CENTRAL EXCISE DUTY

INTRODUCTION AND
OVERVIEW
 CENTRAL EXCISE
DUTY
EXCISE DUTY : It is a duty levied on the production or
manufacture of excisable goods in India. It is a tax levied upon
manufacture and not upon sale of goods. In
In order to attract levy of excise duty, three condition must be
fulfill:-
a) There should be goods.
b) The goods should be excisable goods.
c) Goods must have been produced/manufactured
in India.

Central excise duties contribute approximately one-third share

to the Union Exchequer. These duties from the single largest
source of revenue for central govt. central excise duty is levied
and collected through the machinery of Central Excise Act,1994.
 Goods can be non-excisable in any of the
following situations:
a) If it is immoveable.
b) If it is non-marketable.
c) If it has not been specified in the schedule to
central excise and Tariff Act.
TYPES OF EXCISE DUTIES
Basic Excise
Duty

Additional Special Duty

duty of Excise

National
Calamity Cess
Contingent
 TYPES OF EXCISE DUTIES
1.Basic excise duty (BED) or CENVAT
This is levied u/s 3(1) of the central excise Act 1944. this duty is
levied on all excisable goods produced /manufactured within
India at the rates specified in the first schedule to central
excise Traffic Act 1985.presently the rate is 10%. The basic duty
proceeds are shared by upon and states these rates do not apply
in the case of petroleum and tobacco products, pan masala and
items attracting specific duty.
2.Special duty of excise
It is levied u/s 3 (i)(b) of the CE Act 1944. SED also known as
auxiliary duty is levied as surcharge on basic excise duty. The
objecting of imposing SED is to generate additional resources
for some specified object. SED is livable at the rates specified in
schedule second to Central Excise Tariff Act 1985.
 3. Additional duty on goods of special importance
ADD is levied under either additional of excise Act 1957 or under
additional duty of excise act 1978. former provides for additional
excise duties in lieu of sales tax on specifically items like
Textile,Sugar,Tobacco and later provides for specified of Textile
and articles of textile. The Central Sale Tax Act has restricted the
powers of state govt. to levy sales tax on declared goods and hence
, additional duty has been clamped.
4. National Calamity Contingent Duty (NCCD)
It kind of surcharge levied under Finance Act, 2001 on items like
cigarettes,bidi,pan masala and other tobacco products.
5. Cess
It is levied on certain commodities like tea, rubber etc. for the
purpose utilizing the proceeds fir the development of the
industries and welfare of workers. In some cases, it's levy and
collection is entrusted to Central Excise Department.
 Education Cess 1% secondary and higher education Cess
Finance Act 2004 provided for education cess @of 2% w.e.f
9.7.2004. education cess is duty of excise to be calculated on
aggregate of all duties of excise including special excise duty or
any other duty of excise , but excluding cess on excisable goods.
A secondary and higher education cess @1% of the aggregate
duties of custom excise and service tax has been imposed . It is
applicable in respect of custom and excise from 1.3.2007 and in
respect of service tax from date when finance act 2007 enacted.
1.Method of calculation will be same as for 2%education cess.
2.In case of excise duty , this cess which be changeable on
aggregate duties of excise.
6. DUTY LEVIABLE UNER OTHER ACT
For levy and collection of duties livable under other acts , some
times, the machinery of central excise dept. is used.
 EXCISE CUSTOM SALES
DUTY DUTY TAX
1.BASIS OF Excise duty is a tax Custom is charged sales tax is tax on
CHARGES on manufacture of on import/export sale on goods with
goods. of goods from in India.
India.

2. Central excise Tariff Custom Tariff Act CSR Act classifies

CLASSIFICATION ACT1985 classifies 1985 classifies goods for C.S.T. on
OF GOODS goods for the goods for the inter-state sales
purposes of levy and purposes of the and states tax on
rates of duty. levy and rates of sales within a
duty. particular states
for the purpose of
determine rates of
sales tax.
3.TAXABLE Taxable event for Taxable event is Taxable event is
EVENT levy of tax is entry sale of goods
production or inward/outward within inter –
manufacture of of goods into state.
goods within /from India.
India
4.VALUE Excise duty is Custom duty is Sales tax is
charged on also charged on charged on sales
assessable value. assessable value. price.

