Amit Kumar 9891463160, 9891026051
Central Excise Act, 1944
Union List --- Item No. 84
® Duties of excise on tobacco and other Goods Manufactured OR Produced in India.
® Except alcoholic liquors for human consumption, opium, narcotics.
® But including medical and toilet preparation containing alcohol, opium or narcotics.
Charging Section [Sec.-3]:
(1) There shall be levied and collected in such manner as may be prescribed.
(a)
® a duty of excise to be called Central Value Added Tax (CENVAT).
® on all Excisable Goods which are Produced or Manufactured in India.
® excluding goods produced or manufactured in special economic zones.
® at the rates, set forth in the First Schedule to the Central Excise Tariff Act, 1985.
(b)
® a special duty of excise,
® in addition to the duty of excise specified in (a) above,
® on excisable goods specified in the Second Schedule to the CETA,
® which are produced or manufactured in India,
® excluding goods produced or manufactured in special economic zones
® at the rates set forth in the said Second Schedule.
Excisable Goods – [Sec.-2(d)]
‘Goods specified in the schedule to Central Excise Tariff Act, 1985 as being subject to a duty of excise and including Salt.’
® Goods ‘excisable’ even if exempt from duty
Excisable goods donot become non-excisable goods merely because they are exempt from duty by an exemption notification.
® NIL duty is also a rate of duty.
® Goods not included in CETA are ‘non-excisable goods’.
Goods:
® The word “ goods” has not been defined under Central Excise Act.
® As per judicial interpretation goods must satisfy two requirement for purpose of levy of excise duy:
(a) It must be movable: manufacture or production is associated with movables.
(b) It must be marketable: Goods must be know in the market, something which can be brought to market to be bought & sold.
® Marketability is a decisive test for dutiability
It only means ‘saleable’ or ‘suitable’ for sale. It need not in fact marketed.
® Mere mention in tariff is not enough:
® Goods specified in Tariff Schedule though are excisable goods, yet dutiable only if they are marketable also
® Intermediate goods produced and used for capitive consumption are not liable to duty if not marketable.
® Every thing that is sold is not ‘marketable’
Every thing which is sold is not necessarily a marketable commodity.
Dross and Skimming are not marketable even if they can be sold to recover some metal.
® Perishable Goods
® Even perishable goods can be dutiable if they are marketable or capable of being marketable during that short period.
Q. Differentiate between ‘Excisable goods’ and ‘Dutiable goods’ under Central Excise Act, 1944.
S.NO. /Excisable goods
/Dutiable goods
1. / Defined u/s 2(d) of Central Excise Act, 1944. / Not defined under Central Excise Act, 1944.2. / “Goods specified in the first & second schedule to CETA, 1985 as being subject to a duty of excise & includes salt” / Goods which are excisable against which excise duty is actually payable by the assessee.
3. / Mentioned in tariff but at nil rate or exempted under notification are excisable. / Not dutiable if nil rated or exempted under notification.
4. / Not chargeable to duty if other conditions of Sec. 3 not fulfilled. /
Chargeable only if all the conditions of charging Sec.3 have been fulfilled.
Q. Explain the distinction between ‘Goods” and “Excisable goods”.
S.No. /Goods
/Excisable Goods
1. / Goods are not defined under Central Excise Act, 1944. / Excisable goods are defined U/S 2(d) of Central Excise Act, 1944.2. / To be called good, a commodity must be movable and marketable. / To be called excisable goods, a commodity must be specified in first and second schedule to Central Excise Tariff Act, 1985.
Manufacture – [Sec.-2(f)]
Manufacture includes any process
(i) Incidental or ancillary to the completion of manufactured product or
(ii) Which is specified in relation to any goods in the section or chapter notes of the First Schedule to CETA as amounting to manufacture or
(iii) Which, in relation to the goods specified in the Third Schedule of CETA, involves:
® Packing or repacking of such goods in a unit container or
® Labelling or re-labelling of containers
® Including the declaration or alteration of retail sale price on it or
® Adoption of any other treatment on goods to render product marketable to consumer.
