Brief history and developments -

Central Excise duty is an indirect tax levied on goods manufactured in India. The tax is administered by the Central Government under the authority of Entry 84 of the Union List (No. 1) under Seventh schedule read with Article 246 of the Constitution of India.

The Central Excise duty is levied in terms of Central Excise Act, 1944 and the rates of duty, ad valorem or specific, are prescribed under the Schedule I and II of the Central Excise Tariff Act, 1985. The taxable even under the Central Excise law is 'manufacture' and the liability of Central Excise duty arises as soon as the goods are manufactured . The Central Excise Officers are also entrusted to collect other types of duties levied under Additional Duties of Excise (Goods of Special Important) Act, Additional Duties of Excise (Textiles and Textile Articles) Act, Cess etc.

Till 1969, there was physical control system wherein each clearance of manufactured goods from the factory was done under the supervision of the Central Excise Officers. Introduction of Self-Removal procedure was a watershed in the excise procedures. In 1969, the assessees were allowed to quantify the duty on the basis of approved classification list and the price list and clear the goods on payment of appropriate duty.

In 1994, the gate pass system gave way to the invoice-based system, and all clearances are effected on manufacturer's own invoice. Another major change was brought about in 1996, when the Self-Assessment system was introduced. This system is continuing today also. The assessee himself assesses his Tax Return and the Department scrutinizes it or conducts audit to ascertain correctness of the duty payment. Even the classification and value of the goods were to be merely declared by the assessee instead of obtaining approval of the same from the Department.

In 2000, the fortnightly payment of duty system was introduced for all commodities, an extension of the monthly payment of duty system introduced the previous year for Small Scale Industries.

In 2001, new Central Excise (No.23) Rules, 2001 have replaced the Central Excise Rules, 1944 with effect from 1^st July, 2001. Other rules have also been notified namely, CENVAT Credit Rules, 2001, Central Excise Appeals rules, 2001 etc. With the introduction of the new rules several changes have been effected in the procedures. The new procedures are simplified. There are less numbers of rules, only 33 as compared to 234 earlier. Classification declaration and Price declarations have also been dispensed with, the CENVAT declaration having been earlier dispensed with in 2000 itself.

Administration of Central Excise -

The Central Excise law is administered by the Central Board of Excise and Customs (CBEC or Board) through its field offices, the Central Excise Commissionerates. For this purpose, the country is divided into 23 Zones and a Chief Commissioner of Central Excise heads each Zone. There are total 92 Commissionerates in these Zones headed by Commissioners of Central Excise. Divisions and Ranges are the subsequent formations, headed by Deputy/Assistant Commissioners of Central Excise and Superintendents of Central Excise, respectively.

For enforcing the Central Excise law and collection of Central Excise duty the following types of procedures are being followed by the Central Excise Department -

a) Physical Control- Applicable to cigarettes only. Here assessment precedes clearance which takes place under the supervision of Central Excise officers;

b) Self-Removal Procedure- Applicable to all other goods produced or manufactured within the country. Under this system, the assessee himself determines the duty liability on the goods and clears the goods.

I. PRELIMINARY

Q.1. What is Central Excise? How it differs from other duties/taxes?

Ans. "Excise', as stated in the Oxford Dictionary, was originally 'acise' , a word derived from the Latin, 'accensav', meaning 'to tax', The primary and fundamental meaning of 'excise duty' or 'Duty of Excise' is tax on articles produced or manufactured in the taxing country and intended for home consumption (i.e. consumption within the same country). It is an indirect duty which the manufacturer or producer passes on to the ultimate consumer, that is, its ultimate incidence will always be on the consumer.

Q.2. How important is the role of Central Excise in India?

Ans. Central Excise revenue is the biggest single source of revenue for the Government of India.

The Union Government also tries to achieve different socio-economic objectives by making suitable adjustments in the scope and quantum of levy of Central Excise duty. The scheme of Central Excise levy is suitably adapted and modified to serve different purposes of price control, industrial growth, promotion of small scale industries and the like.

Q.4. What are the different kinds of Excise Duties levied on goods and what are the provisions of law thereof?

Ans.

1. Basic Excise Duty - This is charged under section 3 of the Central Excises and Salt Act, 1944 on all excisable goods other than Salt which are produced or manufactured in India at the rates set forth in the Schedule to the Central Excise Tariff Act, 1985.

2. Additional Duty of Excise -

(a)Section 3 of the Additional duties of Excise (goods of Special Importance) Act, 1957 authorises the levy and collection in respect of the goods described in the Schedule I to this Act. (Schedule I levies Additional Excise duty on goods falling under Chapter 17,24,51,52,54,55,58,59 and 60) of the Central Excise Tariff Act, 1985). This is levied in lieu of Sales Tax and is shared between Central and State Governments.

(b)Section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 provides for the levy and collection of Additional Duties of Excise on certain textile and textile articles mentioned in the Schedule to this Act.

c)Section 3 of the Khadi and other Handloom Industries Development (Additional Excise Duty on cloth) Act, 1953 authorises the levy and collection on all cloth manufactured a duty of excise at the rate of 2.5 paise per square metre subject to certain conditions.

d)Section 3 of the Mineral Products (Additional Duties of Excise and Customs ) Act, 1958 provides for the levy and collection in respect of goods mentioned in column 1 of the Table annexed to this Act.

3. Special Excise Duty- As per Section 37 of the Finance Act, 1978 Special Excise Duty was attracted on all excisable goodson which there is a levy of Basic Excise Duty under the Central Excises & Salt Act, 1944. Since then each year the relevant provisions of the Finance Act specifies that the Special Excise Duty shall be levied and collected during the relevant financial year.

Q.19. Does one require registration to produce/manufacture excisable goods?

Ans. Yes. Every person who produces, manufactures, carries on trade, holds private store-room or warehouse or otherwise uses excisable goods shall get registered as per the provisions of Rule 9. Section 6 of Central Excise and Salt Act, 1944 lays down the statutory provision in this respect. Exceptions to this legal requirement is embodied in Notfn. No. 36/2001-C.E.(N.T.) dt.26.06.01, wherein certain specific categories of persons/ premises have been exempted from registration.

The application for registration has to be made to the jurisdictional C. Excise officer. Manufacturers who are exempted from registration by virtue of the said Notfn. have to file a declaration with the Asstt. Commr. of their respective Divisions.

Non-obtaining of a licence under the Central Excise law is liable to punishment. Manufacturers enjoying exemption from the payment of Central Excise Duty are also exempted from licensing control subject to certain conditions as laid down in Rule 174A.

Q.23. What is the significance of 'Trade Notices' under Central Excise law?

Ans. Rule 31 of the Central Excise Rules, 2002 empowers the Central Board of Excise and Customs and Commissioners to issue written instructions for any supplemental matters arising out of the Rules. This power is only to fill in the working details and are only administrative directions. Trade Notices contain such directions.

The Trade Notices have no statutory effect and their non-compliance does not amount to violation of any substantive provisions of Central Excise law attracting any penal action. They cannot alter the meaning of the words of statute nor can they be read for the purpose of controlling the plain meaning of a tariff entry.

Sometimes Trade Notices explain the existing statutory provisions and sometimes they fill up the gaps or omissions in the procedural statutory rules.

Trade Notices are binding on the Department but not on the quasi-judicial authorities, Tribunals and Courts of Law.