5.RATE OF TAX Excise duty is Custom duty rate C.S.T. at the rate
uniform . in respect of 5% is also
specific goods is uniform but the
also uniform rates of sales tax
very.
6.COLLECTION Excise duty on Custom duty on CST levied by
POWER most of items is import /export is central govt. but
levied by central levied collected collected and
govt. except on and retained by retained by state
certain specify central govt. govt. collection
goods of state sakes
e.g..(alcoholic taxes sole
liquors). State prerogative of
excise on above concerned state.
mentioned items
is levied and
collected by state
govt.
7.TIME OF It is payable on It is payable on It is payable
PAYMENT removal of goods before custom after sales take
from factory / clearance . place.
go down.
BASIS Basis Special National Additional
excises duty excise duty calamity duty of
(BED) (SED) contingent excise (ADD)
duty(NCCD)

1.Charging This is also This is levied This was This is levied

section/rule known as under section levied under under (a)
CENVAT and 3(1)(b) of finance Act Goods of
is imposed Central 2001 Special
under section Excise Act, Importance
3 (1) of 1944. Act 1957(b)
central excise Textile and
Act 1944 Textile
Article Act
1978
2. LEVY This is levied This is It is a kind The
on all levied only of surcharge additional
excisable on those It has been excise duty
goods excisable levied on in lieu of
produced or goods which items sales tax are
manufactured are specified specified in levied on
within India. in the the seventh specified
This is levied second schedule to items of
at the rate schedule to the finance textile,
specified in the Central act sugar.
the First Excise Tariff
schedule to Act, 1985
Central Excise
Act,1985
 Central Excise Law is not one enactment. The provisions
regarding Central excise r governed mainly by the Central excise
Act, 1944, Central Excise Rules 2002 and Central Excise Tariff Act,
1985. Further, some provisions of Customs Act, Criminal Procedure
Code, Indian Penal Code, etc. apply to Central Excise.
The list of various Acts and Rules is as follows:
1. Central Excise Act, 1944. (as amended from time to time) provides
for the basis of charging of excise duty, valuation of goods for
excise purposes, powers of officers, penalties etc. This is the basic
Act governing Central Excise.
2. Central Excise Rules, 2002. These rules have been framed, amended
and notified by the Central Government from time to time under
powers granted to it by Section 37 of the Central Excise Act 1944.
The rules prescribe the procedures to be followed, forms to be
filled for clearance and storage of goods, their accounting,
licensing procedures, procedures for refund of duty, appeals
against orders of excise authorities etc.
3. Central Excise Tariff Act 1985.(CETA). This Act classifies all the goods
under various heads and sub-heads for prescribing different rates of
duties. Each head has a specific code assigned to it.
4. Central Excise (Valuation) Rules 2000. Section 4 of the Central Excise Act
contains provisions regarding determination of value for charging
excise duty. These rules have been framed to supplement Section 4.
5. Cenvat Credit Rules 2004
6. Central Excise (Removal of Goods at Concessional Rate of Duty for
Manufacture of Excisable Goods)Rules 2001.
7. C.E. (Determination of Retail Sale Price of Exciseable Goods)Rules 2008.
8.Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules
1982. CEGAT ( PROCEDURE ) RULES PRESCRIBE ROCEDURE OF FILING
AND HEARING APPEALS TO CEGAT (now CESTAT).
9.Additional Duties of Excise (Goods of Special Importance) Act, 1957. This
Act provides for imposition of additional excise duty in lieu of Sales
Tax on goods of special importance. Such goods are known as
‘Declared goods’ under the Central Sales Tax Act.
10. Central Excise (Appeal Rules) 2001.
11.Central Excise (Compounding of Offences) Rules 2005.
12.Notifications. Section 5A and 11C of Central Excise Duty 1944 grant powers of
Central Government to issue notifications granting partial or full exemptions from
Central Excise. These notifications have full legislative backing.
The rules and notification have to be placed before each House of Parliament
which has power to amend or modify these. So, these rules and notification have
full legislative support and are treated as pert of the Act itself.

