5

General Procedures under Central

Excise
Question 1
Explain briefly the meaning of assessee with reference to Central Excise Rules, 2002.
Answer
Rule 2(c) of Central Excise Rules, 2002, states that assessee means any person who is
liable for payment of duty assessed or a producer or manufacturer of excisable goods or a
registered person of a private warehouse in which excisable goods are stored and includes an
authorized agent of such person.
Question 2
Write a brief note on Personal Ledger Account or PLA?
Answer
Personal ledger Account is an account with the Central Government, which is utilized for
payment of excise duty. The account is credited when the sum is deposited in bank by GAR-7
challan and debited on payment of excise duty. Each debit and credit entry should be made
on separate lines and assigned a running serial number for the financial year. PLA and
CENVAT credit should be used only for payment of excise duty and not for other payment like
rent, lines, penalties etc.
The PLA must be prepared in triplicate by writing with an indelible pencil and using double
sided carbon. Original and duplicate copies of PLA and xerox copy of GAR-7 challans should
be submitted along with monthly/quarterly ER-1/ER-3 return. Mutilations or erasures of
entries once made in the PLA are not allowed. If any correction becomes necessary, the
original entry should be scored out and attested by the assessee or his authorized agent.
No restrictions exist with regard to any minimum amount, which should necessa rily remain in
balance to the credit of an assessee in his PLA. Practically, after introduction of monthly
payment system, PLA has become redundant except in the month of March. In the month of
March, duty is required to be paid before 31 st March. Hence, generally assessee pays higher
amount to be on safe side.

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Question 3
What do you mean by payment of excise duty under protest? Explain the procedure that has
to be followed by an assessee who opts to pay duty under protest.
Answer
At times the classification and assessable value of goods determined by the excise authorities
are not agreeable or acceptable to the assessee. In such cases, the assessee can file an
appeal and in the meanwhile he can pay duty under protest if no stay is obtained from
Appellate Authorities.
As per Supplementary Instructions issued by CBEC, any assessee desirous of paying duty
under protest has to follow the below-mentioned procedure:
(a) The assessee shall inform the Superintendent or Inspector of Central Excise in writing
giving reasons for paying duty under protest and dated acknowledgement will be given to
him.
(b) The assessee shall mark invoices or monthly/quarterly returns indicating the goods on
which duty is paid under protest. If it is a lump-sum duty payment in respect of past
demand, he may record the fact of duty payment under protest in the Personal Ledger
Account, CENVAT Account and the Daily Stock Account.
(c) If a case is appealed against by the assessee or where the appeal period for further
appeal is available, he may continue to pay duty under protest. However, if decision is
not in his favour and he exhausts the appellate remedy or does not appeal within
stipulated period, he shall not have any right to pay duty under protest.
Question 4
Write a brief note with reference to the Central Excise (Removal of Goods at Concessional
Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 on the provisions relating to
the following cases:
(i)

Consequence of goods not being used for intended purposes.

(ii) Defective, damaged, unsuitable, surplus goods returned to manufacturer.

(iii) Goods lost or destroyed by natural causes or unavoidable accident and not used for
intended purpose.
Answer
The provisions of the Central Excise (Removal of Goods at Concessional Rate of Duty fo r
Manufacture of Excisable Goods) Rules, 2001 in relation to the following cases are explained
as under:
(i)

If the material received at concessional rate of duty is not used for intended purpose, the
manufacturer is liable to pay the amount equal to the difference between the duty
leviable on such goods without the concession available under these rules and that

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Central Excise
already paid, if any, at the time of removal from the factory of the manufacturer of the
subject goods, along with interest.
The provisions of section 11A and section 11AA of the Central Excise Act, 1944 apply
mutatis mutandis for effecting such recoveries.

