CENTRAL EXCISE ACT

BY
NEHA MEHTA
B.com 2nd (A)
Roll No. 4222

The law of Central Excise duties is

governed by the following :

1.Central

Excise Act 1944

2.Central

Excise tariff Act 1985

3.Central

Excise Rules ,1944

Central Excise Act ,1944

This is the basic law related to the

levy and collection of duties of
central excise. However This Act does
not contain the rate at which duties
are imposed.

Central Excise Tariff Act ,1985

This Act classifies various goods on

which Central excise duties are
levied and prescribes the rates at
which the duty is payable.

Central Excise Rules ,1944

All manufacturers of excisable goods
are required to register under these
rules.The registration is valid as long
as production activity continues and
no renewals are necessary.

Types Of Excise Duties

(A)

From the view point of NOMENCLATURE: 1.Basic duty of central excise.

2. Special duties of excise.
3. Additional duties of excise.
4. National calamity contingent duty.
5. Education cess on excise duty.
(B) From the view point of Basis of Levy:1.Specific Duty(CENVAT).
2.Ad Valorem Duty.
3.Specific Duty cum Ad Valorem Duty.
4.Duty Based on Fixed Tariff Value.
5.Compounded Duty.

Liability For Central

Excise
For condition must be present for the
charge 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
take
place in India.

1.GOODS
For an item to be considered goods for the purpose
of the levy of central excise duty ,it must satisfy
two requirements:
1. Movability
Goods must be movable. Duty cannot be levied on
immovable property .Central excise duty cannot
imposed on plant and machinery.
2. Marketability
Goods must be marketable .The goods must be
known in the market and must be capable of being
bought or sold.

2.Excisable Goods
For the liability of duty of central
excise to Arise, the item in question
should not only be goods it should
also be excisable goods. Goods
become excisable if and only if it is
mentioned in the Central Excise Tariff
Act 1985.

3.Goods Must Be
Manufactured Or Produced

The third condition that must be

satisfied for becoming liable to pay
duties of central excise is that the
goods must be manufactured or
produced.

4.Manufactured Or
Production Must In India
Finally, for the liability to pay central
excise duty to arise the goods must
be manufactured or produced in India.

Taxable event for central excise

duty
Taxable event for charge of duty of central
excise is the manufacturer or production of
goods in India.
In this context, the Supreme Court has
observed:
Excise duty is not directly on the goods,
but manufactured thereof. Though both
excise duty and sales duty levied with
reference to goods, the two are very
different imposts. In one case, the
imposition is on the act of manufactured or

Who is liable to pay central excise duties?

The central excise duty is a tax on

manufacture or production of
goods .Hence the liability to pay
excise duty lies on manufacturer or
the producer.

Basis for valuation of goods

The duty of central excise is

charged on four bases:
1.Specific duty
2.Tariff duty
3.Maximum retail price
4.ad -valorem basis

1.Specific duty
It

is the duty payable on the basis of

some physical feature of the product unit
like weight ,length ,volume, thickness etc.
Some of the goods on which duty is
charged on the basis are as follows
item
Basis
Cigarette
Length
Matches
Box of 100
Sugar
Quintal
Cement
Per tonne

on the basis of which duty of central excise will be charged .When the government declare the value ,the duty is charged on the v

2.Tariff value
The government has the power to
declare a value on the basis of which
duty of central excise will be charged
.When the government declare the
value ,the duty is charged on the
value and the actual value of the
goods is ignored.

3.MRP Based Valuation

Some manufactures had started the
practice of central excise by resorting
to some questionable practices. In
order to check these malpractices a
new basis of valuation was
introduced that is the maximum
retail price (MRP) - based valuation.
Eg: television sets, DVD players,
Cosmetics and chocolates.

4.Ad Valorem Duty

The first three bases of valuation are
applied for only a few goods. In a large
majority of cases the duty of central
excise is payable on the basis of the
value of the goods, called the
assessable value.

Thanks
NEHA MEHTA