Central Excise Act 1944

CENTRAL EXCISE ACT 1944
by :
DR. T.K. JAIN
AFTERSCHO☺OL
centre for social entrepreneurship
sivakamu veterinary hospital road
bikaner 334001 rajasthan, india
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5 DECEMBER 09 www.afterschoool.tk 1
What is excise ????
Tax paid at the time of manufacture of some

goods as per the government rules.
Charging section – section 3
CENVAT (Central Value Added Tax) and

additional duties As per Central Excise Tariff
Act 1985 – schedule I and schedule II has to be
paid by the manufacturer.
Valuation of goods...
As per section 4 : value of the goods will be

the value at which they will be sold, if they are
not for sale, the value will be determined as per
the prescribed procedure.
Remission of duty
The government may remit duty as per section

5, if there is deficiency in quantity of goods
due to some natural reasons...(example – loss
in transit, spoilage in transit etc. )
What about excise free goods..
There are free trade zones, 100% export

oriented companies, special economic zones,
where there is exemption from excise (no
excise) – however, when goods made in these
areas are bround in rest of the country, for
these – excise has to be paid.
Power to exempt from excise
As per section 5A, the government can exempt

some industries from excise, (however, this
exemption will not be available to goods made
in free trade zone and sold in rest of the
country).
Offences and Penalties
As per section 9, if there is any contravention

of any provision of excise law, there shall be
imprisonment for 3 years + fine and for 2nd
contravention, 7 years imprisonment + fine.
These offenses are non-cognisable as per code
of Criminal Procedure.
What are excisable goods?
Those which are manufactured and for which

mention is there is 1st schedule or 2nd schedule
What is factory?
Section 2(e) : any premise including precincts

thereof where any excisable goods other than
salt is manufactured or where any
manufacturing process is carried out.
What is curing?
Sec. 2(c) : process of wilting,

drying,fermenting or other such process which
can make goods fit for marketing / sale /
manufacturing.
Whosesale dealer
A person who deals in excisable goods is

called wholesale dealer.
Recovery
As per sec. 11B, a person can claim recovery

within 1 year from date of payment from
Assistant Commissioner of central Excise
ACCE will ensure that the company has not
passed this burden to buyer while allowing
recovery of duty. If there is delay in refund
beyond 3 months, interest will be paid on that.
(rate = 5% to 30%)
registration
As per section 6, manufacturer and wholesale

dealers in excisable goods have to get
themselves registered.
Restriction on possession
As per section 8, there is restriction on

possession of excisable goods by any person
beyond permission.
Consumer welfare fund
The government will deposit money collected

as per section 11B,11C,11D in consumer
welfare fund.
11D : is with regard to collection of excise
duty collected from buyer.
Price to indicate duty paid
As per section 12A, seller will denote the

excise duty paid in all documents like invoice
etc.
12B says that it is assumed that excise duty is
passed to the buyer.
Special audit
As per section 14A, the Assistant

commissioner of central excise Can ask for
speical audit by cost accountant for
ascertaining cost / price of goods
manufactured.
Other provisions ....
Sec. 11 : the government can recover excise due from any

company / person
Sec 9AA : in case of default by company, the government can
presecute its executives
Sec.11 AA & AB: if there is delay in payment of excise,
interest @ 10 to 36 % may be charged. (after 3 months from
date of determination)
Sec. 11AC : Penalty in case of short levy of duty
What is the meaning of minimum
wages?
These are fixed by state governments with

regard to industries and the employer has to
pay at least this much of wages (generally @
per day). These are generally revised every two
/ five years based on recommendations of a
wage board (different for different industry)
for this purpose
What wages will not include?
Wages will include only cash component, and

not other facilities like house, etc.
Definition of wages
Section 2(h) “Wages” means all remunerations capable of being expressed in terms of money,
which would, if the terms of the contract of employment, express of
implied, were fulfilled, be payable to a person employed in respect of his
employment or of work done in such employment and includes house rent
allowance but doe s not include:
1. the value of: 1. any house accommodation, supply of light, water
med 2. any other amenity or any service excluded by general or social order
of the appropriate Government;
2. contribution by the employer to any Pension Fund or Provides Fund or
under any scheme of social insurance3. any traveling allowance or the
value of any traveling concession 4. any sum paid to the person employed
to defray special expenses entailed on him by the nature of his employment
5. any gratuity payable on discharge.
Wages in cash only....
The act says that wages should be in cash only

