A REPORT

ON

STUDY ON CONCEPT OF EXCISE DUTY

IN B.S.P

Prepared By
A.VANI

BHILAI STEEL PLANT

(Year 2010-2011)

A report is submitted in partial fulfillment of

the requirement of
2 Year Fulltime Master of Business Administration

(MBA) at

BHILAIINSTITUTE OF TECHNOLOGY
DURG (CHHATTISGARH)
 STUDY ON CONCEPT OF EXCISE DUTY

IN BHILAI STEEL PLANT

Submitted to :
N.TAMILARASAN

Prepared By:
A.VANI
BIT,DURG
 ACKNOWLEDGEMENT

It gives me immense pleasure to convey my heartfelt appreciation to the

institution. I sincerely thank BIT for providing me with adequate knowledge to
take on this complex but interesting task.

I am grateful towards the management of Bhilai Steel Plant for providing me this
opportunity to carry out analysis of one of its ambitious projects. I would like to
thank the management and the staff of Bhilai Steel Plant for their guidance and
co-operation which they had extended over the entire duration of my project.

I would render my sincere thanks to Mr. SHARMA who have been extremely
helpful and co-operative to share with me information and time which I
understand was extremely difficult. I would also extend my deepest gratitude and
sincere thanks to Mr. N. Tamilarasan (DGM Finance and accounting) for his kind
co-operation and help during the progress of the project. I would sincerely thank
my college guide for his consistent support and guidance from time to time
towards the development of this report.

I also pay my deep gratitude and sincere thanks to Mr. A .V. Fuley (Training Co-
ordinator, BTI) who provided able guidance and ensured uninterrupted training
throughout the course of the project.

Finally, I would not be able to finish my report without the support of my

parents, friends and my co-trainees in BSP. I thank them from the core of my
heart.

A.VANI

CONTENTS
Acknowledgement

1. Bhilai Steel Plant (BSP)………………………………………………………

1.1 Introduction………………………………………………………………………………..
1.2 Objectives…………………………………………………………………………………..
1.3 Product Profile……………………………………………………………………………
1.4 Product Mix ………………………………………………………………………………..
1.5 New Products………………………………………………………………………………..
1.6 Expansion & Modernization…………………………………………………………….
1.7 Major Project Activities at BSP………………………………………………………….
1.8 Organizational Structure………………………………………………………………….
1.9 SWOT Analysis ……………………………………………………………………………….

2. Finance & Accounts Department…………………………………………….

2.1 An Overview…………………………………………………………………………………..
2.2 Organizational Structure of F & A/C Department ……………………………..

3. Taxation in India

4. Excise Duty
a) Meaning of Excise Duty
b) Important Definitions
c) Computation of Excise Duty
d) Filing of Return

5. Covering Letter Of BSP

6. Conclusion…………………………………………………………………….
7. Bibliography…………………………………………………………………
7.1 Websites………………………………………………………………………………
7.2 Books…………………………………………………………………………………..
7.3 References……………………………………………………………………………

.
 DECLARATION

I am A.VANI student of BHILAI INSTITUTE OF TECHNOLOGY

(CHHATTISGARH) for the session FW-2009-11, hereby declare that, this project
report is prepared, in lieu of a compulsory paper to be submitted for the partial
fulfillment of Master of Business Administration, is my original work, which I
have submitted in Bhilai Steel Plant, to my guide Mr. SHARMA

All the information and data given in the project is authentic to the best of
my knowledge and taken from reliable sources.

Place: A.VANI
BIT,DURG

Date:

SWAPNALI BORKAR (V.B.I.R.S.M, AMRAV MOHIT SHARMA

.
 .

CERTIFICATE

TO WHOM IT MAY CONCERN

This is to certify that Miss A.VANI student of BIT,DURG has successfully

completed his project work on Project Finance & Accounts procedures at Bhilai
steel plant under my guidance during the month of 7th june to 31st july 2010.

This project has been undertaken by him for the partial fulfillment of academic
curriculum of Master of Business Administration. I here by declare that he has
completed and submitted this report up to my satisfaction.
I wish him a successful professional career.

Date:
Mr.
Place:
 BHILAI
STEEL PLANT
1. BHILAI STEEL PLANT
THE BEGINNING:

This Leadership of free, India took a visionary decision to set up

integrated steel plants under the exclusive responsibility of the state
owing to the massive investment needed for creating additional Steel
capacity, which private industry would not be able to mobilize and the
cardinal role steel would play in rapid economic advancement as a
major step towards this goal, government of INDIA and USSR
entered into an agreement signed at New Delhi on 2nd march 1955, for
the establishment of an integrated Iron and Steel works at Bhilai with
an initial capacity of one million tonnes of ingot steel.

The main consideration which responsible for setting up the plant at

Bhilai, was the availability of Iron ore at Delhi-Rajhara at a distance
of about 90 Km from the site limestone from Nandini at 22 km and
dolomite at HIRRI at 41 km. the plant was commissioned with the
inauguration of the first blast furnace by the then president of India.
Dr. Rajendra Prasad on 4th Febraury 1959. The plant was soon
expanded to 2.5 Million tonnes in September 1967 and in further
expansion to 4 MT was completed in 1988. The main focus in the 4
MT stage was on the continuous casting unit and the plate mill, a new
technology in steel casting and shaping for any integrated steel plant
to India during those times.
THE ORGANIZATION:

Bhilai Steel Plant functions as a unit of SAIL with its corporate office
at New Delhi. SAIL is governed by a Board consisting of function
Directors, Managing Directors and government nominee Directors,
85.62% of the shares of SAIL are with Indian Government and
balance are with financial institutions, mutual funds, Indian Public
and others, corporate office formulate Policies, strategies and overall
guidelines for its unit, central organization like CMO ( Central
Marketing Organization ) RDCIS ( Research and Development Centre
for Iron & Steel ) CET ( Centre for engineering and Technology ) look
after the relevant activities for the plates under SAIL.

Over the years, Bhilai Steel Plant has developed an organizational

culture that run forces its commitment to values and stimulates
continuous improvements and higher levels of performance. the chief
executives at Bhilai is the Managing director (MD) who is in overall
control of the operations of the plant, township and the mines,
Managing Director is assisted by his DRO’S i.e. the functional heads
(Executive directors/General Manager) concept of Zonal heads and
HOD’S helps in integrating various functions with clear
accountability for achieving corporate vision, company goals and
objectives.

India 2020 – A vision for the new Millennium

“We still have a number of persons in our country in Steel authority of

India Limited (SAIL)……… They have the will to excel and transform
the country, given a long term vision”.

Dr. A.P.J. Abdul Kalam

BSP’s ORGANISATIONAL OBJECTIVES:

To encage customer satisfaction through:-
 Improvement in productivity and product quality.
 Skill enhancement of our people by competence commitment
and culture-building.
 Production as per customer requirements.

QUALITY POLICY:
 Attending market leadership through enhancing customer
satisfaction.
 Achieving continual improvement in productivity, quality and
salability of our products.
  Active involvement of all our people in achieving our goals,
objectives and target.

PRODUCT PROFILE:
Bhilai Steel Plant (BSP) has mainly three types of products:-
1. Semis Product
2. Long Products
3. Flat Products

BSP is one of the major producers of long steel products in India. The
current product mix of BSP comprises Plates, Rails, Heavy
Structurals, beams, channels, merchant products, bars, rods and light
structurals, wire rods and semis, like blooms and billets. Presently,
the long products constitute about 74% and flat products about 26%
of the saleable steel produced at BSP.

PRODUCT MIX OF BSP:

Rail & Structural Mill (Capacity - 7,50,000 T )

Products
 Rails - R52 Kg/m & R60 Kg/m ; UTS 880 N/mm2 rails as per
IRST-12/96 specifications , Euronorms and international
standards.
 Thick web asymmetric rail Zu 1-60
 Beams - 600,500,450,400,350,300 & 250.
 Channels - 400,300 & 250.
 Angles - 200 & 150.
 Crossing Sleeper.
 Crane Rails - KP80, 100,120 & 140.
 Bhilai is the sole supplier of the country's longest rail tracks of
260 metres.

Bhilai Rails

 Largest producer and leading rail maker of the world.


 Four and a half decades of experience in rail making.
  Produced over 15 million tonnes of rails; 2.7 lakh km in length.
 Indian Railways- World’s second largest rail company moves
exclusively on Bhilai rails.
 Bhilai rails are subjected to world’s highest traffic density and
axle loads.
 Rails exported to 10 countries with exports to South Korea, New
Zealand, Argentina, Turkey, Iran, Egypt, Ghana, Bangladesh
and Malaysia.

Technological Superiority

 Steel from LD Converter – Ladle furnace - RH Degasser –

Comcast route; achieving world best level of degassing/refining
to less than 1.5 ppm of hydrogen in liquid steel in 100% of
heats.
 Capability to produce as rolled lengths of 80 meter and welded
panels up to 260 meters
 High degree of Straightness due to world’s most advanced and
Laser straightness measurement based end straightening
machine.
 World class tested rails passing through state of art online NDT
equipment; Laser straightness measurement, Ultrasonic and
eddy current testing machines
 Computer controlled automatic rail handling system and
automatic yard mapping for rail storage.
 Computerized Rail Tracking system for collection and storage of
all process and testing related data of each rail.