(ii) If the manufacturer on receiving the subject goods finds them to be defective or damaged
or unsuitable or surplus to his needs, he may return the subject goods to the original
manufacturer of the goods.
Such returned goods are added to the non duty paid stock of the manufacturer of the
subject goods and dealt with accordingly.
(iii) If the goods are lost or destroyed by natural causes or by unavoidable accident during
transport from

the place of procurement to the manufacturers premises or

from the manufacturers premises to the place of procurement or

during handling or storage in the manufacturers premises,

the manufacturer is liable to pay the amount equal to the difference between the duty
leviable on such goods without the concession available under these rules and that
already paid, if any, at the time of removal from the factory of the manufacturer of the
subject goods, along with interest.
The provisions of section 11A and section 11AA apply mutatis mutandis for effecting
such recoveries also.
Question 5
Explain the provisions of rule 10 of Central Excise Rules, 2002 regarding maintenance of daily
stock account of goods manufactured.
Answer
As per rule 10 of the Central Excise Rules, 2002 a daily stock account has to be maintained by
every assessee. The records should be maintained on daily basis in a legible manner,
indicating particulars regarding:
(a) description of goods produced or manufactured
(b) opening balance
(c) quantity produced or manufactured
(d) inventory (i.e. stock) of goods
(e) quantity removed
(f)

assessable value

(g) amount of duty payable and

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(h) particulars regarding amount of duty actually paid

The first and last page of such account book shall be duly authenticated by the producer or
manufacturer or his authorized agent. All such records shall be preserved for 5 years.
Further, such records may be preserved in electronic form and every page of the record so
preserved shall be authenticated by means of a digital signature. Appropriate back up of
records shall be maintained and preserved for a period of 5 years. Where the assessee has
more than one factory, the electronic records shall be maintained separately for each factory.
Question 6
Briefly mention categories of persons/premises that are exempt from obtaining registration
under rule 9(2) of the Central Excise Rules, 2002.
Answer
Central Board of Excise and Customs, as per the power given under rule 9(2) of the Central
Excise Rules, 2002 has exempted the following specified categories of persons/premises from
obtaining registration:
(i)

Persons who manufacture the excisable goods, which are chargeable to nil rate of duty
or are fully exempt from duty by a notification subject to the declaration to be made in a
specified form.

(ii)

Small scale units availing the slab exemption based on value of clearances under a
notification. However, they have to give a declaration when their clearances touch ` 90 lakh.

(iii) Job worker who undertakes job work in relation to goods falling under Chapter 61 - 63 of
Central Excise Tariff on behalf of any other person who pays the excise duty leviable on
the said goods and comply with all procedural formalities under Central Excise Act, 1944.
(iv) Persons manufacturing excisable goods by following the warehousing procedure under
the Customs Act, 1962 subject to certain prescribed conditions.
(v)

The person who carries on whole sale trade or deals in excisable goods except first and
second stage dealer, as defined in the CENVAT Credit Rules, 2004.

(vi) A hundred percent Export Oriented Undertaking or a unit in Export Processing Zone or a
unit in SEZ licensed/appointed under the Customs Act, 1962 if they do not procure
excisable goods from Domestic Tariff Area or do not remove excisable goods to
Domestic Tariff Area.
(vii) Persons who use excisable goods for any purpose other than the processing or
manufacture of goods availing benefit of concessional duty exemption no tification.
(viii) A godown or retail outlet of a Duty Free Shop appointed/licenced under section 57 or 58
of Customs Act, 1962.
(ix) Unregistered premises used solely for affixing a sticker/re-printing/re-labeling/re-packing
of pharmaceutical products falling under Chapter 30 of the Central Excise Tariff Act,

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Central Excise
1985 with lower ceiling price to comply with the notifications issued under Drugs (Prices
Control) Order, 2013.

(x) Units engaged in the manufacture of recorded smart cards (Sub-heading 8523), if the
manufacturer has a centralized billing/accounting system and he opts for registering only
the premises or office from where such centralized billing/accounting is done.
(xi) Mines engaged in the production of coal, peat, lignite etc., if the producer has a
centralized billing/accounting system and he opts for registering only the premises or
office from where such centralized billing or accounting is done.
Question 7
Briefly mention the categories of persons who are required to take registration under t he
Central Excise law.
Answer
The following persons are required to take registration under the Central Excise Law:
i.

Every manufacturer of excisable goods (including Central/State Government

undertakings or undertakings owned or controlled by autonomous corporations) on which
excise duty is leviable.

ii.

First stage or second stage dealers (including manufacturers depot and importers)
desiring to issue cenvattable invoices.

iii.

Persons holding private warehouses for storing non-duty paid goods.

iv.

Persons who obtain excisable goods for availing end-use based exemption notification.

vi.

