5_20_01_2013_CA_T_R_Rajesh

7/17/2019 5_20_01_2013_CA_T_R_Rajesh

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Indirect Tax CertifcationCourse - Central Excise

Rajesh Kumar T.R.B’com, LLB, FCA, DISA

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Revenue rom dierentstreams o taxes

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Nature of taxBudget

st!mates"#$$%$"

Re&!sedst!mates"#$$%$"

Shortfa''(xcess

Corporate tax 3,5,! 3,2",#$! -32,31!

Income tax 1,"2,!2# 1,"1,$" -1%"

&ealt' tax #35 1,!2 %5"

Taxes o (nion Territories 1,"3 2,31" 3%%

Customs 1,51,"!! 1,53,!!! 1,3!!

(nion Excise )uties 1,#%,11# 1,5!,## -13,%2!

*ervice Tax $2,!!! 5,!!! 13,!!!

Tota' ),*",++# ),#$,+ %*#,--

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!

5!,!!!

1!!,!!!

15!,!!!

2!!,!!!

25!,!!!

3!!,!!!

35!,!!!

%!!,!!!

Indirect Tax Revenues

INR

Crore

Customs 186,694

Union Excise Duties 194,350

Service Tax 124,000

Total indirect tax revenue 505,044

Other Tax Revenues INR Crore

Taxes of Union Territories !t"ers 3,555

#ncome tax 195,$86

Cor%orate tax 3$3,22$

Total direct & other duties 572,568

%

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Constitutional +spects o Taxation

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art II . /inance, ropert0,Contracts and *uits

+rticle 2#5 o t'e

Constitution o India - No

tax shall be levied or

collected without the

authority of law#

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art I . Relation tn (nion . *tates- 2%5

arliament a4e as . &'oleor an0 part o t'e Territor0 oIndia

*tate e6islature . &'ole or

an0 part o t'e *tate7o la made 80 arliaments'all 8e deemed to 8e invalid

on t'e 6round t'at it ould"

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+rticle 2%#

arliament 'as exclusivepoer to ma4e las o matterscovered in ist I 9union ist: o;II *c'edule

*tate e6islature 'as exclusive

poer to ma4e las o matterscovered in ist II 9*tate ist:

Concurrent ist . ot' 'ave

poers$

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*event' *c'edule/!o/ L!st% L!st %IEntr0 $3< )uties o customs includin6

export duties<

Entr0 $%< )uties o excise on to8acco andot'er 6oods manuactured or produced inIndia except-9a: alco'olic li=uors or 'uman

consumption>9b: opium, Indian 'emp and ot'er narcotic

dru6s and narcotics,

8ut includin6 medicinal and toiletpreparations containin6 alco'ol or an0

su8stance included in su8-para6rap' 9b:o t'is entr0<

Entr0 2C . Taxes on *ervices

Entr0 " - +n0 ot'er matter notenumerated in ist II or ist III includin6an0 tax not mentioned in eit'er o t'oselists<

State L!st% L!st % IIEntr0 51< )uties o excise on t'e

olloin6 6oods manuactured orproduced in t'e *tate and countervailin6duties at t'e same or loer rates onsimilar 6oods manuactured or producedelse'ere in India?-9a: alco'olic li=uors or 'uman consumption>98: opium, Indian 'emp and ot'er narcotic

dru6s and narcotics,

8ut not includin6 medicinal and toiletpreparations containin6 alco'ol or an0su8stance included in su8-para6rap' 98:o t'is entr0<

Entr0 5%< Taxes on t'e sale or purc'aseo 6oods ot'er t'an nespapers, su8@ectto t'e provisions o entr0 2+ o ist I<

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)uties o excise on to8acco and ot'er 6oods

manuactured or produced in India except?

alco'olic li=uors or 'uman consumption>

opium, Indian 'emp and ot'er dru6s and narcotics,

8ut includin6 medicinal and toilet preparations

containin6 alco'ol or an0 su8stance includin6 in

su8-para6rap' 98: o t'is entr0 9e6< edical

s0rups or coldAcou6':

Entr0 $% o (nion ist

1!

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Entr0 51 o state list)uties o excise on t'e olloin6 6oods

manuactured or produced in t'e *tate andcountervailin6 duties at t'e same or loerrates on similar 6oods manuactured or

produced else'ere in India?-alco'olic li=uors or 'uman consumptionopium, Indian 'emp and ot'er narcotic dru6s and

narcotics

8ut not includin6 medicinal and toiletpreparations containin6 alco'ol or an0su8stance included in su8-para6rap' 98: o t'isentr0

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Entr0 " o (nion istan0 ot'er matter not included in ist II, III

and an0 tax not mentioned in list II or III

T'is is residuar0 poers it'in t'e 'ands o(nion<

C'allen6e o lev0 o an0 ne Central tax,'as to pass t'e test o provin6 t'at it is8e0ond t'is residuar0 poers irrespectiveo 'at t'e tax is namedAc'aracterised as<

