Central Excise Duty

Introduction
This is a tax levied by Central government on goods produced or manufactured in India. It is an Indirect Tax because the burden of this tax falls on the consumer and not on the producer or manufacturer, who pays it in the first instance, producers pass on this tax to consumers by increasing the price of the article. Like Income Tax which is the main source of income of the Government among the Direct Taxes, Excise duty is the main source of income of the Government among the Indirect axes.

Contd.
It should be noted that neither the Indian Constitution nor the Central Excise Act has define the term Excise Duty. The Supreme Court has defined it in one of its Judgments as Excise Duty is a tax levied necessarily on those dutiable goods which are produced or manufactured in India and it has no relationship with the sale of these goods.

Brief History
For the first time Excise Duty was levied in India in 1894 on the finest quality of cotton thread. In 1896 it was levied on fine quality of cloth. In 1924-25 it was cancelled but in 1934 it was re-imposed. In 1917 it was levied on motor spirit and in 1920 it was imposed on Kerosene oil.

Brief History
In 1934 the list of dutiable goods was increased which included match box, steel, sugar etc. In 1941 Tyres and Tubes were also included in the list of dutiable goods while in 1943 Excise Duty was extended to vegetable products. Till 1943 this duty was levied on some well organized industries only and there was a separate law for each product.

Brief History
In 1944 all these laws were consolidated into an Act called Central Excise Duty and Salt Act, 1944, which has been amended time to time. The Finance (No. 2) Act, 1996 removed the word Salt from it. Hence this Act is now called as Central Excise Act,1944.

The Central Excise Act, 1944

The Central Excise Act (CEA), 1944 is the basic Act providing for charging of duty, time and manner of payment of duty, execution of bonds, procedures for appointment and powers of officers, provisions of arrest, penalty etc. The Act extends to whole of India. It came into force on 28 February, 1944. It contains the basic provisions relating to the levy of Excise Duty.

Cond.
There are Seven Chapters in the Act. The Scheme of the Act is as under:
No. Chapter Sections

I
II II A III III A IV V VI VI A VI B VII

Title & Definitions

Levy & Collection of Duty Amount of Duty Powers & Duties of Excise Officers Advance Rulings Transport by Sea Settlement of Cases Adjudication of Confiscations and Penalties Appeals Presumptions as to Documents Supplementary Provisions

1 to 2A
3 to 12 12A to 12D 12E to 23 23A to 23H 24 to 30 31 to 32A 33 to 34A 35 to 36 36A , 36B 37 to 40

Contd.
In 1945 this Duty was levied on Cigarette and Tobacco. In 1963 a surcharge was also imposed on this duty. In 1985 a new Act by the title Central Excise Tariff Act was passed which contained the list of all the excisable goods as well as the rates of duty applicable on them. This Act gets amended on time to time.

Contd..
In 1986 a new technique called Modified Value Added Tax (MODVAT) was introduced in the Excise Duty Act which gave a rebate on the Excise Duty on the followings: i. Inputs; ii. Capital goods.

Contd..
Finance Act, 2000 has replaced the MODVAT by the CENVAT i.e., Central Value Added Tax, according to which a CENVAT of 16% will be imposed and a special excise duty of 8%, 16 % or 24 % will be levied. Rebate on CENVAT will be available similar to the rebate of MODVAT but there will be no rebate on Special Excise Duty.