Exporter-manufacturers under rebate/bond procedure; and Export Oriented Units, which

have interaction with the domestic economy (through DTA sales or procurement of du ty
free inputs).

vii. Importer who issues an invoice on which CENVAT credit can be taken.
Question 8
Under what circumstances can the central excise registration be revoked or suspended or
cancelled?
Answer
The certificate of excise registration can be suspended or revoked by the Deputy
Commissioner or the Assistant Commissioner of Central Excise under the following
circumstances:
(i)

when the assessee or any person under his employment has committed any breach of
the provisions of the Central Excise Act or any rules made there under.

(ii) when the assessee or a person under his employment has been convicted of an offence
under section 161 read with section 109 or section 116 of the Indian Penal Code.

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Further, a registration certificate granted online may be cancelled after giving a reasonable
opportunity to the assessee to represent his case against the proposed cancellation by the
Deputy or Assistant Commissioner of Central Excise, in any of the following situations,
namely:
(a) where on verification , the premises proposed to be registered is found to be nonexistent;
(b) where the assessee does not respond to request for rectification of error noticed during
the verification of the premises within 15 days of intimation;
(c) where there is substantial mis-declaration in the application form; and
(d) where the factory has closed and there are no dues pending against the assessee
Question 9
With reference to the Central Excise Act, 1944 and the rules thereunder, explain briefly
whether the following persons require registration or not?
(i)

Persons, who manufacture excisable goods chargeable to nil rate of duty;

(ii) Central Government undertakings manufacturing excisable goods;

(iii) 100% EOU.
Answer
(i)

No, because manufacturers of goods which are chargeable to NIL Rate of duty are
exempt from registration provided a declaration is filed.

(ii) Yes, as the provisions of section 6 of the Central Excise Act, 1944 read with rule 9 of
Central Excise Rules, 2002 apply in respect of every person who manufactures or
produces excisable goods (including Central/State Government Undertakings or
undertakings owned or controlled by autonomous corporations) in India.
(iii) No, as 100% EOU is deemed to be registered under Rule 9. However, such unit shall be
required to get itself registered if it removes excisable goods to domestic tariff area
(DTA) or procure excisable goods from DTA.
Question 10
Mention the last date of filing the following returns under the Central Excise Rules, 2002:
(i)

ER-4

(ii)

ER-7

Answer
(i)

ER-4 for the preceding financial year to which it relates is filed annually by 30 th
November of the succeeding year [Rule 12(2) of the Central Excise Rules, 2002].

(ii) ER-7 for the financial year to which it relates is filed by the 30 th April of the succeeding
financial year [Rule 12(2A) of the Central Excise Rules, 2002].

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Central Excise

Question 11
Annual Financial Information Statement (ER-4) is required to be submitted by the assessees
paying duty of ` 4 crores or above per annum through PLA. Comment.
Answer
The said statement is false. Annual Financial Information Statement (ER- 4) is required to be
submitted latest by 30 th November of succeeding financial year by the assessees paying duty
of ` 1 crore or above per annum either through PLA or CENVAT credit or both together.
Question 12
Whether provisional assessment can be initiated by the Central Excise Department?
Answer
Rule 7 of the Central Excise Rules, 2002 gives an option to the assessee to make a request to
the Assistant Commissioner/Deputy Commissioner of Central Excise for provisional
assessment in case he is unable to determine the value of excisable goods or the rate of duty
applicable thereto. Rule 7 does not give power to the Department to order provisional
assessment on its own. Thus, the excise department cannot suo motu issue directions for
resorting to provisional assessment.
Question 13
What is the remedy available with the Department when the Central Excise Officer does not
find the self assessment by the assessee in order?
Answer
Where the central excise officers during scrutiny or otherwise find that self-assessment is not
in order, they may ask the assessee to provide all necessary documents, records or other
information for issue of duty demand for differential duty, if any, after conducting inquiry.
If the assessee fails to provide such records or information and the Department is unable to
issue demand, Best Judgement method, may be used to raise the demand based on
collateral evidences. In such a case, the burden will be on the assessee to provide
information for appropriate re-determination of duty.
Question 14
With reference to rule 12(2) of the Central Excise Rules, 2002, explain in brief the main
provisions of the return in form E.R.-4, to be filed with the Central Excise Department by an
assessee. What is the maximum penalty leviable for non-submission or late submission of
E.R.-4 return?
Answer
Every assessee paying duty of ` 1 crore or more per annum [either through PLA or CENVAT
Credit or both together] is required to file Annual Financial Information Statement for the

