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Excise Duty

Central Excise duty is an indirect tax levied on those goods which are manufactured in India and are meant for home consumption. The taxable event is 'manufacture' and the liability of central excise duty arises as soon as the goods are manufactured. It is a tax on manufacturing, which is paid by a manufacturer, who passes its incidence on to the customers

Excise duty is the biggest source of revenue for the government of India. This duty is charged by the central government and the state government has no link with it. Excise duty is charged to the manufactures who manufactures the product for domestic use. So the duty is chargeable as well as payable as soon as the goods manufactured and the duty is paid by the manufactures and then push into the market for consumption

Types of excise duty

1 - Basic excise duty: - basic excise duty is charged on all the goods produced or manufactured in India except salt for domestic use. The rates of basic excise duty are changing year to year as in the annual budget of the India. 2 - Additional excise duty: - in the section 3 of excise act 1955 the finance department also levied some additional excise duty on some products and the additional excise duty will be shared by the state as well as central government. 3 - Special excise duty: - special excise duty is charged on some products or area wise as to help some poor or affected area of the India. This is charged only time to time and no special rates and procedure is available for it

The Central Excise duties are the largest source of revenue for the country. Approximately 30% of the total revenue receipts are collected from Central Excise duties. The levy and collection of Central Excise duties is under the authority of Central Excise Act, 1944. Section 3 (also known as the charging section) provides for the levy and collection of Central Excise duty.

Central Excise duty is leviable as soon as the goods are manufactured or produced. The items on which the excise duty is levied are known as excisable goods For the purpose of administrative convenience the actual collection of duty is done at the time of removal of goods from the place of manufacture of production. The rate of duty, which is levied, is the rate of duty applicable to such goods or which is in force at the time of actual removal.


Following types of control have been proscribed for the levy and collection of Central Excise duties: 1. Physical Control

2. Self Removal Scheme

Under the physical control system the manufactured goods are removed form the place of manufacture under the supervision of the Central Excise officers on after the assessment and payment of appropriate Central Excise duty. The goods are removed on an invoice indicating the duty paid which is countersigned by the Central Excise officer. The physical control system is applicable on in respect of manufacturers of cigarettes and matches.

Under the Self-Removal Procedure (SRP) the goods are removed on payment of duty and against invoices signed by the assess. The actual assessment of the duty paid is done afterwards by the Central Excise officers on monthly returns filed by the assess.

Exemption of the excise duty

There is some exemption available to the manufactures means some manufactures neednt to pay the excise duty as well as neednt to apply for the excise number. The exemption available to 1-Salt manufactures 2-Exporters 3-Sometime the exemption is available for the nature of raw material used. 4-Almost all the products have exemption to the sale up to 1.5 crores per annum for the excise. 5-Sometimes the type of process doesnt count to be manufacturing and that is exempted from excise. 6-SEZ

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