The Central Excise Act, 1944

# The Central Excise Act, 1944(CEA) is the basic Act providing for charging of duty,
time and manner of payment of duty, execution of bonds, procedure for
appointment and powers of officers, provisions of arrest, penalty etc.
# In the Act, the detailed procedures regarding levy of duty on unmanufactured (from
bulk pack to retail pack) products and manufactures products like matches, sugar,
manufactures, tobacco, tyres etc. have been given.
# It came into force on 28th February, 1944 and extends to whole of India and extends
to whole of India.
THE SCHEME OF THE ACT IS AS UNDER :-
No. Chapter Sections

1 Titles and Definitions ( 1 to 2 A )

2 Levy and Collection of Duty ( 3 to 12 )

2 (a) Amount of Duty ( 12A to 12D )

3 Powers and Duties of Excise Officers ( 12 E to 23 )

3 (a) Advance Rulings ( 23 A to 23 H )

4 Transport by Sea ( 24 to 30 )

5 Settlement of Cases ( 31 to 32 A )

6 Adjudication of Confiscations and Penalties ( 33 to 34 A )

6 (a) Appeals ( 35 to 36 )

6 (b) Presumption as to Documents ( 36 A & 36 B )

7 Supplementary Provisions ( 37 to 40 )
 DEFINITIONS

# Adjudicating authority means any authority competent to pass any order

or decision under this Act, but does not include the Central Board of Excise
and Customs constituted under the Central Boards of Revenue Act, 1963
Commissioner of Central Excise (Appeals) or Appellate Tribunal (CESTST);
[Section 2 (a)]
An adjudicating authority can never go back on his order but the appellate
authority can revise orders of Adj. authority.
# Appellate Tribunal means the Customs, Excise and Gold (Control) Appellate
Tribunal constituted under section 129 of the Customs Act, 1962. [Section 2
(aa)]
# Broker or commission agent means a person who in the ordinary course
of business makes contracts for the sale or purchase of excisable goods for
others ; [Section 2 (aaa)]
# Central Excise Officer means the Chief Commissioner of Central Excise
 Commissioner of Central Excise,
Commissioner of Central Excise (Appeals),
Additional Commissioner of Central Excise,
Joint Commissioner of Central Excise,
Deputy Commissioner of Central Excise,
Assistant Commissioner of Central Excise,
Any other officer of the Central Excise Department or
Any person ( including an officer of the State Government) invested by the
Central Board of Excise and Customs constituted under the Central Board of
Revenue Act, 1963.
1. Curing includes wilting, drying, fermenting and any other process for
rendering an unmanufactured product fit for marketing or manufacture ;
[Section 2 (c)]
2. Excisable goods means good specified in the Schedule to the Central Excise
Tariff Act, 1985 as being subject to a duty of Excise [Section 2 (d)]
3. Exempted Goods : Goods specified in CETA 1985 for prescribed cenvat rate
but due to exemption notification issued by Cental Government, there is
exemption from duty liability
4. NIL Rated Goods: Excisable goods specified in CETA 1985 but rate of duty
 mentioned against them is NIL . SC in Nandi printer case decided that goods
are excisable if specified in CETA even though rate of duty is nil.
5. Factory means any premises, including though precincts thereof, wherein or in
any part of which excisable goods other than salt are manufactured, or wherein
or any part of which any manufacturing process connected with the production
of these goods is being carried on or is ordinarily carried on [Section 2 (e)]
6. Manufacture includes any process-
Incidental or ancillary to the completion of a manufactured product ;
which is specified in relation to any goods in the First Schedule of the Central
Excise Tariff Act, 1985 as amounting to manufacture, or
which in relation to goods specified in the 3rd schedule involves packing or
repacking of such goods in a unit container or labeling or relabeling of
containers including the declaration or alteration of retail sale price on it or
adoption of any other treatment on the goods to render the product marketable
to the consumer.
7. Manufacturer: The word manufacturer has not been defined by a separate sub
section. The latter part of the Sec. 2(f) has been used to define manufacturer .
8. Sale and Purchase with their grammatical variation and
cognate expressions, mean any transfer of the possession of
goods by one person to another in the ordinary course of trade
or business for cash or deferred payment or other valuable
consideration. [Section 2 (h)]
9. Wholesale dealer means a person who buys or sells excisable
goods wholesale for the purpose of trade and manufacture and
includes a broker or commission agent who in addition to
making contracts for sale or purchase of excisable goods for
others, stocks such goods belonging to others as an agent for the
purpose of sale. [Section 2 (k)]
DIFFERENCE BETWEEN GOODS AND EXCISABLE
GOODS
Basis goods Excisable Goods
1. Definition Goods are not defined Excisable goods are defined
under Central Excise Act but under section 2 (d) of
Finance Act defines it. Central Excise Act
2. Essential character To be called goods, a To be called excisable
commodity must be goods, a commodity must
movable and marketable. be specified in 1 and 2
schedule of Central Excise
and Tariff Act 1985
3.Scope Wider term Narrow term
DIFFERENCE BETWEEN DUTIABLE AND
EXCISABLE GOODS
Basis Excisable goods Dutiable goods
1. Charging section Under section 2(d) of No section
Central Excise Act
2. Meaning Goods specified in schedule Goods on which actual
1 and 2 of Central Excise excise duty is paid
Tariff Act 1985 as being
subject to duty
3. Scope Goods which are exempted Goods which are exempted
or are at nil rate are still or are at nil rate are not
excisable goods dutiable goods
4, Point of levy Goods are excisable at the Goods become dutiable at
time of manufacture the time of removal of
goods
 MEANING OF LEVY