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preceding financial year to which the statement relates by 30th November of the succeeding
year in Form E.R.4. The main contents of the return are as under
(i)

Financial year to which it relates

(ii) Registration Number

(iii) Name of the Assessee
(iv) Details of Expenditure
(v) Details of Income
(vi) CENVAT credit details
Rule 12(6) inter alia lays down that where Annual Financial Information Statement is submitted
by the assessee after the relevant due date, the assessee is required to pay an amount
calculated at the rate of ` 100 per day subject to a maximum of ` 20,000 for the period of
delay in submission of each such return or statement.
Question 15
Briefly state the provisions of the Central Excise Rules, 2002 relating to electronic payment of
excise duty and electronic filing of returns.
Answer
Every assessee is required to pay the duty electronically through internet banking. However,
the Assistant/Deputy Commissioner of Central Excise may for reasons to be recorded in
writing, allow the assessee to deposit excise duty by any mode other than inte rnet banking.
Thus, e-payment of excise duty is compulsory for all assessees irrespective of the quantum of
excise duty paid in the previous financial year.
Further, the returns and statements prescribed under rule 12 have to be filed electronically by
all the assessees irrespective of the excise duty paid in the preceding year.
Question 16
Briefly state the provisions under the Central Excise Rules, 2002 with respect to filing of
Annual Installed Capacity Statement.
Answer
Every assessee has to submit to the Superintendent of Central Excise an Annual Installed
Capacity Statement declaring the annual production capacity of the factory for the financial
year to which the statement relates by 30th April of the succeeding financial year in Form ER 7 [Rule 12(2A)].
However the assessees manufacturing biris, matches, reinforced cement concrete pipes under
prescribed conditions are exempt from the submission of Annual Installed Capacity Statement.
Where the Annual Installed Capacity Statement is submitted by the assessee after the
relevant due date, the assessee is required to pay an amount calculated at the rate of ` 100

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Central Excise

per day subject to a maximum of ` 20,000 for the period of delay in submission of each such
return or statement. [Rule 12(6)]
Question 17
Discuss the validity of the following statements with reference to Central Excise Rules, 2002:
(i)

In respect of goods received at concessional rate of duty, return is required to be filed on

a monthly basis.

(ii) Submission of Annual Financial Information Statement in Form ER-4 is compulsory for all
assessees
Answer
(i)

Invalid. Rule 5 of the Central Excise (Removal of Goods at Concessional Rate of Duty
for Manufacture of Excisable Goods) Rules, 2001 provides inter alia that the
manufacturer, receiving goods at concessional rate of duty will submit a quarterly return
instead of a monthly return.

(ii) Invalid. Annual Financial Information Statement [Form-ER-4] is to be submitted by every

assessee to the Superintendent of Central Excise for the preceding fi nancial year by 30 th
November of the succeeding year [Rule 12(2)(a) of the Central Excise Rules, 2002].
However, the following assessees are exempt from submission of Annual Financial
Information Statement:
(i)

Assessee who pay less than `1 crore of excise duty during the financial year to
which ER-4 relates.

(ii) Indian Ordinance Factories, Department of Defence Production and Ministry of

Defence.
Question 18
What are the due dates for excise duty payment by a SSI Unit?
Answer
In case of an assessee eligible to avail the exemption under a Notification based on the value
of clearances in a financial year (SSIs), the duty on goods cleared during a quarter is paid as
under:
Case
Due Date for payment of duty
th
If duty is paid electronically through internet 6 day of the month following that quarter
banking
In any other case
5th day of the month following that quarter
In case of goods removed during the quarter 31st day of March
ending in March
It may be noted that above relaxation is available to a unit which is eligible to claim SSI
exemption regardless of the fact whether the concerned unit actually claims it or opts to pay duty.