Merchant Mill (Capacity - 5,00,000 Tonnes)

Products
 Plain Rounds : dia 28, 32, 36,40, 50,53, 56, 63 & 67
 TMT Bars : 25,28, 32, 36, 40 & 45
 Lt. Structurals :Channel 100 x 50, 75 x 40
 Angles : 50 x 50 x 5 upwards to 90 x 90 x 10

Wire Rod Mill (Capacity - 4,20,000 T)

Products
 Wire Rods (Plain, Electrode Quality & TMT) in 5.5, 6, 7, 8 & 10
mm plain and ribbed, and 12 mm plain in coil form
 8, 10, and 12 mm TMT

Product Mix: Saleable Steel Production:

2010 (Estimated)
FY: 2006-07

1 6 .4 0 %
19.80% 19.60%

2 3 .3 0 %
10.20%
24.10%
2 2 .1 0 % 4 .8 0 % 2.80%
8.70%
1 0 .4 0 %
8%
6.70%
15%
7 .4 0 % SEMIS
ROUNDS/BARS
COATED PRODUCTS
CR COILS/SHEETS
R O U N D S /B A R S STRUCCTURALS
CO A T E D PO DUC T S RAILWAY MATERIALS
HR COILS/SHEETS
C R C O I L S /S H E E T S PLATES
ST RUCT URAL S
RA IL W A Y M A T E RIA L S
H R C O I L S /S H E E T S
PL A T E S

Plate Mill (Capacity – 9, 50, 000 T)

(Plate thickness: 8-120mm, Width: 1500-3270mm, Length: 5-12.5 M)

The modern Plate Mill rolls out heavy and medium plates, as well as
those for pipe manufacturers. Plates of wide variety, in any required
size, and strength, chemical and physical properties, can be produced
here. It has capacity to produce high pressure, boiler quality and high
tensile steels. Shipbuilding plates, conforming to Lloyd’s
specifications, and pressure vessel boiler plates, conforming to
various ASTM, ASME standards, have withstood the challenges of
nature and time. Some of the unique features of the mill are on-line
finishing facilities and off-line normalizing facilities. Bhilai has the
widest plate mill in the country, and it uses continuously cast slabs as
input. Liquid steel produced under controlled conditions in the LD
Converters is rinsed with argon gas to homogenize the composition as
well as to remove non-metallic inclusions before continuous casting
so as to ensure the production of high quality feedstock for the Plate
Mill. As per customers' requirement or specifications, plates are
normalized in a roller hearth normalizing furnace.

NEW PRODUCTS:

 To meet the customers’ requirements, increase the market

share and widen the product range, several new products have
been developed.
 BS-1501-224 Grade 490A for mounded pressure vessels.
 API 5L X-52/X-65 Plates for Line Pipe Applications.
 High Tensile Plates BSEN-100025, S-355 K2G3 and BS4360 50
DD Specifications for export with sub-zero impact toughness,
thicker plates in boiler quality grade.
 SAILMA 300 HI plates in 75 & 80 mm thickness were
developed for DLW, Varanasi, for application in locomotive
base plate.
 DMR-249 A (ABA grade) plates with stringent toughness
requirement at sub-zero temperature was developed for
Defense Research Lab, Hyderabad.
 Corrosion resistant Molybdenum rail (52 kg) was developed and
supplied to Railways.
 Commercial production of Cu-Ni-Cr Plates for corrosion
resistant (with corrosion resistance index of 6 Min.)
 applications has been successfully done for customers like
BHEL & TISCO.
 Commercial production of 25 mm TMT- Fe 415 and TMT- HCR
500 bars at Merchant Mill. 950 mm High Tensile impact tested
IS 8500 Fe 540 B Plates were successfully rolled and supplied
for the first time.
 63 mm High Tensile Plates of DIN 17100 St 52.3 were
successfully rolled and supplied for the first time.
 API X-60 plates were developed in up to 3270 mm width in
thickness range of 14-22 mm for pipeline segment.

 SAILMA 300 HI plates in 75 & 80 mm thickness were

developed for DLW, Varanasi for application in locomotive base
plate.
 A new segment - Windmill Tower was identified in Non-
conventional Energy sector and supplies to the tune of 2500
T/month are being made to customers like L&T, ECC &
ATMASTCO.
 Narrow width slabs in 180 mm thickness, in 205x290 size in
SWR 14 grade with specific chemistry, and Hy blooms in 205x
265 size and 205x325 size in SWR 14 grade were developed at
BBM for cycle manufacturers.
 Besides, successful trial production of wire rods of EN-8 grade
high carbon steel, and Weather Resistant Cu-P Plates for
corrosion resistant applications has been done.

Lower tonnage orders of non-standard size plates with lower slab

weight are also being. Plates from Bhilai have been exported to
Europe, America, Middle East, and South East Asia from 1986.

EXPANSION AND MODERNISATION:

Presently total requirement of iron ore of BSP is met from Dalli

Rajhara, Iron Ore Complex. In view of fast depleting reserves at
Iron Ore Complex, Rajhara and to meet future requirement, BSP
has decided to open up an iron ore mine at Rowghat which is
located about 80 Kms from Rajhara in Narayanpur District of
Chhattisgarh. Accordingly, BSP will develop the mine in Block-A of
Deposit-F of Rowghat with a production capacity of 14.0 MT per
year wef 2011-12. Due to environmental reasons, the
beneficiation plant shall be of dry circuit type. However, grant of
forest clearance under Forest (Conservation) Act, 1980 is still
awaited. work of layings Railway line for Rajhara to Rawghat has
already been selected into by SECR.

MAJOR PROJECT ACTIVITIES AT BHILAI STEEL PLANT

SI. Project Sanctio Expected

NO. ned/Est Date of
im-ated Completio
cost n

1 New Slab Caster In SMS2 along with 520.76 Sep-07

Ladle Furnace & RH Degasser

2 Technological Up gradation of BF7 170.41 July-06

including GCP

3 Installation of 15MW Turbo generator 48.10 Feb-06

at P&BS

4 Replacement of strand 9, 10 and 12 18.64 Sep-05

with housing less stands in Merchant
Mill.
5 10.37 Sep-o5
On line ultrasonic testing machine in
Plate Mill.
6 219.04 Jan-07
Rebuilding of Coke Oven Battery no 5
along with integrated coal chemical
7 facilities. 74.66 Feb-06

8 Modernization of B Strand Wire rod 64.10 July-06

Mill.

9 Hydraulic AGC, ATG & PV rolling in 75.68 *

Plate Mill.
10 102.00 *
Hot Metal Desulphurization unit in
11 SMS 2 43.97

Revamping of Sintering Plant-2 *

ERP Facilities

ORGANISATIONAL STRUCTIRE OF BHILAI STEEL PLANT

MANAGING DIRECTOR

ED
GM(F&A) ED (PROJECTS) ED (P&A) ED (MM)
(WORKS)

GM (IT) GM (TS)
GM (PROJECTS) GM (MM)

GM (PERS)
GM (M&SP)
GM (PP&E & BEDB)

GM (HRD)
GM (IA) GM I/C (SERVICES)

GM (SAFETY) GM (MS)
GM I/C
(MINES)
GM I/C (M&U) (REFR) DGM (L & A)

DIR (M&HS) GM (P MILL & MILLS-LP)

ACVO GM(CO,CCD & SP,OHP)

GM I/C (PE,EN & STEEL)

COC
GM (QUALITY)

GM (CCS)- SMS-II
SWOT Analysis

The primary function of Bhilai Steel Plant are derived from the
functions of the mother organization SAIL. As a production unit of
SAIL, BSP carries out the specific functions and task assign to it from
time to time, both with regards to production and execution of other
functions of SAIL, such as design consultancy, training and
development etc. The primary analysis of any organization begins
with the SWOT Analysis. It gives a complete picture so as to where an
organization stands with respect to its competitors
And areas where its lags behind. It also gives a bird eye view f the
possible opportunity that exists which can be capitalize upon the
threats that may affect its operations at present or in the future.

SWOT

Strengths:
 Capacity of plant
 Product Mix
 Quality of Products
 Human Resource & Management

Weakness:
 Supply of Raw Materials
 Demurrages
 Rigidity of Labor Law compared to other countries

Opportunities:
 Upsurge in Indian Economy
 Technological Edge
 Human Resource Management
Threats:
 Effect of Custom Duty
 International Competition
 Domestic Competition
 Increase in Oil Prices
 Depleting Mines

BHILAI STEEL PLANT PERFORMANCE HIGHLIGHTS:

2008 - 09

During 2008-09, the year of Golden Jubilee, Bhilai Steel Plant

continued to forge ahead in the areas of production, productivity and
techno-economics. With expansion activities picking up pace for
enhancement of production capacities, BSP took up various projects
and chalked out an ambitious road map (production plan). Special
emphasis was also given to the production of Special Steel/ Value
added products.
With depleting Iron Ore reserves & constraints in Coal supplies
throughout the year, Coke Oven pushing had to be regulated resulting
in reduced production of Hot Metal. For optimally utilising the
available Hot Metal, production at SMS-2 was maximised to sustain
higher production of Rails & Plates. The semis component in Saleable
Steel was restricted in order to sustain production in finishing mills.
Against all odds, the Plant continued to operate well above the rated
capacity in all major areas of production and achieved a capacity
utilization of 112.4 % in Hot Metal, 129.1 % in Crude Steel and 140.8
% in Saleable Steel. This has resulted in a growth of 9.4%, 5.3%
and.9% respectively over the last year. In response to increasing
market demand all the four finishing mills viz. RSM, MM, WRM &
PM operated well above the rated capacity and achieved best ever
yearly production for the first time since inception. As regard
of Saleable Steel at, the plant operated above the rated capacity for
the fifteenth year in succession and notched a production of 4.43
MT.
The upward trend in production was maintained throughout and
several new records were established. Bhilai Steel Plant registered
substantial growth and achieved best yearly production of Sinter from
Sintering Plant-3, Total Sinter, Hot Metal, Cast Steel at SMS-2, Cast
Slabs, Cast Blooms, Total Crude Steel, Rails, Total Rails & Structurals,
Merchant Products, Wire rods, Plates, Total Finished Steel and Total
Saleable Steel. Growth was also registered in the areas of production
of Limestone from Nandini, Iron Ore from Rajhara, BF Coke, Sinter
from Sintering Plant 2, Ingot Steel at SMS-1, Ingots rolled at BBM
and Billets from CBM.

