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Central excise duty is an indirect tax, levied in goods manufactured
in India. The tax is administered by the central government under the
authority of entry 84 of the union list (list 1) under 7 schedule, read with
article 256 of the constitution of India.
The word \u201cexcise\u201d is derived from a Dutch term \u201cacise\u201d , which itself is
derived from the Latin word \u201caccensay\u201d , which means to tax \u201cexcise\u201d is a
word of wide import any & according to dictionary meaning, denotes \u201can in
direct tax on commodity manufactured ,produced ,sold ,used or transported
by the country\u201d. Excise duty is a duty levied on the goods that are
Excise duties having been defined in this manner in sec. 3 of the that act, it
immediately follows from the very defined that for anything to be liable to
excise duties, it must fulfill all the following conditions.
(A) It must be \u201cgoods\u201d.
(B) It must be \u201cexcisable goods\u201d.
(C) It must be either produced or manufactured in India.
While the duty no doubt is on goods as such, still goods
themselves cannot pay duty. This takes us to the next concept of
\u201ctaxable event\u201d. For every tax, whether direct or indirect, there is a
\u201ctaxable event\u201d. That is the event or situation which gives rise to
the liability which he has created, which would mean that he
should be the person to pay the duty. Since the taxable event is
Excise duty is today the most important source of revenue in India.
It constitutes about 1/5 of the total yearly receipts of the central
The finance act, 2000 has renamed the \u2018duty of excise\u2019. The \u2018central value added tax\u2019 (CENVAT), which term is the term \u2018duty\u2019, \u2018duties\u2019, \u2018excise duty\u2019 or \u2018duties of excise\u2019.
(B) An inland duty or imposed, levied upon the manufacture,
sale or consumption of commodities within the country.
(C) A tax upon the pursuit or fall of certain sports, trades or
The supreme court of India has defined \u201cExcise duty\u201d as \u201ca tax on the production or manufacture of excisable goods produced or manufactured within the country\u201d
A few special features describing the nature of excise duty are as
1. The duty of excise is not levied on directly on the goods but is
levied on the manufacture or production of a new commodity.
Hence it is called an \u2018indirect tax\u2019.
2. Excise duty is payable by the manufacturer or the producer, not
by the consumer. However the incidence of duty is always
indirectly on the consumer.
3. Excise duty is levied on goods &the taxable events is
manufacture or production if a new commercial commodity. The
levy collection of excise duty is practically made at a stage next to
the manufacture of goods, i.e. removal of goods.
4. The taxable event is not independent of liability to pay duty
from levy of duty. Therefore there cannot be different taxable
events for different purposes.
5. The method of collection does not effect the essence of excise
duty, but only relates to the machinery of collection for
Excise duty is levied on manufacture or production of goods within
the country. Thus it is related to industrial activity. Custom duty,
on the other hand, is attracted on the movement of goods across the
Excise duties are the duties, payable on goods produced at home,
where as custom duties on goods imported into country from
Excise duties are the duties levied upon a manufacture or producer
of specified goods, in respect of their manufacture & production in
a factory within the country. It is not related to sale of goods or
proceeds of such sale. Sale tax , on the contrary is levied on the
vendor of goods, in respect of his sale.
The taxable event in case of excise duty is the coming into
existence of a commodity. However in case of sale tax , the taxable
event is the sale of a commodity. The event of a sale of a
commodity is immaterial for levy of excise duty.
In 1939, the duty of excise included the tax on sales as well.
However, when the government of India Act 1985, delegated
powers to levy tax on sale to another authority, it was distinguished
from excise duty.
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