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CENTRAL EXCISE DUTY

GROUP MEMBERS:SAMATA MUNDRA 85

RAJNA NAMBIAR 87

PRIYANKA PARAB 89

DEEPAK PATIL 91

JITESH SAIYA 93RUSHABH SANGHVI 95

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Excise duty

Indirect tax

Manufactured or produced goods

State excise duty

Central excise duty

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Definition

- SUPREME COURT

Supreme Court of India has defined ExciseDuty as a tax on the production ormanufacture of excisable goods produced ormanufactured within the country.

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Nature of Excise Duty

The duty of excise is not directly levied on thegoods, but is levied on the manufacture orproduction of a new commodity

Excise Duty is payable by the manufacturer orproducer, not by the Consumer.

Collection of excise duty is practically made at astage next to the manufacture of goods.

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BASIC CONDITIONS FOR LEVY

OF CENTRAL EXCISE DUTY

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Under section 3 of the Central Excise Act 1944 theBasic conditions for levy are:

1.There must be GOODS

2.The goods must be EXCISABLE

3.There must be MOVABILITY of the goods

4.There must be MARKETABILITY of the goods

5.The goods must have been PRODUCED orMANUFACTURED INDIA

6.There must be TAXABLE EVENT7.There must be REMOVAL OF GOODS at thefactory or site

8.

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CETA- CENTRAL EXCISE TARRIF ACT

1.Goods must be specified and listed in theSchedule to the CETA, 1985

2.All the goods cannot be excisable only becausethey are goods

3.CETA 1986 came into force w.e.f. February 28th,1986

4.

5.6.

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Features of CETA

1. Technical and legal aspects in relation to goods have beenincorporated

2. The goods of the same class has been grouped together

The Excise Tariff has been classified using 4 digit system. i.e.Tariff ItemDescription of goodsUnitRate of Duty

1.

2.

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VALUATION

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VALUATION OF EXCISABLE GOODS FOR THEPURPOSE OF CHARGING OF DUTY OF EXCISE

As per the CETA 1985, excise duty is payable onfollowing basis

1.Specific Duty

2.Duty based on value (ad valorem duty)c.Tariff value under Sec 3(2) of Central Excise Act,1944;

d.Transaction Value determined under Sec 4(3)(d)

of Central Excise Act, 1944; ore.Retail sale price determined under Sec 4A of

Central Excise Act, 1944

8.Duty based on production capacity also known as

Compounded Levy Scheme (Rule 15 )

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Solved example The goods manufactured by A & Co, liable to duty at 14% were exempt from duty on

account of an exemption notification. On 1-3-2008 the exemption notificationpertaining to the said goods was withdrawn .Certain good manufactured prior to1-3-2008 are removed from factory of A & Co. on 2-3-2008. The value of thegoods so removed is Rs. 2,00,000. Discuss whether any duty is chargeable on thegoods so removed and, if yes, compute the amount of such duty.

Solution

In the case the goods were manufactured prior to 1-3-2008, when exemptionnotification was in force. However, the goods were excisable at the time ofmanufacture. Hence, since at the time of removal the duty is chargeable at 14%

(plus 3% education cess) i.e. 14.42%, the goods will be liable to duty at that rate. Amount of excise duty= 14.42% of Rs.2,00,000= Rs. 28, 840.

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Q) Computation of transactional value when sale price includes excise and sale tax

The cum-duty price of the product is Rs. 5,94,984/-. It includes sales tax @4% and excise duty

@14%(plus 3% education cess and SHEC). Find out the assessable value and excise duty andsales tax?

SolutionLet the assessable value of the goods be Rs.xSince, tax @4% of Rs. 1.1442 x= Rs. 0.045768 (x)

Total price inclusive of excise duty and sales tax = Rs. 6,05,696i.e. x + 0.1442(x) = Rs. 5,94,984i.e. 1.189968(x) = Rs. 5,94,984i.e. x = Rs. 5,94,984 / 1.189968Therefore, x = Rs.5,00,000Hence, the assessable value of the product is Rs. 5,00,000.Excise duty @14.42% is Rs. 72,100.Sales tax @ 4%= (5,00,000+72,100)* 4%= Rs. 22,884