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Further, the above relaxation is available to an eligible unit for the entire financial year even if it
crosses the limit of ` 400 lakh (aggregate value of clearances) in the current financial year.
Question 19
ABC, an assessee availing SSI exemption, paid central excise duty of ` 10,000 for the goods
cleared in the month of March, 20XX on April 15, 20XX. Discuss whether any interest will be
charged from ABC for late payment of duty. If yes, what will be the interest liability?
Answer
The second proviso to rule 8(1) of the Central Excise Rules, 2002 lays down that where an
assessee is availing the exemption under a Notification based on the value of clearances in a
financial year, the duty on goods cleared during a quarter of the financial year shall be paid by the
6th day of the month following that quarter, if the duty is paid electronically through internet banking
and in any other case, by the 5th day of the month following that quarter. However, in case of goods
removed during the month of March the duty shall be paid by the 31st day of March.
Sub-rule (3) of rule 8 provides that if the assessee fails to pay the amount of duty by the due
date, he shall be liable to pay the outstanding amount along with interest at the rate specified
by the Central Government vide notification under section 11AA of the Central Excise Act on
the outstanding amount. Such interest shall be paid for the period starting from the first day
after the due date till the date of actual payment of the outstanding amount. The rate of
interest has been specified as 18% vide Notification No. 6/2011 CE (NT) dated 01.03.2011.
Therefore, since ABC has paid the duty for the month of March on 15th April, it will have to
pay the duty with interest for the delay of 15 days.
The amount of interest will be computed as under:
= ` 10,000 x 18/100 x 15/365 = ` 73.97 = ` 74.00 [Rounded off]
Question 20
What is an invoice? Describe the special considerations in respect of an invoice as provided
under rule 11 of the Central Excise Rules, 2002.
Answer
An invoice is the document under cover of which the excisable goods are to be cl eared by the
manufacturer. It also indicates the assessment of the goods to duty. Although the
Department has specified the entries in the invoice, yet it is the manufacturers own document.
According to rule 11 of Central Excise Rules, 2002, following special considerations are to be
kept in mind:
(I)

No excisable goods should be removed from a factory or a warehouse except under an

invoice signed by the owner of the factory or his authorised agent.

(II) The invoice should be serially numbered and contain the following particulars:
(a) Registration number

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(b) Address of the jurisdictional Central Excise Division
(c) Name of the consignee
(d) Description
(e) Classification
(f)

Time and date of removal

(g) Rate of duty

(h) Quantity
(i)

Mode of Transport

(j)

Vehicle registration number

(k) Value of goods

(l)

Duty payable on goods

(m) Name of the proprietor or HUF if the business is owned by sole proprietor/HUF
respectively
(n) details of job worker (as consignee) and the manufacturer/output service provider (as
buyer) when goods are directly dispatched to job worker (without being delivered to the
premises of the manufacturer/ output service provider).
(o) details of registered dealer ( as buyer) and its customers ( as consignee) when goods
are directly dispatched to such customers (without being delivered to the premises of
the registered dealer).
(III) If the goods imported under the cover of a bill of entry are sent directly to buyers
premises, the invoice issued by the importer should mention that goods are sent directly
from the place or port of import to the buyers premises.
(IV) The invoice should be prepared in triplicate in the following manner:
(a) The original copy being marked as ORIGINAL FOR BUYER
(b) The duplicate copy being marked as DUPLICATE FOR TRANSPORTER
(c) The triplicate copy being marked as TRIPLICATE FOR ASSESSEE
However, assessee may make more than three copies for his other requirements and
prominently mention on such additional copies as NOT FOR CENVAT PURPOSES.
(V) Only one invoice book shall be in use at a time unless otherwise allowed by the
Deputy/Assistant Commissioner of Central Excise in the special facts and circumstances
of each case.
However, if assessee requires two different invoice books for the purposes of removals
for home-consumption and removals for export they may do so by intimating the

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jurisdictional Deputy/Assistant Commissioner of Central Excise. No permission is