Levy means imposition of tax . Once a tax or

duty is imposed b, it is quantified and then
collected . The term levy includes both
imposition of tax as well as assessment ,
however , it does not include collection.
 DIFFERENCE BETWEEN LEVY
AND COLLECTION
BASIS LEVY COLLECTION

MEANING Levy means imposition When excise duty is

of duty actually realized , it is
called collection

APPLICABLE PROVISION Section 3 is the charging Rule 8 prescribes that

section excise duty shall be
collected at the time of
removal
POINT OF LEVY The levy is on C collection at the time
production or of removal
manufacture of excisable
goods
POINTS of Distinction Levy under the Act Levy Under Finance act

Nature of levy Such type of levy is a Such type of levy is a

Continuous levy yearly levy that is it
remains alive only for an
year
Alteration of Rates The rates remain same Such levy automatically
unless altered by the lapse at the end of
finance act financial year and
continuance of such duty
in subsequent yr at the
old or new rates shall be
treated as a fresh levy
Sharing of collection The collection proceeds The collection proceeds
from such levy are from such levy from such
shared by the Union with levy are exclusively for
the states government of India and
are not shared with the
states
 DUTIES SPECIFIED IN THE FIRST
AND SECOND SCHEDULE TO THE
CENTRAL EXCISE TARIFF ACT ,1985
TO BE LEVIED
(a) A duty of excise , called Central Value Added Tax (CENVAT) on all
Excisable Goods (excluding good produced or manufactured in SEZ )
(b) A Special duty of excise on Excisable goods in schedule 2