Meaning of ‘Manufacture’
® Manufacture implies a change but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation.
® But something more is necessary and
® There must be some transformation;
® A new and different article must emerge
® Having a distinctive name, character or use.
® Trade parlance is important
® Identity of original article should be lost
® Whether Labelling Packing and Branding amount to manufacture
® Whether waste and scrap are also liable to duty
® Whether assembly amounts to manufacture.
· Assembly can amount to manufacture if new, movable product emerges.
Deemed Manufacture
(a) Statutory provisions
The provisions of deemed manufacture are covered u/s 2(f)(ii) and 2(f)(iii).
(b) Examples of deemed manufacture u/s 2(f)(ii)
Following are the examples of processes deemed as manufacture in CETA:-
(1) Labelling or re-labelling and re-packing of
(i) Natural or artificial mineral water
(ii) UN-natural tobacco, cigar and cigarettes
(iii) Pan masala or ice cream
(iv) Perfumes and beauty preparations
(v) Soaps
(2) Recording on audio or video-tapes.
(c) Validity of deemed manufacture
“Produced”
(i) The word produced is used to cover items like tobacco, coffee, ore etc. Which are produced. But no manufacturing process may be carried out.
(ii) By products and waste are not manufactured but they get produced.
Duty Liability on manufacturer
® The liability to pay duty is on ‘Manufacturer or producer’.
Who is the Manufacturer
® ‘Manufacturer’ is a person who actually manufactures or produces excisable goods, i.e. one who actually brings existence new and identifiable products.
® The word manufacturer shall be understood accordingly and shall include:
· not only a person who employs hired labour.
· but also any person engaged in the production or manufacture on his own account.
1. Raw material supplier is not manufacturer.
2. Brand owner is not manufacturer.
Taxable event for charge of duty
Bombay Tyres International (SC)
® Levy and collection of duty need not in time synchronize.
® The collection of duty may be postponed due to administrative convenience.
® Duty can be levied only if goods were excisable when they were manufactured or produced and not when they are removed.
Wallace Flour Mills Co. Ltd. (SC)
® Manufacture or production of excisable article is the taxable event for central excise.
® Exempted goods will be chargeable to duty at the time of removal, if subsequent to manufacture but before removal, the exemption is withdrawn.
® However goods not mentioned in CETA will not be chargeable to duty even if made chargeable before removal.
Power to grant exemption from duty – [Sec.-5A]
1. If the Central Government is satisfied that it is necessary in the public interest to do so.
2. It may exempt generally either absolutely or subject to specified conditions, and excisable goods from the whole or any part of the duty of excise, by notification in the official gazette.
3. For the removal of doubts, it is hereby declared that where an exemption from the whole of the duty has been granted absolutely, the manufacturer shall not pay the duty of excise on such goods.
4. However no exemption in such notification shall apply to goods manufactured in a FTZ and 100% EOU allowed to be sold in India.
5. Central Government may also exempt by special order in each case any excisable goods of strategic or secret nature or for charitable purpose.
6. Unless otherwise provided, every such notification shall come into force on the date of its issue for publication in the official gazette.
7. The central government may, if it considers it necessary or expedient so to do
® for the purpose of clarifying the scope or applicability of any notification,
® insert an explanation in such notification, by notification in the official gazette,
® at any time within one year of the issue of the notification and
® every such explanation shall have effect as if it had always been the part of the first such notification.
Registration Under Central Excise Law
As per Section 6 of CEA, registration is compulsory for
(a) Every manufacturer or producer of excisable goods.
(b) Warehouse where goods are stored without payment of duty.
As per Rule 9 of Central Excise Rules, every person who produces, manufactures, carries on trades, holds private store-room or warehouse or otherwise uses excisable goods shall get registered.
The rule also authorises Board to issue notifications
(a) Specifying conditions and procedures for registration and
(b) Granting exemption to person or class of persons from provisions of registration.
Requirements for registration
¨ Separate registration is required for each separate premises, if person has more than one premises.