Several Strategies were adopted & new initiatives were taken up for
enhancing performance and to provide a cutting edge to the
organization during the year, which paved the path for continuous
growth and helped in maximizing our share in the domestic steel
market. Some of the initiatives were:

 Optimum utilization of available resources like operating all

seven Blast Furnaces and three Converters with 3 Casters
simultaneously with the fourth Caster being operated on overlapping
sequence.
 Maintaining average pushing level at 718 equivalent ovens per
day throughout .
 Higher Finished Steel component in Saleable Steel at 81.4 %
registering a growth of 6.3 % over last year.
 Greater thrust on value addition of products like gradual
switches over to higher grade, i.e. Fe-500 for both TMT Bars & Rods.
 Enhancing customer satisfaction by on-line invoicing of
deliveries by road.
 Rolling of different TMT profiles simultaneously from different
strands at WRM.
 Charging of Nut Coke with Iron Ore lumps in BF 3 & 4.
 Use of Chiller in ASU-3 of OP-2 to increase Oxygen Production.
 Maximize Utilization of Grinding facilities for increasing CDI
injection in BF’s.
 100 % Utilization of LD slag.
 Rolling of 100 % TMT in Fe500 grade in Merchant Mill.
 Restarting of Tar Injection in Blast Furnace.

Record production of 7.23 MT of Total Sinter, surpassing the

previous best of 6.93 MT in ‘05-06 and registering a growth of 8.8 %
over previous year.

AWARDS & ACCOLADE

Bhilai Steel Plant has excelled in all walks of life, be it

technology, quality, environment or socio-culture, some of the
prestigious awards bugged by BSP are as follows.
• Prime minister Trophy for best integrated steel plant in India
Won seven times science its inception in the year1992-93, 1993-
94, 1995-96, 1996-97, 1997-98, 2003-04 and 2004-05.
• National energy conservation award in the integrated steel
sector won for 1994,1996,1998 & 1999.

• IIM National Quality awards winners in ferrous category during

1995-96, 1997-98 and 1999-2000.
• BIS Rajiv Gandhi National Quality award won twice in recent
years.

• IOD Golden Peacock National Quality Award won therice in

recent year.

• INSAAN Award for employee suggestions six times in last Seven

year.

• SAIL paryawaran Award for all the six times (this ward was
given from 1992-93 til 1997-98), for best environmentally
managed Integreted Steel Plant. Several Paryawaran Awards
have been also been won by captive mines and SMS-1 of BSP.

• Indo- German Green Tech. Environment Excellent Award for

the year 1999-2000.

• Lal Bahadur shastri Memorial Award for the year 2000-01 for
“Best Pollution Control Implementation Gold Award”.

• Dalli mines has bigged National Safety Award for a record seven
times.

• National Award for best pay rolls the year 1999-2000 for
outstanding social work won by Bhilai savings group in public
sector for 1999-2000 and thrice earlier as best Sanchayika
Award.

• Washeshari Devi Bhatia memorial Charitable Trust Award for

Mahila Samaj.

• Steel ministers Trophy for the longest accident free period

during 1995 -96 in the integrated steel plant category.

• BTI adjudged the best Training Establishment in northern zone

by all India Regional Council several times.

• Padam Bhushan – Awarded to smt. Teejan Bai, Pandwani

Singer.
 • Prime Minister’s Shram Awards since inception of the
award(1985)- Total 25 won as follows:-

 Shram Ratan : 08

 Shram Bhushan : 09

 Shram vir : 04

 Shram Shri : 04

 Vishwakarma Rastriya puruskar :

188

 Arjun Award : 02

• Apart from above, numbers individual group awards have been

won time by BSP employees at National level in the field of
Quality Circles, Management , Metallurgy, Sport & Cultural
Activities etc.

Bhilai Rail – universally certified

• RDSO, Indian Railways

• RITES Ltd
• ISO: 9001- 2000 certificate by LRQA (Lloyds Register Quality
Assurance)

• ISO – 14000 certified by BIS

• Crown Agents, London

• General Superintendence Company, Geneva

• Lloyds Register of Shipping

• Robert W Hunt & Company

• Overseas Merchandise Inspection Company, Tokyo

• Egyptians Railway inspection Team

 FINANCE &
ACCOUNTS
DEPARTM
ENT

2. FINANCE AND ACCOUNTS DEPARTMENT

An Overview:
For any organization, the Finance & Accounts function plays a key
role in guiding the organization to meet its ultimate goals and
objectives. While Finance function embarks upon regulating the
inflow and outflow of funds, the Accounts function basically
supports the finance function by way of analyzing the transaction in
a most befitting manner. Finance & Accounts function is like a
mirror through which one can peep into the health of an
organization.

Finance & Accounts Department of BSP has to execute several

activities. The Department has been divided into several sections
based on organizational needs and functional expertise required by
grouping activities of similar nature as a section. The objective of
Department is always to meet the requirements of Line
Departments, customers, suppliers, stakeholders and Government
Departments while discharging its own functions such as
accounting, budgetary control, rendering advice on financial
matters and meeting the statutory requirements. To back up all
above functions, the Department has a vast and dedicated team of
professional accountants and experts.

The entire department is represented by the following sections -

 Cash & Bank
 Central Accounts & Assets Accounts
 Central Excise & Service Tax
 Contract Concurrence
 Contributory Provident Fund (CPF)
 Cost Accounting & Energy Cell
 Final Claim Cell (FCC)
 Finance Co-ordination & Administration
 Freight & Claims
 Import Accounts
 Incentive Cell
 Management Accounting
 Medical Accounts
 Mines-Rajhara, Nandini, Hirri
 Operation Accounts
 Operation Budget
 Project Finance & Accounts
  Purchase Concurrence
 Raw Material Accounts
 Rent Cell
 Sales Accounting
 Sales Invoicing and Central Freight
 Sales Tax & Entry Tax
 Stock Ledger (Stock valuation)
 Stock Verification
 Store Accounts
 Store Bill Accounting
 Store Bills
 Township Accounts
 Wages

Finance also discharges special functions such as taxation like Central

Excise, Sales Tax, VAT, CST, Entry Tax, and Terminal Tax.

ORGANISATIONAL STRUCTURE OF
FINANCE AND ACCOUNT DEPARTMENT OF BHILAI
STEEL PLANT

GM(F&A)

CFA
D.G.M.(F&A) CFM CFM CFM
D.G.M.(F&A)
PROJECT FINANCE,
CAPITAL BUDGET,
MINES, ZONAL
WORKS FINANCE
WAGES, WAGES
CASH, WAGES-I ZONAL A/CS & WORKS
COORDINATION
WAGES-III A, COMPILATION
INCENTIVE CELL,
STORES, FIN.
ESTABLISHMENT RAW MATERIALS
ADMINISATION & A/C, FREIGHT & SALES, EXCISE,
COORDINATION CLAMS, STOCK SALES TAX, FRT.
VERIFICATION, OUTWARD
TOWNSHIP
CENTRAL A/CS, MANAGEMENT SERVICES,
A/CS, ASSETS A/CS, TAXATION I INDIA
HOSPITAL A/CS
OPERATION BUDGET, COST A/CS,
ENERGY CELL,
OPERATION A/CS, PC, CC.
 India has a well developed tax structure with a three-tier
federal structure, comprising the Union Government, the
State Governments and the Urban/Rural Local Bodies. The
power to levy taxes and duties is distributed among the
three tiers of Governments, in accordance with the
provisions of the Indian Constitution. The main taxes/duties
that the Union Government is empowered to levy are Income
Tax (except tax on agricultural income, which the State
Governments can levy), Customs duties, Central Excise and
Sales Tax and Service Tax. The principal taxes levied by the
State Governments are Sales Tax (tax on intra-State sale of
goods), Stamp Duty (duty on transfer of property), State
Excise (duty on manufacture of alcohol), Land Revenue (levy
on land used for agricultural/non-agricultural purposes), Duty
on Entertainment and Tax on Professions & Callings. T he
Local Bodies are empowered to levy tax on properties
(buildings, etc.), Octroi (tax on entry of goods for
use/consumption within areas of the Local Bodies), Tax on
Markets and Tax/User Charges for utilities like water supply,
drainage, etc.

Since 1991 tax system in India has under gone a radical

change, in line with liberal economic policy and WTO
commitments of the country. Some of the changes are:

• Reduction in customs and excise duties

• Lowering corporate Tax
• Widening of the tax base and toning up the
tax administration
WHAT IS TAX?

A tax is a compulsory charge or payment levied or

imposed by a public authority on an individual.

TYPES OF TAXES

1)DIRECT TAX

A tax which is paid by a person on whom it is legally

imposed and the burden of which cannot be shifted to
any other person.

2)INDIRECT TAX

Indirect tax is imposed on one person but is paid

partly or wholly by others.

General Tax Incentives for Industries:

100% deduction of profits and gains for ten years is available in respect of
the following:

• Any enterprise carrying on the business of developing,

maintain ing and operating infrastructure facilities viz.,
roads, highways, bridges, airports, ports, rail systems,
industrial towns, inland waterways, water supply
projects, water treatment systems, irrigation projects,
sanitation and sewage projects, solid waste
management systems.
• Undertakings engaged in generation or generation and
distribution, transmission or distribution of power,
which commence these activities before 31.3.2006.
• Any company engaged in scientific and industrial
research and development activities, approved by the
prescribed authority, before 31.3.2003.
• Any undertaking which develops, operates, maintains
an Industrial Park or Special Economic Zone before
31.3.2006.
• Notified Industrial Undertakings set up in the North
Eastern region including seven north-eastern states and
the state of Sikkim.
• Undertakings developing and building housing projects
approved by the local authority before 31.3.2001and
which are completed before 31.3.2003.

• 100% deduction for seven years for

undertakings producing or refining mineral oil.
• 100% deduction from income for first five
years and 30% (for persons other than companies:
25%) in subsequent five years is available in
respect of the following:

o Company which starts providing

telecommunication services whether
basic or cellular including radio paging,
domestic satellite service, network or
trunking, broad band network and
internet services before 31.3.2003.
o Industrial undertakings located in
certain specified industrially backward
states and districts.
o Undertakings which begin to
operate cold chain facilities for
agricultural produce before 31.3.2003.
o Undertakings engaged in the
business of handling, storage,
transportation of food grains.