and not in kind (in any goods). Wages include
only cash payments – it does not include any
facilities provided.
How is the rate fixed?
The wages may be fixed on hourly basis, or on

daily basis or on piece rate basis or on monthly
basis. It differs from Industry to industry.
Generally the government will fix the rate for
all those industries where 1000 or more
workers are working in the total state. A
general minimum wages may be prescribed for
general workers.
How to arrive at minimum wage?
Look at the cost of living index, based on this

wages are revised. Cost of living index denotes
changes in the price level. It is based on a
basket of commodities.
Who is employee?
Section 2(i) Employee means any person who is employed for hire or
reward to do any work, skilled or unskilled, manual or clerical in a
scheduled employment in respect of which minimum rates of wages
have been fixed; and includes an outworker to whom any articles or
materials are given out by another person to be made up, cleaned,
washed, altered, ornamented, finished, repaired, adapted or otherwise
processed for sale purpose of the trade or business of that other
person where the process is to be carried out either in the home of
the out-worker or in some other premises, net being premises under
the control and management of that person
What is scheduled industry ?
All the industries which are listed are called

scheduled industries and they are covered in
the minimum wages act.
Who is employer?
Sec 2 (e) : 1. in a factory - , any person named under clause (f) of
sub-section (1) of Section 7 of the Factories Act, as manager
2. in any scheduled employment under the control of any
Government the person or authority appointed by such Government
for the supervision and control of employees or where no person of
authority is so appointed, the Head of the Department;
3. in any scheduled employment under any local authority - the
Chief Executive Officer of the local authority;
4. in any other case- any person responsible to the owner of the
supervision and control of the employees or for the payment of
wages.
Method of fixing wages?
1. it may ask the committee / board, based on

the advice of the board, it may fix the wage
rate and specify in Gazettee.
2. it can ask people to give their proposal,
which will be forwarded to the board /
committee and based on the proposals, the
wage rate will be fixed.
Case : Bijoy Cotton Mills V/s
Ajmer
The company had challenged this act stating

that it was against freedom of trade (article 19
– 1- g), however, The court held that the act is
constitutional.
Case : U. Unichoy v.s Kerala
The court held being a welfare state, it is the

responsibility of the government to prevent
exploitation of workers, so the goverment
should fix minimum wages.
Case : Kamani Metals vs workers
Minimum wages have to be paid, whether the

factory is in profit or loss. Even if the factory is
in loss, you have to pay minimum wages.
Other provisions :
Section 14 : pay overtime, if worker works

more than prescribed hours (as per sec. 13,
hours of work have to be fixed), and if the
worker willingly works for less time, the wages
may be reduced also (as per section 15). But it
is obligatory to pay at least minimum wages
(sec. 12).
THANKS....
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Central Excise Act 1944

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Central Excise Act 1944

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CENTRAL EXCISE ACT 1944

Tax paid at the time of manufacture of some

CENVAT (Central Value Added Tax) and

As per section 4 : value of the goods will be

The government may remit duty as per section

There are free trade zones, 100% export

As per section 5A, the government can exempt

As per section 9, if there is any contravention

Those which are manufactured and for which

Section 2(e) : any premise including precincts

Sec. 2(c) : process of wilting,

A person who deals in excisable goods is

As per sec. 11B, a person can claim recovery

As per section 6, manufacturer and wholesale

As per section 8, there is restriction on

The government will deposit money collected

As per section 12A, seller will denote the

As per section 14A, the Assistant

Sec. 11 : the government can recover excise due from any

These are fixed by state governments with

Wages will include only cash component, and

The act says that wages should be in cash only

The wages may be fixed on hourly basis, or on

Look at the cost of living index, based on this

All the industries which are listed are called

1. it may ask the committee / board, based on

The company had challenged this act stating

The court held being a welfare state, it is the

Minimum wages have to be paid, whether the

Section 14 : pay overtime, if worker works

GIVE YOUR SUGGESTIONS AND JOIN

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