CENTRAL EXCISE LAWS

1. Explain the Meaning and Nature of excise duty? 10 marks

Ans: It is a duty levied upon goods manufactured and not upon sales or the
proceeds of sale of goods. Therefore the duty of excise is levied on a manufacturer or producer in respect of the commodities produced or manufactured by him. It is a tax upon manufacture of goods and not upon sales or proceeds of sale of goods. Excise "uty is a duty on excisa$le goods produce or manufacture in ndia.
The po$er to levy and collect excise duties has been conferred on the %nion (overnment by virtue of 'rticle +4, of the %onstitution of ndia. #ntry *+ of the %nion &ist empo$ers the (overnment to levy duty of #xcise on Tobacco and other goods manufactured or produced in India excluding alcoholic liquors for human consumption opium Indian hemp and other narcotic drugs and narcotics $here state (overnment has the po$er to levy excise duty. -o.e/er in case of medicinal and toilet preparations containing alcohol or opium* ndian hemp and other narcotic drugs* the central 0o/ernment has the po.er to le/y excise duty. It means that only the goods $hich are produced or manufactured in India can become liable to excise duties. Thus the statutory authority to levy duty of excise has been conferred by the ,onstitution on the %nion (overnment.

Entry 84 Duties of excise on tobacco and other goods manufactured or produced in India Except: (a) Alcoholic liquors for human consumption (b) opium Indian hemp and other narcotic drugs and narcotics! but ncluding "edicinal and toilet preparations containing alchohol or any substance stated before. Example: "edical syrups for cold and cough contains a small portion of alcohol. #ven though it contains alcohol it $ill come under %nion &ist '.
!"uty of excise# has $een renamed as %entral &alue 'dded (ax )%EN&'(). %EN&'( includes !duty#* !duties# !duty of excise# or !duties of excise#. Although excise started as a pure duty on manufacturing activity over a period of time it has included deemed manufacture and is tending to$ards a value added tax and the changed nomenclature indicates the same. In future it $ould be subsumed into the ()T.

CENTRAL EXCISE LAWS

)a1 "uties under %entral Excise 'ct* 1244 : #xcise duties are of follo$ing types )i1 3asic excise duty: This duty is le/ied under section 4)11)a1 of ,entral #xcise Act. As per section -A of ,entral #xcise Act basic excise duty is termed as ,envat $ith effect from '-./.-000. It is levied at the rates specified in 5irst 6chedule to ,entral #xcise Tariff Act read $ith exemption notification if any. )ii1 6pecial excise duty: This duty is le/ied under section 4)11)$1 of ,entral #xcise Act. )pecial duty of excise is leviable on some commodities li1e pan masala* cars etc. (hese items are co/ered in 6econd 6chedule to ,entral #xcise Tariff. -o.e/er* .ith effect from 01.04.+00,* all good ha/e $een exempted from special excise duty. )iii1 "uty in case of 1007 E89 and 5(: : 2undred percent #xport 3riented %nderta1ings (#3%) and units in 4ree Trade 5one (4T5) export all their production. 2o$ever $hen they clear their final products in Domestic tariff area (DTA) excise duty has to be paid. The duty amount is equal to the aggregate of the duties of customs leviable on li1e article if imported in India. #ven if rate of customs duty is considered for payment of duty actually the duty paid by them is central excise duty. The rate of customs duty is ta1en only as a measure. )$1 "uties under 8ther 'cts: )ome duties and cesses are levied on manufactured products under other Acts li1e 'dditional "uty on 0oods of 6pecial mportance ;'E")06 1< and 'dditional "uty on (extile 'rticles. The administrative machinery of ,entral #xcise is used to collect these taxes. 6rovisions of ,entral #xcise Act and 7ules have been made applicable for levy and collection of these duties8cesses. A National %alamity %ontingent "uty )N%%"1 has been imposed vide section '9: of 4inance Act -00'. This duty is imposed on pan masala che$ing tobacco and cigarettes. ; <asic #xcise Duty is levied u8s 9(') of ,entral #xcise Act. The section is termed as =charging section>.