• 50% deduction for a period of five years is

available to undertakings engaged in the business
of building, owning and operating multiplex
theatres or convention centres constructed before
31.3.2005.
• Tax exemption of 100% on export profits for
ten years upto F.Y. 2009-10, for new industries
located in EHTPs and STPs and 100% Export
Oriented Units. For units set up in Special
Economic Zones (SEZs), 100% deduction of export
income for first five years followed by 50% for next
two years, even beyond 2009-10.
• Tax exemption of 100% of Export profits for
ten years for new industries located in Integrated
Infrastructure Development Centres or Industrial
Growth Centres of the North Eastern Region.
• Deduction of 50% of export profits from the
gross total income. The deduction would be
restricted to 30% for financial year 2003-04 and
no deduction is allowable subsequently.
• Deduction from the gross total income of
50% of foreign exchange earnings by hotels and
tour operators. The deduction would be restricted
to 30% for financial year 2003-04 and no
deduction is allowable subsequently.
• 50% deduction of export income due to
export of computer software or film software,
television software, music software, from the gross
total income. The deduction would be restricted to
30% for financial year 2003-04 and no deduction is
allowable subsequently.
• Deduction in respect of certain inter-
corporate dividends to the extent of dividend
declared.
• Exemption of any income by way of dividend,
interest or long term capital gains of an
infrastructure capital fund or an infrastructure
capital company from investment made by way of
shares or long term finance in any enterprises
carrying on the business of developing,
maintaining and operating infrastructure facility.
SALES TAX

Central Sales Tax (CST).

When the sale is done between states ie inter state sale then central sales tax
is levied.

Local Sales Tax (LST) OR VAT

Where a sale takes place within a state, LST would be levied.

Such a tax would be governed by the relevant state tax
legislation. This is normally 1%,2%,4 or 5% &14%.

Excise Duty

It is a tax levied on those dutiable goods which are produced

or manufactured in india & has no relation with the sale of
these goods. Central VAT (CENVAT) is applicable to
practically all manufactured goods, so as to avoid cascading
effect on duty.

Small Scale Sector is exempted from payment of excise duty

from annual production upto Rs.10 million.

Custom duty
It refers to the duty levied on the Import of the goods as well as on the
Export of the goods.
Nature of Excise Duty

Power to levy excise duty is derived from Constitution. Excise is a

duty on excisable goods manufactured or produced in India. Each
word of this definition is vitally important to fix liability of Central
Excise Duty.

Indian Constitution has given powers to Central Govt. and State Govt.
to levy various taxes and duties. Powers of Central and State Govt.
are enlisted in Seventh Schedule to our Constitution. Entry No. 84 of
list I of Seventh Schedule to the Constitution reads as follows :
“Duties of excise on tobacco and other goods manufactured or
produced in India, except alcoholic liquors for human consumption,
opium, narcotics, but including medical and toilet preparations
containing alcohol, opium or narcotics.”

Basic conditions of excise liability - Section 3 of Central Excise

Act ( often called the ‘Charging Section’ ) states that ‘There shall be
levied and collected in such manner as may be prescribed duties on
all excisable goods (excluding goods produced or manufactured in
special economic zones) which are produced or manufactured in
India - . - . -'. The words ‘goods which are manufactured or produced
in India’ are same as those used in Entry No 84 to list I. Thus, the
power to levy Central Excise duty is derived from the Constitution.
This definition of charging section of Central Excise is vital, because it
clearly signifies that there are four basic conditions for levy of Central
Excise duty. (1) The duty is on goods. (2) The goods must be
excisable. (3) The goods must be manufactured or produced (4) Such
manufacture or production must be in India. Unless all of these
conditions are satisfied, Central Excise Duty cannot be levied.
Each of these requirements needs close scrutiny.

GOODS MANUFACTURED IN SEZ ARE ‘EXCLUDED EXCISABLE

GOODS’ – A per section 3(1) of CE Act, duty is leviable on all
excisable goods (excluding goods manufactured or produced in
Special Economic Zones). Thus, goods manufactured or produced in
SEZ are ‘excisable goods’ but no duty is leviable, as charging section
3(1) excludes those goods. Thus, the goods manufactured in SEZ are
not ‘exempted goods’. They can be termed as ‘excluded excisable
goods’ [The revised definition is made effective from 15-8-2003].

Taxable Event for Excise Duty - ‘Taxable event’ is that on happening

of which the charge is fixed. It is that event, which on its occurrence
creates or attracts the liability to tax. Such liability does not accrue at
any earlier or later point of time . Tax becomes payable when liability
to pay tax arises and liability to pay tax arises by the happening of the
taxable event.

Excise duty is not directly on the goods, but manufacture thereof. - .

- . - Though both excise duty and sales tax are levied with reference
to goods, the two are very different imposts. In one case, the
imposition is on the act of manufacture or production, while in the
other it is on act of sale

Taxable event in Central Excise is the manufacture of excisable

goods. - . - . - The sale or the ownership of the end-product is
absolutely irrelevant for the purposes of 'taxable event' under Central
Excise'.

Person liable to pay excise duty - Once duty liability is fixed, the duty
can be collected from a person at the time and place found
administratively most convenient for collection.

THE DUTY LIABILITY IN CASE OF MANUFACTURED GOODS -

Rule 4(1) of Central Excise Rules makes it clear that excise duty is
payable by the manufacturer or producer of excisable goods. In case
where goods are allowed to be stored in a warehouse without
payment of duty, the duty liability is of the person who stores the
goods. Rule 4(1) makes it clear that goods can be removed from the
place where they are manufactured or produced or warehoused, only
on payment of duty.

Ownership of raw material is not relevant for duty liability. Duty

demand is payable by manufacturer, even if it cannot be recovered
from customer. Rule 20 of CE Rules permit warehousing of certain
goods in warehouses without payment of duty. These goods are
coffee, petroleum products, benzene, tolune etc. In such cases, the
duty liability is on the person who stores the goods.

DUTY LIABILITY IN CASE OF JOB WORK - Even in case of job

work, the duty liability is of actual manufacturer and not of the raw
material supplier

Rate of duty as applicable on date of removal relevant - Though

taxable event is 'manufacture', duty payable is as applicable on date
of removal i.e. clearance from factory.

State of goods at the time of removal is relevant - Goods have to be

classified and valued in the state in which goods are removed from
the factory. Any further processing done after removal is not relevant.

Duty payable even when not collected - An assessee is liable to pay

sales tax and the question whether he has collected it from consumer
or not is of no consequence. His liability is by virtue of being an
assessee under the Act

Duty is a manufacturing expense from accounting point of view -

Excise duty should be considered as a manufacturing expense and
should be considered as an element of cost for inventory valuation,
like other manufacturing expenses. Excise duty cannot be treated as
a period cost.

Types of excise duties - Excise duties are of following types -

DUTIES UNDER CENTRAL EXCISE ACT - Basic duty is levied

under Central Excise Act.

BASIC EXCISE DUTY TO BE TERMED AS CENVAT - Basic

excise duty (also termed as Cenvat as per section 2A of CEA
added w.e.f. 12-5-2000) is levied at the rates specified in
First Schedule to Central Excise Tariff Act, read with
exemption notification, if any. – [section 3(1)(a) of CEA].

Basic excise duty is levied u/s 3(1) of Central Excise Act. The section
is termed as ‘charging section’. The duty rate is generally 10.30%
w.e.f. 27-2-2010including education and SAH cess [ It was 8% w.e.f.
24-2-2009 i.e. total 8.24%. Still earlier, it was 14% i.e. total 14.42%].

Education cess is payable @ 2% of the basic duty and Secondary

and High Education Cess is 1% of basic excise duty.

EDUCATION CESS AND SAH EDUCATION CESS ON EXCISE DUTY

- If excise duty rate is 8%, education cess will be 0.16% and SAH Education
cess will be 0.08%. A provisions of Central Excise Act, including those
relating to refunds, exemptions and penalties will apply to education cess
and SAH cess.

EXCISE DUTY IN CASE OF CLEARANCES BY EOU – The EOU

units are expected to export all their production. However, if they
clear their final product in DTA (domestic tariff area), the rate of
excise duty will be equal to customs duty on like article if imported in
India. [proviso to section 3(1)]. Note that even if rate of customs duty
is considered for payment of duty, actually the duty paid by them is
Central Excise Duty. The rate of customs duty is taken only as a
measure. The EOU unit can sale part of their final products in India at
50% of customs duty or normal excise duty in certain cases.

NATIONAL CALAMITY CONTINGENT DUTY – A ‘National Calamity

Contingent Duty’ (NCCD) has been imposed vide section 136 of
Finance Act, 2001 [clause 129 of Finance Bill, 2001, w.e.f. 1.3.2001].
This duty is imposed on pan masala, chewing tobacco and
cigarettes. It varies from 10% to 45%. - - NCCD of 1% was imposed
on PFY, motor cars, multi utility vehicles and two wheelers and
NCCD of Rs 50 per ton was imposed on domestic crude oil, vide
section 169 of Finance Act, 2003.

DUTIES UNDER OTHER ACTS - Some duties and cesses are levied
on manufactured products under other Acts. The administrative
machinery of central excise is used to collect those taxes. Provisions
of Central Excise Act and Rules have been made applicable for levy
and collection of these duties / cesses.

Goods

The word “goods” has not been defined under the Central Excise Act.
Article 366(12) of the Constitution defines ‘goods’ as ‘goods includes
all materials, commodities and articles’. Sale of Goods Act defines
that “Goods” means every kind of movable property other than
actionable claims and money; and includes stocks and shares,
growing crops, grass and things attached to or forming part of the
land which are agreed to be severed before sale or under the
contract of sale. These definitions are quite wide for purpose of
Central Excise Act. However, case law on this is well developed and
as per judicial interpretation, the word “goods”, for purpose of levy of
Excise duty, must satisfy two requirements i.e. (a) they must be
movable and (b) they must be marketable.