¨ Registration is not transferable. If business is transferred, fresh registration has to be obtained by the transferee.
¨ Registration certificate shall be granted within seven days of receipt of duty completed application. Registration Certificate will be issued in prescribed form ‘RC’.
¨ Change in constitution of partnership firm or company should be intimated within 30 days of change. In case of such change, fresh registration is not required.
¨ If the manufacturer ceases to carry on operations for which he is registered, he should apply for de-registration.
¨ Registration can be revoked or suspended if the holder of registration or any person in his employment commits breach of any of the provisions of Central Excise Act or Rules or has been convicted under Sec.161 of Indian Penal Code.
¨ If there is any change in information given in the form, the change should be informed in the form itself.
Procedure for obtaining registration
¨ Application for registration in prescribed form duly completed and signed should be submitted in office of jurisdictional Assistant/Deputy Commissioner in duplicate.
¨ Application should be accompanied by self-attested copy of PAN issued by Income-tax department.
¨ If PAN is not available, copy of application made for PAN should be submitted. Temporary 15digit registration number can be issued which will later be converted into permanent number based on PAN.
¨ The application will be scrutinized by inspector in the office of AC/DC and if found in order, it shall be fed into computer through website SACER (System for Allotment of Central Excise Registration).
¨ Registration certificate bearing the 15digit PAN based registration number will be generated by computer system, which will be delivered to assessee on the spot.
¨ Registration certificate should be ready within 30 minutes on completion of data entry. If it is not possible to issue Registration certificate immediately, acknowledgement of application will be given on the spot.
¨ Later, registration certificate shall be either sent by post or handed over personally to assessee on the next working day.
¨ After grant of registration certificate, original copy will be retained by divisional office and duplicate copy will be sent to Range Superintendent for post facto verification.
¨ The Range officer and Sector officer (i.e.Superintendent and Inspector) shall verify the declared address and premises within 5 working days. If found in order, it will be certified on the duplicate copy and sent to Divisional Office for record. Name of officer doing verification and date of verification will be entered into system.
¨ Registration can be granted to minor, if legal/natural guardians conduct business on his behalf.
¨ The boundary of registered premises should be indicated in the application form.
¨ The registration number can be used for removals, duty payments and other requirements of the Central Excise Act, 1944 and rules made thereunder.
¨ Once registration is granted, it has a permanent status unless suspended or revoked by the appropriate authority in accordance with law is surrendered by Registrant.
Excise Control Code (ECC)
Each registered person is given an assessee code (Excise Control Code – ECC). New ECC code has been introduced w.e.f. 1-1-2000.
The ECC code is 15digit code. First 10 characters are permanent Account Number (PAN) allotted by income tax department. Next two characters would be ‘XM’ if the assessee is manufacturer or registered warehouse and ‘XD’ if he is registered dealer. This will be followed by 3 character numeric code – 001,002,003 etc.
Valuation
Section 4(1)(a):
® When duty of excise is chargeable on excisable goods
® with reference to value will be ‘transaction value’
® and such value shall be calculate for each removal separately.
Conditions for accepting transaction value as assessable value: -
Transaction value shall be taken as assessable value only if following conditions are satisfied:
1. It should be at the time of removal.
Fluctuations subsequent to the removal in the prices of the commodity can have no relevance whatsoever so far as the liability to pay excise duty is concerned.
2. It should be at the place of removal
Section 4(3)(c) “place of removal” means-
(i) A factory or any other place of production or;
(ii) A warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty;
(iii) A depot premises of a consignment agent or any other place from where the excisable goods are to be sold after their clearance from the factory.
From where such goods are removed.
Section 4(3)(cc) “Time of removal”
® In respect of excisable goods removed from the place of removal referred to in 4(3)(c)(iii)
® shall be deemed to be the time
® at which such goods are cleared from the factory.
3. The buyer is not a related person of the seller.
Section 4(3)(b) persons shall be deemed to be “related” if—
(i) They are inter-connected undertakings or