CENTRAL EXCISE LAWS

(eneral rate of duty of central excise on non.petroleum products is '0? $.e.f. -@.0-.-0'0. (The duty rate $as '+? during '.9.-00* to :. '-.-00* $hich $as reduced to '0? $.e.f. @.'-.-00* and to *? $.e.f. -+.0-.-00A). This duty is applicable to maBority of excisable goods. There is partial exemption to a fe$ products. ; #ducation ,ess C -? of excise duty under section A9 of 4inance (Do. -) Act ($.e.f. A.@.-00+). ; )econdary and 2igher #ducation ,ess ()E2 #ducation ,ess) C '? of the total duties of excise vide section '9: read $ith section '9* of 4inance Act -00@ $.e.f. '.9.-00@. (hus* total excise duty is 10.407 in ma=ority of the cases.

+. >hat the $asic conditions are for le/y of duty under section?4 of the central Excise 'ct* 1244? 10 marks
'ns: As per section 9 of ,entral #xcise Act (,#A) excise duty is levied if follo$ing conditions are satisfiedF (') The duty is on goods. (-) The goods must be excisable. (9) The goods must be manufactured or produced (+) )uch manufacture or production must be in India. n other .ords* 9nless all of these conditions are satisfied* %entral Excise "uty cannot $e le/ied.
Therefore we can say that excise duty is not levied on:

') )ervices such as doctors treating the patients accountants preparing the accounts in these cases service tax are levied. -) Immovable goods such as roads bridges and buildings. 9) Don."ar1etable goods i.e. goods for $hich no mar1et exists e.g. melted iron ore at ':00 degree ,elsius. +) (oods that are not mentioned in ,#TA! and /) (oods manufactured or produced out of India. f production or manufacture is in special economic @one then no excise duty is le/ied. 'n analysis of section 4 of the %entral Excise 'ct* 1244 $hich is the charging section thro$s out the follo$ing propositionsF. (a) There must be a manufacture (b) "anufacture must be in India and

CENTRAL EXCISE LAWS

(c) The manufacture must result in GgoodsH (d) The resultant goods must be Gexcisable goods H #xcise duty is levied on production of goods but the liability of excise duty arise only on removal of goods from the place of storage i.e. factory or $arehouse. #xcise duty is levied even if the duty $as paid on the ra$ material used in production. #xcise duty is levied on government underta1ings also e.g. 7ail$ays is liable to duty on the goods manufactured by it. #xcise duty is an expense $hile calculating the profits in accounting. #xcise duty is levied if goods are mar1etable. Actual sale is not relevant. Therefore goods $hich are given for free replacement during $arranty period are also liable for excise duty. 6ection 4)11 .hich is the charging section states: There shall be levied and collected in such manner as may be prescribedF (a) a duty of excise on all excisable goods (excluding goods produced or manufactured in special economic Iones J)#5K) $hich are produced or manufactured in India as and at the rates set forth in the 4irst )chedule to the ,entral #xcise Tariff Act 'A*/! (b) a special duty of excise in addition to duty of excise specified in clause (a) above on excisable goods (excluding goods produced or manufactured in special economic Iones) specified in the 6econd 6chedule to the %entral Excise (ariff 'ct* 128A .hich are produced or manufactured in India as and at the rates set forth in the )econd )chedule. 2o$ever the excise duty leviable on any excisable goods manufactured by a hundred percent export oriented underta1ing ('00? #3%) and brought to any other place in India shall be an amount equal to the aggregate of the customs duties $hich $ould be leviable under the ,ustoms Act or any other la$ for the time being in force on li1e goods produced or manufactured outside India if imported into India. The value of such goods shall be determined in accordance $ith the provisions of the ,ustoms Act 'A:- if the duty to be levied is based on the value of such goods (ad valorem). Lhere in respect of any such li1e goods any duty of customs leviable for the time being in force is leviable at different rates then such duty shall be deemed to be leviable at the highest of those rates. 2ere '00? #3% means an underta1ing $hich has been approved as a '00? #3% by the <oard appointed in this behalf by the ,entral

CENTRAL EXCISE LAWS

(overnment in exercise of the po$ers conferred by section '+ of the Industries (Development and 7egulation) Act 'A/' and the rules made under that Act. )#5 has the meaning assigned to it in clause (Ia) of section - of the )pecial #conomic 5ones Act -00/. 4. "iscuss $riefly .hether excise duty is attracted on the excisa$le goods manufactured $y or on $ehalf of the go/ernment? 6ection 4)1'1 provides that there is no distinction bet$een excisable goods produced by the (overnment and those produced by others $ith regard to payment of excise duty. #xcise duty is payable on all excisable goods other than salt manufactured by or on behalf of the (overnment (both ,entral and )tate) also.