Goods must be movable - They must be movable. Thus,

immovable property or property attached to earth is not ‘goods’ and
hence duty cannot be levied on

Goods must be Marketable - The item must be such that it is

capable of being bought or sold. This is the test of ‘Marketability’.
The goods must be known in the market. Unless this test of
marketability is satisfied, duty cannot be levied as these will not be
goods.

Actual sale is not necessary - Marketability is an essential ingredient

in order to be dutiable. Marketability is a decisive test for dutiability. It
only means ‘saleable’ or ‘suitable for sale’. It need not in fact be
marketed.

Mere mention in Tariff is not enough - Mere mention of an item in

tariff is not enough. Simply because a certain article falls within the
schedule (of Central Excise Tariff), it would not be dutiable if the
article is not ‘goods’ known to the market.

Duty leviable on captive consumption - Since excise is a duty on

manufacture, duty is leviable even if goods are consumed within the
factory and not sold. However, the goods must be marketable in the
condition in which they are manufactured and further consumed
within the factory.

However, mere fact that goods have been captively consumed (i.e.
consumed within the factory) is no evidence of its marketability (or
non-marketability). Even transient items can be ‘goods’ provided that
the article is capable of being marketed even during that short period.
Goods which are unstable can be theoretically marketable if there
was market for such transient article - but one has to take a practical
view on the basis of available evidence.

Every thing that is sold is not 'marketable' - 'Marketability' implies

regular market for a product. Occasional, stray or distress sales do
not mean that the product is 'marketable'.

Marketability to be decided on the basis of the state in which it is

produced - The commodity which is sought to be made liable to
excise duty must be a commodity that is marketable as it is, and not a
commodity that may, by further processing, be made marketable

Waste and Scrap are ‘goods’ - market -Waste and scrap of steel
arising during manufacture is dutiable as it is marketable and
specifically mentioned in tariff.

WASTE AND SCRAP NOT GOODS IF NOT MARKETABLE

WASTE AND SCRAP EXCISABLE ONLY IF MENTIONED IN CETA -

'Dust collector fine' emerging during grinding is merely an industrial
waste and even if it fetches some price, it is not 'excisable goods' as
there is no tariff entry in CETA.

What are not “Goods” - Some cases where the product was held as
not ‘goods’ are illustrated here.

Goods having very short life are not ‘goods’, if not marketable in that
short period – Yeast having short shelf life is not ‘goods’ when there
is no proof about its marketability, even if the product is specified in
tariff.

Immovables are not ‘goods’ - Articles which are attached to earth are
not goods as goods means a movable property.

Excisability of plant & machinery assembled at site - Plant and

Machinery or structure assembled and erected at site cannot be
treated as 'goods' for the purpose of Excise duty, if it is not
marketable and movable.
ASSEMBLY AT SITE IS NOT MANUFACTURE, IF IMMOVABLE
PRODUCT EMERGES

a) Duty cannot be levied on immovable property (b) If plant is so

embedded to earth that it is not possible to move it without dismantle,
no duty can be levied. (c) If machinery is superficially attached to
earth for operational efficiency, and can be easily removed without
dismantling, duty is leviable (d) Turnkey projects are not dutiable, but
individual component/machinery will be dutiable, if marketable.

Intermediate Product - Captive Consumption - Manufacture is

possible at intermediate stage also. If a product which is complete,
identifiable and which can be sold in market comes into existence
during the manufacturing process at intermediate stage, it will amount
to manufacture and will be dutiable even if it is not sold and it is used
within the same factory

Excisable Goods

Other essential requirement is that the goods must be ‘excisable’.

Section 2(d) of Central Excise Act defines Excisable Goods as
‘Goods specified in the Schedule to Central Excise Tariff Act, 1985 as
being subject to a duty of excise and includes salt’. ‘Goods’ includes
any article, material or substance which is capable of being bought
and sold for a consideration and such goods shall be deemed to be
marketable sThus, unless the item is specified in the Central Excise
Tariff Act as subject to duty, no duty is leviable.

Goods ‘excisable’ even if exempt from duty - ‘Excisable goods’ do

not become non-excisable goods merely because they are exempt
from duty by an exemption notification .

Goods not included in CETA are ‘non-excisable goods’ - Some

goods like wheat, rice, cut flowers, horses, soya beans etc. are not
mentioned in Central Excise Tariff at all and hence they are not
‘excisable goods’, though they may be ‘goods’. These are ‘non-
excisable goods’. Similarly, ‘waste and scrap’ will be ‘excisable
goods’ only if specifically mentioned in CETA –

Mere mention in CETA not enough - Mere mention in the Excise

Tariff will not attract duty, unless these are ‘goods’ i.e. unless test of
marketability is satisfied .Further, the ‘excisable goods’ are liable to
duty only if they are ‘manufactured’ or ‘produced’.

Goods excisable even if duty is nil – If by virtue of an exemption

notification, the rate of duty is reduced to NIL, the goods specified in
the tariff would still be regarded as excisable goods on which NIL rate
of duty was payable.

Goods removed under bond are not 'exempted goods' - Under

Central Excise, the term 'exempted goods' has specific meaning.
'Exempted goods' means those exempted under notification issued
u/s 5A of CEA. Goods removed under bond without payment of duty
are neither goods 'exempt from duty' nor 'goods chargeable to Nil
rate of duty'. - CBE&C circular No 278/112/96-CX dated 11.12.1996 -
relying on law ministry opinion dated 29.10.1974.

Goods manufactured in SEZ are ‘excluded excisable goods’ – As per

section 3(1) of CE Act, as made effective w.e.f. 15-8-2003, duty is
leviable on all excisable goods (except goods manufactured or
produced in Special Economic Zone). Thus, goods manufactured or
produced in SEZ are ‘excisable goods’ but no duty is leviable, as
charging section 3(1) excludes those goods. Thus, the goods
manufactured in SEZ are not ‘exempted goods’. They can be termed
as ‘excluded excisable goods’.

Meaning of 'Goods which have suffered duty' - In some cases, the

wording used is 'goods which have suffered duty / tax'. In such case,
it has been held that actual payment of tax / duty is necessary. Goods
cannot be said to have 'suffered tax' when no tax is paid.

Manufactured or produced

Excise is a duty on “manufacture or production” of goods. Excise is

mainly levied on goods manufactured or produced. Thus, definition of
‘manufactured’ or ‘produced’ is important because excise is a duty on
manufacture and if there is no manufacture, there is no liability of
payment of Central Excise duty.

DIFFERENCE BETWEEN SALES TAX AND EXCISE - Central

Excise duty has to be distinguished from Sales Tax. The Sales Tax is
a tax on sales and hence can be imposed only when there is a sale.
On the other hand, excise duty is a duty on manufacture and the duty
liability is fastened immediately after goods are manufactured ;
whether these are sold or not is immaterial. For example, if a
Company manufactures a machine or fabricates some furniture within
the factory for its own use, there will be no sales tax on the machine
or furniture manufactured as it is not sold. However, the machine or
furniture will be liable to excise duty as it has been manufactured.
However, for administrative convenience, the payment of duty may
be deferred till removal of goods from the factory.

Produced - The word produced is used to cover items like tobacco,

tea, coal, ores etc. which are produced, but no manufacturing
process may be carried out ,it has been held that the word
‘production’ has a wider connotation than the word ‘manufacture’.
Every ‘manufacture’ can be characterised as ‘production’, but every
‘production’ need not amount to manufacture. When the word
‘produced’ or ‘production’ is used in juxtaposition with the word
‘manufacture’, it takes in bringing into existence new goods by a
process which may or may not amount to manufacture. It also takes
in all by-products, intermediate products and residual products, which
emerge in the course of manufacture of goods. Thus, waste, scrap
and by-products are dutiable even if they are not manufactured, as
they are ‘produced’.

Thus, the word 'produced' covers (a) Items like coffee, tea, tobacco,
coal, dairy products, ores etc. which are 'produced' (b) The word
'produced' can also cover live products like horse, fish, flowers etc.
which are 'produced' (c) By-products, scrap etc. which are not really
'manufactured' but they do get 'produced' (d) It will obviously cover
goods 'manufactured'.

Manufacture - Section 2(f) of Central Excise Act merely states that

“manufacture” includes any process - (i) incidental or ancillary to the
completion of manufactured product or (ii) which is specified in
relation to any goods in the Section or Chapter notes of the Schedule
to the Central Excise Tariff Act, 1985 as amounting to manufacture,
or (iii) which, in relation to goods specified in third schedule to the
CEA, involves packing or repacking of such goods in a unit container
or labelling or re-labelling of containers or declaration or alteration of
retail sale price or any other treatment to render the product
marketable to consumer. [clauses (ii) and (iii) are called deemed
manufacture]. - - Thus, definition of ‘manufacture’ is inclusive and not
exhaustive. However, there is ample case law on this issue.
‘Manufacture’ means : (a) Manufacture as specified in various Court
decisions i.e. new and identifiable product must emerge or (b)
Deemed Manufacture.

DEEMED MANUFACTURE – Deemed manufacture is of two types –

(a) CETA specifies some processes as ‘amounting to manufacture’. If
any of these processes are carried out, goods will be said to be
manufactured, even if as per Court decisions, the process may not
amount to ‘manufacture’ [section 2(f)(ii)] (b) In respect of goods
specified in third schedule to Central Excise Act, repacking, re-
labelling, putting or altering retail sale price etc. will be ‘manufacture’.
The goods included in Third Schedule of Central Excise Act are same
as those on which excise duty is payable u/s 4A on basis of MRP
printed on the package.

Manufacture as defined by Courts - Some important Court

decisions are discussed here.

New substance having distinct name, character or use must emerge

-Manufacture is end result of one or more processes, through which
original commodity passes. Thus, manufacture implies a change but
every change is not manufacture. A new and different article must
emerge having a distinctive name, character or use.

MERE MENTION IN TARIFF DOES NOT MEAN MANUFACTURE-It

was held that even if an article is specified in tariff, there is no duty
liability unless it is ‘manufactured’.