required to use different invoice books for home consumption and export.
(VI) Before making use of invoice book, the serial numbers of the same should be intimated to the
Superintendent of Central Excise having jurisdiction over the factory of the assessee.
(VII) The amount of duty shown in invoice should be rounded off to the nearest rupee as
provided under section 37D of the Central Excise Act, 1944 and the duty amount so
rounded off should be indicated both in words as well as in figures.
(VIII) The first stage dealer or a second stage dealer and importer issuing CENVATable
invoices is also required to comply with the provisions of rule 11 regarding issue of
invoices.
(IX) The invoice issued may be authenticated by means of a digital signature .
However, where the duplicate copy of the invoice meant for transporter is digitally signed,
a hard copy of the duplicate copy of the invoice meant for transporter and self attested by
the manufacturer would be used for transport of goods.
Question 21
Briefly explain the procedure for removal of goods by a 100% EOU to Domestic Tariff Area.
Answer
Rule 17 of the Central Excise Rules, 2002 provides that where any goods are removed from a
100% EOU to domestic tariff area, such removal shall be made under an invoice as per the
procedure specified in rule 11 of the Central Excise Rules, 2002. Further, removal shall be
made only after payment of appropriate duty by debiting the account current maintained for
this purpose or by utilizing the CENVAT credit.
Such unit is required to maintain appropriate accounts related to production, description of
goods, quantity removed and the duty paid in the prescribed form.
Such unit is required to submit a monthly return in Form E.R-2 within 10 days from the end of
the month to which the return relates in respect of the excisable goods manufactured in, and
receipt of inputs and capital goods in, the unit. The return should be submitted to the
Superintendent of Central Excise. The delay in filing of such return attracts a late fee of ` 100
per day for each day of default subject to a maximum of ` 20,000.
Question 22
Describe the power of a Central Excise Officer to summon persons under the Central Excise Act.
Answer
Section 14 of the Central Excise Act, 1944 contains the provisions relating to power of a
Central Excise Officer to summon persons. As per this section, any Central Excise Officer
empowered by the Central Government in this behalf, shall have power to summon any person
whose attendance he considers necessary for:

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(i)

Central Excise
giving evidence, or

(ii) producing a document or

(iii) any other thing in any enquiry which he is making for any of the purposes of this Act.
All persons so summoned shall be bound to attend, either in person or by an authorised agent,
as such officer may direct. Further, these persons shall be bound to state the truth upon any
subject in respect of which they are examined and produce documents and other things as
may be required. Every inquiry under this section shall be deemed to be a judicial
proceeding within the meaning of section 193 and section 228 of the Indian Penal Code.
Question 23
Who can arrest a person under section 13 of Central Excise Act, 1944?
necessary condition for such arrest?

What is the

Answer
According to section 13 of the Central Excise Act, 1944, any central excise officer not below
the rank of Inspector of Central Excise has the power to arrest a person whom he has re ason
to believe to be liable to punishment under Central Excise Act or Rules. Prior approval of
Principal Commissioner or Commissioner of Central Excise is required for arrest.
Question 24
Can a document which is relevant for a proceeding under the Central Excise Act, 1944 be
searched by a Central Excise Officer? Explain the relevant provisions.
Answer
Section 12F of the Central Excise Act, 1944 contains the provisions relating to search by a
Central Excise Officer. Section 12F(1) lays down that where the Joint Commissioner of
Central Excise or Additional Commissioner of Central Excise or such other Central Excise
Officer as may be notified by the Board has reasons to believe that any goods liable to
confiscation or any documents or books or things, which in his opinion shall be useful for or
relevant to any proceedings under this Act, are secreted in any place, he may authorise in
writing any Central Excise Officer to search and seize or may himself search and seize such
documents or books or things.
Sub-section (2) of section 12F lays down that the provisions of the Code of Criminal
Procedure, 1973, relating to search and seizure, apply to search and seizure under this
section. However the police officer would have to submit the copies of any record made, to
the Principal Commissioner/ Commissioner of Central Excise.
Question 25
Briefly explain the term large taxpayer with reference to the Central Excise Rules, 2002.
Answer
As per Rule 2(ea) of the Central Excise Rules, 2002 large taxpayer means a person who

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(a) has one or more registered premises under the Central Excise Act, 1944; or
(b) has one or more registered premises under Chapter V of the Finance Act, 1994;
and is an assessee under the Income-tax Act, 1961, who holds a Permanent Account Number
issued under section 139A of the said Act, and satisfies the conditions and observes the
procedures as notified by the Central Government in this regard.
Question 26
Explain the special facility available to a large tax payer under rule 12BB of Central Ex cise
Rules, 2002 in respect of intermediate goods and the conditions required to be satisfied for
availing the said facility.
Answer
Rule 12BB of Central Excise Rules, 2002 provides that a large tax payer may remove
excisable intermediate goods except motor spirit, commonly known as petrol, high speed
diesel and light diesel oil, without payment of excise duty, from any of his registered premises
to his other registered premises for further use in the manufacture of other excisable goods
(subject goods).
For this purpose, he should satisfy the following conditions:
1.

Either of the following conditions must be satisfied:(i)

Subject goods should be manufactured out of the intermediate goods and cleared
on payment of excise duties within six months from the date of receipt of
intermediate goods, or

(ii) Subject goods should be manufactured out of the intermediate goods and exported
out of India, under a bond or letter of undertaking, within six months from the date of
receipt of intermediate goods.
2.

