Excise Tariff also adopted HSN based classification w.e.f. 1-3-1986.

All manufacturers of excisable goods are required to register under these rules. The registration is valid as long as production activity continues and no renewals are necessary

Central Excise Rules ,1944

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 order to attract levy of excise duty, three condition must be fulfill:-

• There should be goods.• The goods should be excisable goods.• 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.

Types of Excise Duty

Basic Excise Duty

Special Duty of Excise

CessAdditional duty

National Calamity

Contingent Duty

• 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.

• 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 schedule second to Central Excise Tariff Act 1985.

• Additional duty on goods of special importance:ADD is levied under either additional of excise Act 1957 or under

additional duty of excise act 1978. former provides for additional excise duties in lieu of sales tax on specifically items like Textile, Sugar, Tobacco and later provides for specified of Textile and articles of textile. The Central Sale Tax Act has restricted the powers of state govt. to levy sales tax on declared goods and hence , additional duty has been clamped.

• National Calamity Contingent Duty (NCCD):It kind of surcharge levied under Finance Act, 2001 on items like

cigarettes, bidi, pan masala and other tobacco products.

• Cess:It is levied on certain commodities like tea, rubber etc. for the

purpose utilizing the proceeds fir the development of the industries and welfare of workers. In some cases, it's levy and collection is entrusted to Central Excise Department.

Taxable event for charge of duty of central excise is the manufacturer or production of goods in India

In this context ,the Supreme Court has observed :

Excise duty is not directly on the goods, but manufactured thereof. Though both excise duty and sales duty levied with reference to goods ,the two are very different imposts. In one case ,the imposition is on the act of manufactured or production ,while in the other it is on the act of sale.

Taxable event for central excise duty

For condition must be present for the charge of central excise duty:

1.The duty is on goods 2.The goods must be excisable 3 .The goods must be manufactured or produced 4.Such manufacture or production must be take place in

India.

Liability for central excise

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 ( 12A to 12D )

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 )

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 section

Rule 8 prescribes that 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

For an item to be considered goods for the purpose of the levy of central excise duty ,it must satisfy two requirements:

1.Movability: Goods must be movable. Duty cannot be levied on

immovable property.2.Marketability:

Goods must be marketable .The goods must be known in the market and must be capable of being bought or sold.

GOODS

For the liability of duty of central excise to arise ,the item in question should not only be goods it should also be excisable goods. A goods become excisable if and only if it is mentioned in the Central Excise Tariff Act 1985. Nil Duty and Exempt from Duty – Both are ‘excisable goods’.

Excisable goods

Manufactured or Produced

‘Production’ is broader than ‘manufacture’. ‘Production’ included ‘manufacture’

In both production and manufacture, new and identifiable product should emerge

Usually, ‘production’ term is used for new product by natural process. ‘Manufacture’ derived from ‘manu’ i.e. by hands.

Production

Items like ore, asbestos, coffee, tea, tobacco, dairy products etc.

live products like horse, fish, flowers etc. By-products, scrap etc. which are not really

'manufactured' but they do get 'produced' It also covers ‘manufactured goods’ as term

‘produced’ is broader than ‘manufacture’.

Meaning of ‘Manufacture’

Manufacture as specified in various Court decisions i.e. new and identifiable product having a

distinctive name, character or use must emerge or Deemed Manufacture – (a) Process amounting to

manufacture (b) Products covered under MRP provisions.

Manufacturer

Section 2(f) - “the word manufacturer shall be understood accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account.”

Who is ‘Manufacturer’

Person who actually brings new and identifiable product into existence.

Raw material supplier is not ‘manufacturer’. Job worker is the manufacturer.

Brand name owner is not ‘manufacturer’. Loan licensee is not ‘manufacturer’.

List of Documents Required for Central Excise Registration

PAN card copy of the company/firm.   Address Proof of Business Premises of the company/firm

(Electricity Bill / Phone Bill / Gas Bill).  Ground plan of factory (which should also provide description

of boundaries of premises to be registered).  Details of Property Holding Rights of the registrant (if not self-

owned then Rent Agreement).  If Business Premises and Head Office of the company is

different than Address Proof of Head Office also.  PAN card copy of authorized signatory.  Details of all banks with Bank Statement of last 2 months.  Certificates of

Customs Registration No.(BIN) Import Export Code State Sales Tax No. CST No. Company Index No.

The provisions related to Central Excise are stabilized in the past few

years. No major changes were observed in Central Excise Duty

procedures, Statutory Returns, The Excise Duty Rate also remained in

the range of 10%to 12% adv. Provisions related to Valuation under

Central Excise remained unaltered.

Conclusion

THANK YOU