Trade Parlance is important - The test to be applied is whether a

commodity subject to processing retains its original character and
identity or whether the processed commodity is regarded in the trade
by those who deal in it, as distinct identity from original commodity.
Nature and extent of processing may vary. With each process, the
original commodity experiences change. But it is only when the
change or series of change take commodity to a point where
commercially it is recognised as a new and distinct commodity, then it
can be said that new commodity has come into being. The test is
whether in the eyes of those dealing in the commodity or in
commercial parlance, the processed commodity is regarded as
distinct in character and identity from the original

Assembly can be manufacture - Assembly of various parts and

components may amount to manufacture if new product emerges,
which is movable and marketable.

Manufacture even if final product falls under same tariff - There can
be ‘manufacture’ even if both inputs and final product fall under same
tariff heading, if a different identifiable commercially known product
comes into existence

Deemed manufacture - Section 2(f), which defines ‘Manufacture’

has two deeming provisions. Deemed manufacture is of two types –
(a) CETA specifies some processes as ‘amounting to manufacture’. If
any of these processes are carried out, goods will be said to be
manufactured, even if as per Court decisions, the process may not
amount to ‘manufacture’. (b) In respect of goods specified in third
schedule to Central Excise Act, repacking, re-labelling, putting or
altering retail sale price etc. will be ‘manufacture’. The goods included
in Third Schedule of Central Excise Act are same as those on which
excise duty is payable u/s 4A on basis of MRP printed on the
package.

Thus, the process may not amount to manufacture as per principles

evolved by Courts, but these will be liable to excise duty if it is defined
as amounting to manufacture under CETA, or if the product is
included in third schedule to Act and any of specified process (like re-
packing, re-labelling, alteration of retail sale price etc.) are carried
out. - - This is called 'deeming provision' or a 'legal fiction'. e.g.
process like labelling, re-labelling, re-packing is not 'manufacture' as
no new product emerges. However, it will be 'deemed manufacture'
and duty will be payable if the process is specified in Central Excise
Tariff as 'amounting to manufacture' in relation to any goods. This
amounts to charging excise duty on product which is not really
manufactured as defined by Courts.

BOTH REPACKING AND LABELLING REQUIRED AND PRODUCT

SHOULD BE MADE MARKETABLE – In many ‘deemed
manufacture’ provisions, the wording used is ‘labelling or re-labelling
of containers and repacking from bulk packs to retail packs or the
adoption of any other treatment to render the products marketable to
the consumer’. Since the word used is ‘and’, it can be argued that
mere labelling without re-packing is not ‘deemed manufacture’, as
activities of labelling/re-labelling and re-packing in small packs are
inter-dependent and not mutually exclusive.

MERE RE-PACKING IS NOT MANUFACTURE – The words used in

many ‘deeming provisions are ‘repacking from bulk packs to small
packs’. Thus, mere re-packing is not ‘deemed manufacture’. If goods
returned are re-packed, such re-packing is from one retail pack to
another retail pack and hence cannot be termed as ‘manufacture’. - -
Similarly, if goods returned for rectification are re-packed, it is not
‘any other treatment to render the product marketable’, as the product
was already marketable.

WHEN 'REPACKING AND LABELLING'’ WILL AMOUNT TO

MANUFACTURE - In some cases, goods are bought in bulk and sold
in retail. This will not amount to 'repacking'. Generally, the expression
'packing' is considered as a package containing pre-packed
commodity and quantity of the product contained therein is also pre-
determined. - . - Activity of simply transferring material from one
container to another may not come under the description 'repacking
and labelling' - . - . - However, facts should be ascertained and
decision should be taken based on all relevant facts-

Incidental or ancillary process - Section 2(f), which defines

‘Manufacture’ states that “manufacture” includes any process which is
incidental or ancillary to the completion of manufactured product.
Incidental means occasional or casual process. Ancillary means
auxiliary, i.e. it is integral part of manufacturing. Manufacture is not
complete unless all ancillary and incidental processes are complete.
In border line cases, there can be ambiguity whether a particular
process is incidental or ancillary process. For instance, painting or
polishing may be essential process for manufacture of furniture.
However, a machinery may be said to be finished without painting. It
has been held that quality checking is not a process ancillary or
incidental to manufacture, unless it is legally mandatory.
Manufacturer

The liability to pay duty is on ‘Manufacturer or producer’. Duty cannot

be recovered from his purchaser .Hence, Excise demands, if any, are
always raised on manufacturer and recovered from manufacturer.
Hence, it is essential to decide who is to be termed as ‘Manufacturer’.

Who is the 'manufacturer' - The definition of ‘manufacture’ u/s 2(f)

is not exhaustive. Hence, the word ‘Manufacturer’ has to be
understood in its natural meaning, i.e. ‘Manufacturer’ is a person who
actually manufactures or produces excisable goods, i.e. one who
actually brings into existence new and identifiable product.

Person who transforms commodity into another commodity having a

distinct name and character is the manufacturer.

(a) Persons who get the goods manufactured through hired labour.
(b) Persons who engage in manufacture of goods on their own
account. - - These may be termed as ‘deemed manufacturers’.

MANUFACTURE THROUGH HIRED LABOUR - A person will be

treated as ‘Manufacturer’ if he engages ‘hired labour’ who may be
Employee or Contractor for manufacture of excisable goods. A hired
labour is one who hires himself out to work for and under control of
another for wages. However, if he undertakes manufacture on own
account, he cannot be said to have hired himself out to another even
if he manufactures for other ..

Sub-contractor is manufacturer if relation to the main contractor is on

principal to principal basis, even when job work is done at site, if
relationship between sub-contractor and main contractor is on
principal to principal basis. –

ENGAGES IN MANUFACTURE ON HIS OWN ACCOUNT – The

word ‘engages’ has to be read as ‘engages others’. This is because,
if he is himself engaged in manufacturer, then he is actually the
manufacturer. Extended or enlarged definition is not required to treat
him as ‘manufacturer’. ‘On his own account’ has been interpreted to
mean as ‘under his direction and control’
Manufacture at site of buyer -It was held that an independent
contractor who assembles the parts in a factory (assembly of crane in
this case) will be the manufacturer and not the owner of factory. In
this case, the marketing company assembled various parts at the site
of buyer. It was held that the marketing company is the manufacturer.

Raw material Supplier is not the manufacturer - It is common in

Industry to supply raw material to a Job Worker or Processor and get
the goods manufactured from him in his factory e.g. Automobile
Manufacturers like Bajaj, Maruti, Mahindra, Premier Automobiles or
Hindustan Motor very often get many parts manufactured from
outside on ‘Job Work’ basis. In such cases, they (Maruti, Bajaj etc.)
will not be treated as ‘Manufacturer’ even if the Raw Material is
supplied by them and right of rejection is retained by them.It has been
held that excise duty is on ‘manufacture and production of goods’ and
liability to pay duty is not dependent upon whether the manufacturer
is owner or not.

Brand Owner is not the Manufacturer - Some large units get their
goods manufactured from others under their Brand Name, instead of
manufacturing it themselves. They usually control quality and may
even supply the design. e.g. Bajaj Electricals get many electrical
goods manufactured from others; Batas procure some foot-wear from
others and supply under their brand name. Some large
pharmaceutical companies also get the goods manufactured from
small scale units under their brand names. In such cases; Bajaj, Bata
or the Pharmaceutical Companies will not be treated as
‘Manufacturer’ even if they exercise quality control, or allow use of
their brand name, or provide financial help to the small
manufacturers, or even supply the raw material, if their relation with
the manufacturer is ‘Principal to Principal’ basis.

Brand name owner will not be manufacturer even if he supplies raw

material.

Manufacture must be in India

Last operative word of section 3 of Central Excise Act is that

excisable goods must be manufactured or produced in India. Thus,
excise levy cannot be imposed on imported goods or goods
manufactured in Nepal. This is also true if goods are imported in SKD
or CKD condition and they are only assembled in India, as no new
product emerges.

However, if goods are classified as per rules of classification as

complete machine as per legal fiction, but actually components or
sub-assemblies are imported, its assembly in India will amount to
manufacture and excise duty will be payable.

Basis of calculation of duty payable

After duty liability is established and after the product is correctly

classified, the next question is ‘What is the Excise Duty payable ?’ If
you refer to CETA, you will find that some rates are fixed on per Kg or
per quintal basis, while some rates are based on ‘%’ basis. This
percentage is the % of ‘Assessable Value’ of goods fixed as per
section 4 of Central Excise Act.

Excise duty is payable on one of the following basis :

Specific duty
Duty as % of Tariff Value fixed under Section 3(2).
Duty based on annual production capacity under section 3A
Duty based on Maximum Retail Price printed on carton after
allowing deductions - section 4A of CEA
Duty as % based on Assessable Value fixed under Section 4 (ad
valorem duty)

Specific Duty - It is the duty payable on the basis of certain unit like
weight, length, volume, thickness etc. For example, duty on Cigarette
is payable on the basis of length of the Cigarette, duty on sugar is
based on per Kg basis etc. In such cases, calculation of duty payable
is comparatively easy. In view of the simplicity, many goods were
earlier covered under ‘specific duty’. However, the disadvantage is
that even if selling price of the product increases, revenue earned by
Government does not increase correspondingly. Frequent revisions
of rates have to be done, which is a slow and time consuming
process. Hence, now most of the goods are covered under ‘Ad
valorem’ duty. Presently, specific rates have been announced for - (a)
Cigarettes (length basis) (b) Matches (per 100 boxes / packs) (c)
Sugar (per quintal basis) (d) Marble slabs and tiles (Square meter
basis) (e) Colour TV when MRP is not marked on the package or
when MRP is not the sole consideration (Based on screen size in
cm). (f) Cement clinkers (per tonne basis) (g) Molasses resulting from
extraction of sugar (Per ton basis)

Duty on basis of production capacity - Section 3A of Central

Excise Act provides for payment of duty on basis of production
capacity, without any reference to actual production. Pan masala and
gutkha and chewing tobacco are covered under these provisions.