Removal should be made under a transfer challan/invoice.

3.

Transfer challan or invoice should be serially numbered and should contain details of
registration number, name, address, description, classification, time and date of removal,
mode of transport, vehicle registration number, quantity of the goods, name of consignee
unit and registration number.

4.

If goods manufactured out of intermediate goods are not cleared on payment of excise
duty /exported out of India within six months, duties on intermediate good s are required
to be paid with interest under section 11A and 11AA of the Central Excise Act, 1944.

5.

If intermediate goods are used in exempted subject goods, recipient unit has to pay duty
on intermediate product along with interest under section 11AA.

Question 27
With reference to the provisions of rule 16 of Central Excise Rules, 2002, explain the
procedure for availment of CENVAT credit when:
(i)

the duty paid goods returned to the factory are put through a process not amounting to

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Central Excise
manufacture;

(ii) the duty paid goods returned to the factory are put through a process amounting to
manufacture.
Answer
As per rule 16 of the Central Excise Rules, 2002, when duty paid goods are returned to the
factory for being re-made, refined etc., the assessee can avail and utilize CENVAT credit of
the duty paid if he states the particulars of such return in his records.
If the duty paid goods returned to the factory are subjected to a process which: (i)

does not amount to manufacture, the manufacturer shall pay an amount equal to the
CENVAT credit taken at the time when such goods are returned. Such amount shall be
allowed as CENVAT credit as if it was a duty paid by the manufacturer who removes the
goods.

(ii) amounts to manufacture, the manufacturer shall pay duty on such returned goods at the
rate applicable on the date of removal and on the value as determined under the relevant
provisions.
Question 28
Mention the facilities which may be withdrawn and restriction that can be imposed on a
manufacturer under rule 12CCC of Central Excise Rules, 2002 to prevent evasion of or default
in payment of excise duty.
Answer
As per Notification No. 16/2014 CE (NT) dated 21.03.2012, following restrictions can be
imposed/facilities be withdrawn by the Chief Commissioner of Central Excise under Rule
12CCC of the Central Excise Rules, 2002:(i)

the facility of monthly payment of duties may be withdrawn and the assessee shall be
required to pay excise duty for each consignment at the time of removal of goods;

(ii) payment of duty by utilisation of CENVAT credit may be restricted and the assessee shall
be required to pay excise duty without utilising the CENVAT credit though he may
continue to take the CENVAT credit;
(iii) the assessee may be required to maintain records of receipt, disposal, consumption and
inventory of the principal inputs on which CENVAT credit has not been taken;
(iv) the assessee may be required to intimate the Superintendent of Central Excise regarding
receipt of principal inputs in the factory on which CENVAT credit has or has not been
taken, within a period specified in the order and the said inputs shall be made available
for verification upto the period specified in the order.

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General Procedures under Central Excise

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(v) Where a person knowingly commits the specified offences for the second time or
subsequently, the invoice may be ordered to be countersigned by the
Inspector/Superintendent of Central Excise before each removal of goods from his factory.
(vi) Restrictions can be imposed for a period upto 6 months if the offences are committed for the
first time and upto 1 year when the offence is committed subsequently.
Question 29
(i)

Is it mandatory to pay duty and/or file various returns electronically under central excise?
Mention the exceptions, if any.

(ii) Is there any provision for submission of revised return under central excise? If yes, how
can it be submitted and if no, what is the other recourse available?
(iii) How can the adjustments be made for over/under payment of duty or non -availment of
CENVAT credit?
Answer
(i)

Payment of duty: Yes, as per rule 8(1B) of the Central Excise Rules, 2002, it is
mandatory to pay duty electronically under Central Excise.
Exception carved out in proviso to rule 8(1B) The Assistant/Deputy Commissioner
of Central Excise may for reasons to be recorded in writing, allow the assessee to
deposit excise duty by any mode other than internet banking.
Filing of returns: Yes, rule 12(5) of the Central Excise Rules, 2002 requires every
assessee to mandatorily file various returns electronically under central ex cise.
Exceptions carved out in rule 12(5) - Assessees availing exemption with respect to
certain specified goods cleared from:

a unit in the State of Uttarakhand or Himachal Pradesh [Notification No. 49/2003 CE

dated 10.06.2003]

a unit located in the specified areas meant for industrial development and growth
namely, Industrial Growth Centre or Industrial Infrastructure Development Centre or
Export Promotion Industrial Park or Industrial Estate or Industrial Area or
Commercial Estate or Scheme Area, in the above two States [Notification No.
50/2003 CE dated 10.06.2003]

