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Excise Duty

Excise Duty

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Published by Kishan Andure

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Published by: Kishan Andure on Apr 15, 2010
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CHAPTER - 1 CONCEPTUAL FRAMEWORK 1)Direct Vs Indirect Taxes:
TaxesDirect Taxes Indirect TaxesI) Income Tax, Wealth Tax I) Central Excise, Customs, Service taxCentral Sales Tax, VAT, State Excise TaxIi) Paid directly by person concerned ii) Paid by one person but he records the samefrom other personiii) Tax payer pays directly from his iii) Tax payer pays while purchasing goodsIncome or wealth and / or servicesIV) Paid after income reaches hands of IV) Paid before goods/ services reach theTax payer tax payer 
2)Advantages of Indirect Taxes
Psychological advantage to tax payer 
Easier to collect
Less tax evasion
Lower collection cost
Control over wasteful expenditure
Channelise industrial growth
Support local industry [ High Customs Duty low Excise Duty]
High revenue [ 71% of tax revenue ]
3)Disadvantages of Indirect Taxes:
Tax is uniform whether purchased by rich or poor 
Reduces demand of goods
Increases project cost
Shield to inefficient local industries
Cost of modern imported m/c & technology
Smuggling / tax evasion
4)Laws Relating to Central Excise
Central excise Act 1944
Central excise rules
Central excise valuation rules (2000)
Central excise tariff Act (CETA) 1985
Additional duties on goods of SP. Importance Act. 1957
Customs excise & service tax appellate tribunal (CESTAT ) procedure rules 1982
 Notifications issued by central excise Deptt.
Circulars issued by central excise Deptt.1
5)Important features of Excise Duty (E.D.)
Power to impose E.D. is given by constitution to Central Govt.
Power to impose E.D. on liquor, opium & narcotics to S. Govt.
Any article can be levied C.E. duty if all following conditions are satisfied :a)Duty is on goods [movable & Marketable b)Goods must be excisable i.e. mentioned in schedule to CETA 1985c)Goods must be manufactured or producedd)Such mfg. or production must be in India
Goods manufactured in SEZ are “excluded excisable gods”& no E.D. is livable onsuch goods
Taxable event is manufacture or production in India
Once duty liability is fixed, it can be collected from a person at time & place foundadministratively most convenient for collection
Liability to pay E.D. is on manufacturer or producer of excisable goods.
When goods are stored in a warehouse without payment of duty the liability to payduty is on person who stores goods i.e. warehouse keeper.
Duty payable is as applicable on date of removal
Duty is payable even when-Goods are used within factory-Goods are captivity consumed within factory for further manufacture-Goods given as free samples-Goods given as free replacement
Duty can be levied on Govt. undertaking also
E.D. should be considered as manufacturing expenses & should be considered asan element of cost for inventory valuation
Goods manufactured or produced in SEZ are excisable goods’ but no duty isleviable on these goods
6)Types of Excise Duty
i)Basic Excise Duty : (BED)-Also termed as CENVAT-Levied as per rates specified in Sch. I of CETA 1985-General rate is 16%-There is partial exemption to few productsii)Special Excise Duty. (SED)-Charged on items given in Sch. II of CETA 1985-At present there is no SED on any productiii)National calamity contingent duty (N.C.C.D)-In additional to BED-Imposed only on specified goods-Various for different goods from 10% to 45%-If goods are exempted from Excise duty they are2
Exempted from N.C.C.D. also.iv)Additional Excise Duty on Pan Masala & Tobaco products:-Introduced w.e.f. 1-3-2005-Imposed by way of surcharge-Payable @10% of aggregate of normal rate of Excise duties-For Pan Masala mfd. / unmfd. Tobaco, Cigars, Cigarettesv)Education Cess:-Payable on C.E., Customs, Service Tax, Income Tax-Calculated on all duties of Excise @ 3% on duty payable. Thus if duty rateis 16% education cess is 0.48%vi)Duties payable under other Acts:-Medical & Toilet preparations-Additional duty on mineral products-Cess on certain products such as automobiles, Beedis, Jute sugar, Coffee,Tea, etc.
7) Important Definitions:
To levy Excise Duty article is considered as goods if it satisfies following twoconditions:a)It must be movable b)Must be marketable i.e. capable of being bought or soldii)
Excisable goods
:These are the goods specified in schedule to CETA 1985. Only these goodscan be levied Excise Duty as per the rates specified in the scheduleiii)
The word produced coversa)Items like coffee, Tea, Tobaco, dairy products etc. which are produced b)Live products like horse, flower, fish etc. which are produced.c)By products, scrap etc. which are not manufactured buy they get produced.d)It also covers manufactured goods.3

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