BASIC CONCEPTS OF EXCISE TAX
A. SOME IMPORTANT ASPECTSGENERAL ± Central Excise Duty is renamed as ³Central Value Added Tax´ (CENVAT) w.e.f.12.5.2000.
1. BASIC CONCEPTS
Basic pre-requisites for levy of Central excise duty ± In order to acquire basic workingknowledge in relation to law on Central Excise, understanding of some of the basic conceptsof Central Excise would be very much essential.In order to attract levy of excise duty: STEP 1 - There should be production or manufacturerof goods in India: STEP 2 - Such production or manufacturer should result in creation of excisable goods, and STEP: 3 - Such excisable goods should be specified in the Schedule toCentral Excise Tariff Act, 1985 (CETA).
In order to levy central excise duty; it is necessary that a new article should come intoexistence as a result of manufacturing activity. Unless there is manufacture, excise duty isnot payable. (Hawkins Cookers Ltd. V Collector ± 1997 ELT 507 S.C.).Section 2(f) of theCentral Excise Act,1944 (CEA) defines ³manufacture´ as ³manufacture´ includes anyprocess: (i) incidental or ancillary to the completion of a manufactured product; and (ii)which is specified in relation to any goods in the Section or Chapter notes of the FirstSchedule to the Central Excise Tariff Act, 1985, as amounting to manufacture, or (iii) whichin relation to goods specified in Third Schedule, [MRP Goods] involves packing or repackingof such goods in a Unit container or labeling or rebelling of containers including thedeclaration or alteration of retail sale price on it or adoption of any other treatment on thegoods to render the product marketable to the consumer.The statutory definition would indicate that ³manufacture´ under Central Excise has to beconstrued in Two ways: (A) ³general concept´ of manufacture: (B) ³deemed concept´ of manufacture.A. General concept- The general concept of manufacture has been a subject matter of discussions in a number of cases by the Supreme Court. Some of the leading case laws onthe subject are UOI vs. Delhi Cloth and General Mills Co. Ltd. 1 ELT J 199 (SC), South BiharSugar Mills vs. UOI 2 ELT J 336 (SC), Empire Industries Ltd. Vs. UOI 20 ELT 179 (SC),FoodPackers 6 ELT 343 (SC), Sterling Goods vs. State of Karnataka 26 ELT 3 (SC), SiddheshwariCotton Mills P. Ltd. vs. UIO 39 ELT 498 (SC), Mafatlal Fine Spg. & Mfg. Co. Ltd. vs. CCE 40ELT 218 (SC), State of Maharashtra Vs Mahalaxmi Stores 152 ELT 30 S.C. In the Delhi ClothMills case the Apex Court observed that: µan activity or process, in order to amount tomanufacture must lead to emergence of a new commercial product, different from the onewith which the process was started. In other words, it should be article with different name,character and use.¶ µManufacture¶ implies a change but every change in raw material is not