(ii) There is no specific provision for submission of revised return under central excise law.
If the assessee finds that he has made short payment of duty, he should pay the amount
and inform the Department suitably. In case of excess payment of duty, he can file a
refund claim.
(iii) Unlike service tax, self adjustment cannot be made in case of over/under payment of
duty under central excise.
If the assessee has not availed CENVAT credit on inputs, he can avail the same in any
subsequent period within one year from the date of issue of invoice. However, such time

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5.17

Central Excise
limit of one year is not applicable in case of capital goods and thus, the credit can be
availed on capital goods in any subsequent period.

Question 30
Enterprises Pvt. Ltd.s excise duty liability for the month of October, 2014 is ` 25,000.
Enterprises Pvt. Ltd. has availed SSI exemption under Notification No. 8/2003 -CE
dated 1-3-2003 in the financial year 2013-14 and 2014-15. What is the due date for payment
of excise duty? Briefly state with reasons.
Answer
Every assessee (including SSI units) has to electronically pay the duty through internet
banking. [Rule 8(1B) of Central Excise Rules, 2002].
However, the Assistant/Deputy Commissioner of Central Excise, for reasons to be recorded in
writing, may allow an assessee payment of duty by any mode other than internet banking.
In this case since no such permission has been given to M/s. Enterprises Pvt. Ltd. by
Assistant/Deputy Commissioner, it will be required to deposit excise duty through internet
banking. In case of SSI units, excise duty is paid on quarterly basis and the due date for e payment for a quarter is 6th day of the month immediately following the said quarter.
Thus, due date of payment of excise duty for quarter October-December, 2014 for M/s.
Enterprises Pvt. Ltd. will be 6 th January, 2015.
Question 31
State briefly with reasons whether registration under the Central Excise Act, 1944 and rules
made thereunder is required in the following cases:
(i)

Importer who issues CENVATable invoice

(ii) Godown or duty free outlet of duty free shop

(iii) Mine engaged in production of coal
(iv) Premises used for affixing prices on pharmaceutical products
Answer
(i)

As per rule 9(1) of the Central Excise Rules, 2002, an importer who issues a
CENVATable invoice is required to take registration under the Central Excise Law.

(ii) No. Godown or duty free outlet of duty free shop appointed/ licensed as customs
warehouse are exempt from taking registration under the Central Excise Law vide
Notification No. 36/2001-C.E. (N.T.) dated 26.06.2001 issued under rule 9 of the Central
Excise Rules, 2002.
(iii) Mines engaged in production of specified goods in respect of which there is centralized
billing/ accounting system at the premises/office registered under Central Excise Law are
exempt from taking registration under the Central Excise Law vide Notification No.

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General Procedures under Central Excise

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10/2011-C.E. (N.T.) dated 24.03.2011 issued under rule 9 of the Central Excise Rules,
2002. Coal is one of such specified goods.
Therefore, if such mine has centralized billing/ accounting system at the premises/office
registered under Central Excise Law, registration under central excise is not required.
(iv) Notification No. 11/2013C.E. (NT), dated 2.08.2013 issued under rule 9 of the Central
Excise Rules, 2002 exempts the premises used solely for affixing lower ceiling prices on
pharmaceutical products from obtaining registration under Central Excise Law provided
conditions specified in the notification which exempts the pharmaceutical products from
excise duty have been fulfilled.
Therefore, if such conditions have been fulfilled, registration under central excise is not
required.

Exercise
1.

Explain the provisions relating to provisional assessment.

2.

Write a brief note on powers of Central Excise Officers.

3.

What are the procedures to be followed in relation to following:

(a)

Filing of return by assessees

(b)

Job worker discharging duty on manufacture of branded jewellery.

4.

When and how is the assessee required to discharge his liability towards payment of duty under
the Central Excise Rules, 2002?

5.

Discuss the mechanism for removal of goods at concessional rate of duty for manufacture of
excisable goods with reference to the Central Excise Act, 1944 and the rules made thereunder.

6.

Discuss the special provisions for removal of excisable goods in respect of molasses.

7.

Who is a client executive in relation to LTU?

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