Tariff value - In some cases, tariff value is fixed by Government from

time to time. This is a “Notional Value” for purpose of calculating the
duty payable. Once 'tariff value for a commodity is fixed, duty is
payable as percentage of this 'tariff value' and not the Assessable
Value fixed u/s 4. This is fixed u/s 3(2) of Central Excise Act.
Government can fix different tariff values for different classes of
goods or goods manufactured by different classes or sold to different
classes of buyers.

When tariff value is prescribed under the law, that value will form the
basis for assessment (and not any other value)

Value based on Retail Sale Price

Section 4A of CEA empowers Central Government to specify goods

on which duty will be payable based on 'retail sale price'. The
provisions are as follows - (a) The goods should be covered under
provisions of Standards of Weights and Measures Act (b) Central
Government can permit reasonable abatement (deductions) from the
'retail sale price'. While allowing such abatement, Central
Government shall take into account excise duty, sales tax and other
taxes payable on the goods (c) If more than one 'retail sale price' is
printed on the same packing, the maximum of such retail price will be
considered (d) The 'retail sale price' should be the maximum price at
which excisable goods in packaged forms are sold to ultimate
consumer. It includes all taxes, freight, transport charges,
commission payable to dealers and all charges towards
advertisement, delivery, packing, forwarding charges etc. (e) Central
Government has to issue a notification in Official Gazette specifying
the commodities for which the provision is applicable and the
abatements permissible.

MRP provisions are overriding provisions – Section 4A(2) uses

the words ‘notwithstanding section 4’. Hence, when section 4A is
applicable, provisions of section 4 for determination of assessable
value are not applicable.

CVD DUTY RATE ON IMPORTED GOODS WHEN PRODUCT

COVERED UNDER MRP - If goods covered under MRP provisions
are imported, CVD will be payable on basis of valuation u/s 4A i.e. on
basis of MRP printed on carton.

Provision applicable only when product is statutorily covered

both under Weights and Measures Act and notification issued
under CEA - It has been clarified that provisions in respect of
payment of duty on MRP are applicable only in cases where specific
notification has been issued and manufacturer is statutorily required
to put MRP under Weights & Measures Act. The provisions do not
apply in cases where manufacturer voluntarily affixes MRP on the
product . It is further clarified that where provisions of Weights &
Measures Act do not apply, duty is payable on basis of AV as per
section 4 .

Provision applicable even if goods manufactured on job work

basis - Normally, if assessee is engaged in manufacture on job work
basis, he has to pay duty on material cost plus job charges. However,
if a product covered under MRP provisions is manufactured on job
work basis, duty will be payable as per provisions of section 4A, i.e.
on basis of MRP less abatement and not on basis of material cost
plus job work charges. This is because section 4A has overriding
effect over section 4.

Provision when more than one retail price declared - MRP printed
on package is required to be inclusive of taxes. Rate of taxes vary
from State to State. Hence, in some cases, a manufacturer may print
different prices for different States. In some cases, manufacturer
earmarks different packages for different areas and marks different
prices for different areas.

If a package bears more than one retail sales price, maximum out of
these will be deemed to be retail price for purpose of section 4A. If
retail price declared on the package at the time of removal is
subsequently altered to increase the price, such increased retail price
will be retail price for purpose of section 4A. Where different retail
sale prices are declared on different packages, each such retail price
shall be the 'retail sale price' for purposes of valuation of excisable
goods intended to be sold in area to which the retail price relates.
Thus, if different prices are printed on different packages, each such
price will be 'retail price'.

If retail price not indicated or wrongly indicated at the time of

removal - If retail price is not declared on the package at the time of
removal, or retail price is declared which is not the retail price as
required to be declared as per provisions of Central Excise Law or
any other law, the goods are liable to confiscation. In such case, the
‘retail sale price’ will be ascertained in the prescribed manner and
duty will be payable as per the retail price so determined.

What is 'retail sale price' – As per Weights and Measures Act, retail
price indicated on the retail package should be inclusive of all taxes.
However, in case of drugs, the retail price to be indicated is required
to be exclusive of taxes. Section 4A provision can be made
applicable in either case.

MRP INCLUSIVE OF ALL TAXES - Explanation 1 to section 4A(4) of

Central Excise Act defines 'retail sale price' as the maximum price at
which the excisable goods in packaged form may be sold to the
ultimate consumer and includes all taxes local or otherwise, freight,
transport charges, commission payable to dealers, and all charges
towards advertisement, delivery, packing, forwarding and the like, as
the case may be, and the price is the sole consideration for such
sale. - - It may be noted that under Weights & Measures Act,
'Maximum Retail Price' (MRP) has to be printed on packaged
commodity for retail sale. The 'MRP' has to be inclusive of all duties
and taxes, including local taxes. In view of different rates of taxes in
different States, a manufacturer can print different rates for sale in
different States / areas. A retailer can sell the goods below MRP
printed on the package.

RETAIL PRICE EXCLUSIVE OF TAXES – As per proviso to

Explanation 1 to section 4A(4), if as per provisions of any other law,
retail price excluding taxes (local or otherwise) is required to be
declared on the package, such retail price will be the ‘retail price’ for
purpose of section 4A. - - In case of scheduled drug or formulation
covered under Drug Price Control Order (DPCO), price is required to
be displayed as ‘Retail price not to exceed . . local taxes extra’.
In such cases, the retail price declared as per provisions of DPCO will
be the ‘retail price’ for purpose of section 4A. [In case of non-
scheduled formulations (i.e. on which there is no price control), price
is required to be displayed as ‘Maximum Retail Price . .
inclusive of all taxes’].

Increase in retail price after clearance from factory - If retail price

declared on the package at the time of removal is subsequently
altered to increase the price, such increased retail price will be retail
price for purpose of section 4A. [Explanation 2(c) to section 4A]. It
may be noted that the provision applies only when retail price is
‘increased’ after clearance. However, as per section 2(f)(ii), putting
label of altered price will be ‘deemed manufacturer’ and hence excise
duty will become payable. - - Really, as per rule 23 of Packaged
Commodities Rules, alteration of MRP on the package is prohibited.

Deemed manufacture in case of goods covered under MRP

provisions - In respect of goods specified in third schedule to Central
Excise Act, any process which involves packing or repacking of such
goods in a unit container or labelling or re-labelling of containers
including the declaration or alteration of retail sale price on the
container or adoption of any other treatment on the goods to render
the product marketable to consumer will be ‘manufacture’. [section
2(f)(iii) ]

The goods included in Third Schedule of Central Excise Act are same
as those on which excise duty is payable u/s 4A, i.e. on basis of MRP
printed on the package. Thus, in case of goods on which duty is
payable on basis of MRP, if any of the process as specified (like
labelling, re-labelling, repacking in unit container, alteration of MRP
etc.), it will be ‘manufacture’ and duty will become payable.

Products covered under the scheme - So far, 98 articles have

been covered under this scheme.

Ad valorem Duty

Fixing specific duty or tariff value is possible only for few selected
items like Sugar, pan masala, consumer goods, Cigarette etc.
Generally, it is not practicable to fix specific duty or tariff value for
numerous products produced. Similarly, paying duty on the basis of
MRP is possible only in respect of a few selected commodities. In
other cases, Central Excise is payable on the basis of value. This is
called “ad valorem duty”. The 'assessable value' is arrived at on the
basis of Section 4 of the Central Excise Act and duty is payable on
the basis of such value.

Assessable Value (AV) - Assessable Value (AV) is the ‘Value’ on

which duty is payable as a percentage. Generally, by ‘Value’, we
understand the price as mentioned in Bill or Invoice. However, for
excise purposes, it is not possible to fully rely on such price as (a)
Duty is payable even if goods are not sold (b) It is desirable to have
uniform policy in fixing the AV (c) Chances of manipulation in such
price should be minimum.

Basis of Assessable Value - As per new section 4 w.e.f. 1st July,

2000, excise duty is payable on basis of 'transaction value', if the
goods are sold at the factory gate to an unrelated buyer when price is
the sole consideration. If these requirements are not satisfied,
valuation will be done as per Valuation Rules. - section 4(1)(b)

Earlier, Assessable Value was fixed, as per old section 4, on the

basis of ‘Normal wholesale price to independent buyer/s at the
factory gate, inclusive of packing cost, but exclusive of (a) all taxes
and duties payable (b) Trade Discounts and (c) Cost of durable and
returnable containers’. However, the section has been replaced by
entirely new section 4 w.e.f. 1-7-2000.

The basic provisions of new Section 4(1)(a) state that 'assessable

value' when duty of excise is chargeable on excisable goods with
reference to value will be 'transaction value' on each removal of
goods, if following conditions are satisfied -

The goods should be sold at the time and place of removal.

Buyer and assessee should not be related
Price should be the sole consideration for the sale.
Each removal will be treated as a separate transaction and 'value'
for each removal will be separately fixed.

Cost of Manufacture not relevant - It may be noted that Central

Excise Valuation can be below manufacturing Cost. If there is no
allegation of flow-back of money from buyer to assessee, if price is
the sole consideration and if dealings between assessee and buyer
are at arm’s length, Assessable Value will be decided on basis of
selling price, even if it is below manufacturing cost.

Full intrinsic value should be considered, ownership is irrelevant -

‘The fact that the petitioners are not the owners of the end-product
are irrelevant. Taxable event is manufacture - not ownership’.

Time and Place of removal – Section 4(1)(a) states that transaction

value shall be assessable value when goods are sold by assessee,
for delivery at the time and place of removal.

TIME OF REMOVAL - As per section 4(3)(cc), in case of sale from

depot/place of consignment agent, ‘time of removal’ shall be deemed
to the time at which the goods are cleared from factory.

PLACE OF REMOVAL - 'Place of removal' has been defined in

section 4(3)(c). Since this concept is related to ‘outward freight’ this
aspect has been discussed later.

Goods must be sold at the time and place of removal - Transaction

Value is relevant for valuation only when goods are 'sold' at the time
and place of removal.