Section 3 is a charging section which determines a taxable event and

it also provides the duty shall be levied and collected in such manner
as may prescribed . Central Excise rules provides that in case of goods
removed from a factory or a warehouse , the date for determination of
duty and valuation shall be the date of actual removal of such goods
from such factory or warehouse.
What is the taxable event calling for the levy ?
The event is manufactured or production. If there is no
manufacture/production then there is no duty to attract duty there
must be a process amounting to manufacture/production and the
output be excisable goods sale is not a parameter in excise.
Who is liable to pay excise duty?
Rule 4(1) of central excise rules 2002 provide that every person who
produces or manufactures any excisable goods .
Or stores such goods
What is the relevant date of determination of rate of duty & traffic
value under central excise?(rule5)
In case of excisable goods other than khan sari molasses:
(a) date on which such excisable goods are
removed from factory or a warehouse.
(b) Capital consumption : when goods removed from store, then it shall
be deemed to be removed from factory .
DUTIES OF EXCISE COLLECTED FROM
THE BUYER TO BE DEPOSIOTED WITH
CENTRAL GOVERNMENT
DUTY OF DEPOSIT EXCISE DUTY
Every person who is liable to pay duty under5 this act or
the rules hereunder and has collected any amount in
excess of theca duty assessed or determined and paid
excisable goods under the acts or the rules made there
under from he buyer of such goods bin representing duty
of excise shall forthwith pay amount so collected to the
credit of central government .
MANNERS PRESCRIBED FOR COLLECTION EXCISE DUTY
UNDER THE CENTRAL EXCISE RULES 2002
DUTY PAYABLE ON REMOVAL
1) Every person
According To C.E. act excise duty is attracted the moment
manufacture is completed but it becomes payable at the time of
removal only and the too at the rate application on the date of
removal and not at the rate prevalent on the date of
manufacture C.E rules 4 & 5.
2) Notice of demand
Where any amount of required to be paid to the credit of the
central government as above which has not been o paid the
central excise officer may serve on the person liable to pay such
amount a notice requiring him to show cause why the said
amount as specified in the notice should not paid by the credit
the central got.
3) Liability
The central excise officers shall after considering the
representation if any made by the person on whom the notice is
served as above determine the amount due from such person.
4) Adjustment against excise duty payable
The paid to the credit to the central govern shall beer adjust
against the duty of exile payable by the person on finalisation of
assessment or any preceding for terming by the duty of excise
relating to excisable goods.
5) Refund
In accordance with the provision of section 11B
And such person may be make ban application under that in
such cases within 6months from the date of the public notice to
be issued by the assistant commissioner of central excise for the
refund of such surplus amount.
CENTRAL EXCISE RULES 2002
I Basic rules

Rule 2 : definition

Rule 3 appointment and jurisdiction

II DUTY RELATED RULES

Rule 4 duty payable on removal

Rule 5 date for determination of duty and tariff valuation

Rule 6 assessment of duty

Rule 7 provisional assessment

Rule8 manner of payment

Rule 13 duty on matches

Rule 13a utilization of amount paid for procurement of

central excise stamp for payment of duty
Rule 15 special; producer for payment of duty

Rule 17 removal of goods by a unit

III BASIS EXCISE PRODUCER

RULE 9 registration
Rule 10 daily stock amount

Rule 11 goods to be removed on invoice

Rule 15 (5) re pre authentication of in voice deleted by
finance act 2010
Rule 12 filling of return

IV Return and retention and duty plaids goods

Rule 16 credit of duty on goods brought to the factory

V Job work

Rule 16 a removal of goods for job work etc

VI Export procedure

Rule 18 rebate of duty

Rule 19 export without payment of duty

VII Warehousing profession

RULE 20 warehousing profession

VIII RULE 21 remission of duty

IX POWER OF CEO

RULE 22: ACESS TO REGISTERED PREMISES

RULE 23 POWER TO STOP AND SEARCH RULE 24 POWER TO DETAIN

AN SIZE THE GOODS

x PENALITY PROVISION
Rule 25 confiscation and penalty
Rule 26 penalty for certain officers

Rule 27 general penalty

Rule 28 on confiscation , property to vest in the general in the

central governmental
Rule 28 disposal of goods confiscated

Rule 30 storage charges I.R.O. goods consifiscated and redeemed.

XI MISCELLANEOUS RULES
Rule 31 power to issue

Supplement instruction

Rule 32 restriction on removal of goods