State in which goods are removed is relevant for valuation - Goods

are to be assessed at the time of removal from factory. Thus, the
stage in which they are removed is highly relevant for valuation.
Essentials of valid sale - 'sale' and purchase' within their
grammatical variations and cognate expressions, means any transfer
of goods by one person to another in the ordinary course of trade or
business for cash or deferred payment or other valuable
consideration.

Note that ‘consideration’ can be paid by or to third party also. The

definition does not say that consideration must be paid to the
assessee himself.

Sale under Central Excise would include hire purchase and lease.
When goods are given on hire purchase, there is transfer of
possession for consideration but there is no transfer of property.

However, 'sale' will not include job work, stock transfer, branch
transfer or free samples.

Buyer should not be known in stock transfer - It may be noted that

'stock transfer' or 'branch transfer' envisages dispatch of goods of
standard size and specifications to the depots / branches. Goods
should not be dispatched or identified for a particular buyer. If the
buyer is identifiable before removal of goods from the factory (e.g. in
case of tailor made goods), it is a sale and not a stock transfer, even
if goods are dispatched to depot and sold from depot.

Price must be sole consideration - Price should be sole

consideration of sale. Price is the consideration given for purchase of
a thing.

Transaction Value as Assessable Valuetc "Transaction Value’ as

Assessable Value"

New section 4(3)(d) defines ‘transaction value’ as the price actually

paid or payable for the goods, when sold, and includes in addition to
the amount charged as price, any amount that the buyer is liable to
pay to, or on behalf of, the assessee, by reason of, or in connection
with the sale, whether payable at the time of sale or at any other time,
including, but not limited to, any amount charged for, or to make
provision for, advertising or publicity, marketing and selling
organization expenses, storage, outward handling, servicing,
warranty, commission or any other matter; but does not include the
amount of duty of excise, sales tax and other taxes, if any, actually
paid or actually payable on such goods. Thus, following are main
requirements of ‘transaction value’.

Price actually paid or payable

Price is for the goods
It includes any amount that the buyer is liable to pay to, or on behalf
of assessee. Thus, payment made by buyer to another person, on
behalf of assessee, will be includible. Thus, payment made by
buyer to third party is includible only if it is made on behalf of
assessee.
The payment should be ‘by reason of, or in connection with the
sale’. As explained later, these terms have always been construed
strictly in judicial interpretation.
The amount may be payable at the time of sale or at any other time.
Such time may be before or after sale. However, normally, it should
be quantifiable at the time of removal, as goods are normally
expected to be assessed before clearance from the factory.
Any amount charged for, or to make provision for, advertising or
publicity, marketing and selling organization expenses, storage,
outward handling, servicing, warranty, commission or any other
matter is includible. However, these expenses are includible only
when aforesaid conditions are satisfied i.e. (a) The amount should
be paid or payable to assessee or on behalf of assessee and (b)
Payment should be by reason of sale or in connection with sale.
Amount of duty of excise, sales tax and other taxes, if any, actually
paid or actually payable on such goods is to be excluded while
calculating ‘transaction value’. The amount may be ‘payable’ any
time in the future.

Amount payable by buyer to or on behalf of assessee - Any amount

that the buyer is liable to pay to the assessee or to a third person on
behalf of assessee is includible in ‘transaction value’.

Inclusions in Transaction Value

'Transaction Value' as defined in section 4(3)(d) states that any

amount charged for (by assessee to buyer), or to make provision for
(presumably by buyer), advertising or publicity, marketing and selling
organisation expenses, storage, outward handling, servicing,
warranty, commission or any other matter; is includible in
'transaction value'. However, the payment or provision will be
includible only if (a) Buyer is liable to pay to assessee or on behalf of
assessee and (b) It is by reason of or in connection with the sale.

• Packing charges
• Design and Engineering Charges
• Consultancy charges relating to manufacturing

Manufacturers often give free after sale service during warranty

period. Though these are called ‘free services’, cost of such services
is already included in the price of product. Promise for provision of
after sale service certainly increases its marketability, it is in
connection with sale and its cost is includible.

Loading and handling charges within the factory - These are in by

reason of sale and are includible. These were includible earlier also.

Price at the Time of Removal - Price relevant is ‘at the time of

removal’. Thus, any subsequent increase or reduction in prices after
goods are cleared from the factory is not relevant.

Additional consideration should be added to the price paid by

buyer to assessee - The additional consideration flowing directly or
indirectly from the buyer shall be added to the price actually paid to
assessee. This will be cum-duty price. The cum-duty price, exclusive
of sales tax and other applicable taxes, if any, will be deemed to
include the duty payable on such goods

Thus, additional consideration will be added to the price paid by

buyer to assessee. This will be treated as cum-duty price and
assessable value will be worked back after allowing admissible
deductions (i.e. by back calculations.

Payment of EXCISE DUTY –

Duty is payable on monthly basis , by 5th of following month . In
case of e-payment ,last date is 6th [rule 8(1) of central excise
rules].
Special provisions for month of March- since Govt accounts
close on 31st March special provision are made for payment of
duty in March .Duty in respect of clearances in the month of
March are payable by 31st March only and not in following
month.
Payment when due day is holiday or Sunday cheque can be
deposited on next working day.
Form and maintenance of PLA-
Assessee should pay duty through account current (popularly
known as PLA(Personal Ledger Account). The PLA is credited
when duty is deposited in bank by TR-6/GAR-7 challan and duty
is required to be paid by making a debit entry in the PLA on
monthly basis .PLa and CENVAT CREDIT should be used only
for payment of excise duty and not for other payments like
rents,fines,penalities etc.
Payment of education cess – Education cess , SHE
Cess(secondary and higher education cess)can be paid in same
challan ,but separate account head should be indicated.
Mandatory e-payment if annual excise duty exceeds Rs 50 lacs.
PERIODIC RETURNS UNDER CENTRAL EXCISE-
Form of return-ER-1
Description- Monthly Returns by large units.
Who is required to file – Manufacturers not eligible for SSI
concession.
Time limit for filing return – 10th of following month.
BASIC DETAILS REQUIRED IN THE ER-1 RETURN-
a) Period for which return is submitted.

b) Name of assessee and registration no.

c) Details of goods manufactured,cleared and duty

payable.This should be product wise under 8 digit Tariff
no.

d) Details of duty paid through Cenvat Credit and Account

Current.

e) Details of each type of Cenvat credit availed.

f) Details of other payments i.e.interest,arrears etc.

 g) Self Assessment memorandum.

RATES OF TAXES APPLICABLE-

Excise duty rate applicable in products of BSP GRADE

A,B,C,D is 10%

Education Cess is 2%

Secondary and Higher Education Cess is 1%.

PRODUCTS

Iron and Steel

The main products of Bhilai Steel Plant are Rails, Structural,

Plates, Billets, Blooms. Slabs, Pig Iron,Defectives, Cuttings, and
Scrap of Iron and Steel etc.

Coke /Coal

The Assessee also manufactures coke from the coal for using the
same for the manufactures of Iron and Steel products.

Bye Products
Apart from the steel products BSP also manufactures Bye Products
like Benzol, Benzene, Naptha Oil, Solvent Oil, Ammonium Sulphate,
Slag etc the unsuitable item which are sold through stores.

RAW MATERIALS

The Plant uses a variety of raw materials out of which Coaking

Coal, Iron Ore and High Silica Limestone are main raw materials
and others like Bentonite, Kaynite, Runner sand, Sulfur etc are
minor raw materials.

Coaking Coal

Coaking Coal is used in making coke from the coal, which is then
used in blast furnace to generate heat to produce hot metal. A part
of it goes to sinter plant, from there also it eventually comes to the
blast furnace. Plant purchases indigenous as well as imported
coal. the imported Coal comes from Australia and New Zealand
and indigenous coal is purchased from various units of Coal India
Ltd.

Iron Ore

The Plant uses Haematite iron ore which is sourced from it's
captive mines at Dalli Rajhara. Occasionally the demand is met
from M/s. National Mineral Development Corporation (NMDC).

High Silica Limestone

The Plant uses high silica limestone as an additive in blast

furnace for producing the molten metal.

Low Silica Lime Stone

Low Silica Limestone is used in refractory material plant (RMP) to

convert it into lime in it's rotary kilns.

Boiler Coal
Boiler Coal is used in boilers for generating steam and power in
captive power plant.

Minor Raw Material

The plant uses some other minor raw materials like silica
manganese, Ferro Manganese, Ferro Silicon, Bentonite, Kaynite,
Sulphur runner sand, etc.

Incidental & Other Goods

Plant uses various incidental goods like Tyres, Tubes, Batteries,

Bites ,Grease Lubricants Oils, Electrodes, Petrol, LDO, paints
and Varnishes etc.

Capital Goods

Plant has a full fledged deptt. looking after expansion

activities. Additions, modifications and replacements keep taking
place throughout the year. Most of the capital goods i.e. Plant &
Machinery are bought under the turnkey works contract basis.
 CONCLUSION

1.Bhilai steel plant is the highest Tax payer in Chhattisgarh.

2.Following Taxes are paid by bhilai steel Plant
(a) C.S.T.
(b) VAT
(c)Central Excise duty.
(d)Custom duty
(e)Entry and Internal
(f)Service tax

Indian steel players have reacted to the hike in excise duty in the Union
Budget from 8% to 10% by increasing the prices of both their long and flat
products from March 1. Those that have raised their prices include public
sector Sail .ssThe impact of the higher excise duty translates to a Rs 500-600
a tonne increase for consumers.
Before the price hike, long product prices in the domestic market ranged
between Rs 27,000 and Rs 29,000 a tonne. Long products are used mainly in
the construction industry. The price of flat products, used primarily in the
automobile sector, stood at Rs 34,000-36,000 a tonne.

BIBLIOGRAPHY

The above report has been repaired from the following sources of data
and information:

Website:

 www.Google.com
 www.sail.co.in
 www.steelindia.com
 www.wordsteel.com
 www.wikipedia.org

Books:
  Indirect Taxes-H.C Mehrotra & V.P AGRAWAL

References:

 Information collected from Bhilai Steel Plant

 SAIL