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asic Elements o Taxationev0 . &ill defne t'e event upon 'ic' t'e

dut0Atax 6ets attracted

+ssessment . Buantifcation o t'e lev0attracted

Collection . T'e mec'anism 80 'ic' t'eovernments ould collect t'e assessedtax

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ev0 . collection . meanin6

*omai0a Dr6anics td ;s *tate o (, 2!!1

913!: ET 3 9*C: . t'e ord collection in

+rt<2#5 ould mean p'0sical realiation o tax,

'ic' is levied or imposed< ev0 and collect

are not s0non0mous terms< ev0 meansassessment or c'ar6in6 or imposition o tax,

collect means p'0sical realiation<

ev0 and collection

1%

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+rt<3##92$: o Const< o India . Taxation

includes t'e imposition o an0 tax or

impost, 'et'er 6eneral or local or special,

and FtaxG s'all 8e construed accordin6l0<

Tax

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T'e Central oard o Revenue +ct, 1#3 defnes Fdirect

taxG to mean an0 dut0 levia8le or tax c'ar6ea8le under

Estate )ut0 +ct, 153, &ealt'-tax +ct, 15",

Expenditure Tax +ct, 15", it Tax +ct, 15$, Income-

tax +ct, 1#1, *uper rofts Tax +ct, 1#3, Interest Tax

+ct, 1"%, Hotel Receipts Tax +ct, 1$!, and an0 ot'er

dut0 or tax 'ic', 'avin6 re6ard to its nature or

incidence, ma0 8e declared 80 t'e Central overnment,

80 notifcation in t'e ocial 6aette to 8e a direct tax<

&'at is )irect Tax

1#

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Eri eac' Compan0 td ;s +ttorne0

eneral o Dntario, +IR 13! C 1!

direct tax is one 'ic' is demanded rom

t'e ver0 person 'o it is intended or desired

s'ould pa0 it< Indirect taxes are t'ose 'ic'

are demanded rom one person in t'e

expectation and intention t'at 'e s'all

indemni0 'imsel at t'e expense o anot'er<

CourtGs vies

1"

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Introduction to Central Excisea

1$

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Central Excise +ct, 1%%

Rules

CE Rules, 2!!2,

Cenvat Credit Rules, 2!!%,

CE 9+ppeal: Rules, 2!!1,

CE 9+dvance Rulin6s: Rules, 2!!2,

CE 9*ettlement o cases: Rules, 2!!",

CE 9Removal o oods at Concessional Rate o dut0

or manuacture o excisa8le 6oods: Rules, 2!!1,

*ources o CE la

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CE ;aluation 9)etermination o rice o Excisa8le

oods: Rules, 2!!!,

CE 9Compoundin6 o Dences: Rules, 2!!5,

CE 9)etermination o Retails *ale rice o

Excisa8le oods: Rules 2!!$

Central Excise Tari +ct, 1$5

7otifcations

Case las and Circulars

*ources o CE la

2!

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C'ar6in6Aev0 *ection - 3 T'ere s'all 8e levied and collected in suc'

manner as ma0 8e prescri8ed

a dut0 o excise to 8e called t'e Central ;alue+dded Tax 9CE7;+T:

on all excisa8le 6oods9excludin6 6oods produced or manuactured

in special economic ones:J

'ic' are produced or manuactured in Indiaas, and at t'e rates, set ort' in t'e /irst*c'edule and *econd *c'edule to t'e CentralExcise Tari +ct, 1$5

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Elements o ev0roductionAanuactureIn India

D oods

Excisa8le 9*et out in 1st

K 2nd

*c'< To CET+su8@ected to dut0:

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oods anuactured in ED( and 8rou6't toot'er place in India)uties o Excise to 8e paid+mount e=ual to

t'e a66re6ate o t'e duties o customs 'ic'ould 8e levia8le on li4e 6oods produced ormanuactured outside India i imported into India<

;aluation ould 8e 8ased on Customs

oods anuactured 80 or on 8e'al oovernment ould 8e same li4e an0 ot'er r<oer to fx Tari values to C<<

*ec< 3 . Dt'er +spects

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LanuactureM includes an0 process, -

i: incidental or ancillary to t'ecompletion o

a manuactured product> AND ii: 'ic' is specied in relation to any goods

in t'e *ection or C'apter notes o t'e First

Schedule to t'e Central Excise Tari +ct, 1$5

95 o 1$#: as amountin6 to manuacture> 0R

anuacture . )efnition .29:

2%

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iii: 'ic', in relation to t'e 6oods specied in the

Third Schedule, involves packing or repacking o

suc' 6oods in a unit container or labelling or re-

labelling o containers includin6 t'edeclaration or

alteration o retail sale price on it or adoption oany

other treatment on t'e 6oods to render t'e product

mar4eta8le to t'e consumer

and t'e ord LmanuacturerM s'all 8e construedaccordin6l0 and s'all include not onl0 a person 'oemplo0s 'ired la8our in t'e production or manuactureo excisa8le 6oods, 8ut also an0 person 'o en6a6es int'eir production or manuacture on 'is on account>

anuacture . )efnition .29:

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)efnition starts it' t'e ord LincludesM

3 lim8s in t'e defnition

2nd and 3rd lim8 . L)eemed manuactureM

anuacture - anal0sis

2#

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(DI ;s )el'i Clot' K eneral ills Co<ltd, 1"" 91:

ET N<1 9*C: . manuacture implies a change, 8ut

ever0 c'an6e is not manuacture and 0et c'an6e o

an article is t'e result o treatment, la8our and

manipulation< ut somet'in6 is necessar0 and t'ere

must 8e transormation> a new and dierent

article must emer6e 'avin6 a distinctive name

and character or use< +lso see *out' i'ar *u6ar

ills ltd ;s (DI, 1"$ 92: ET N<33# 9*C:<

anuacture

2"

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Empire Industries ltd ;s (DI, 1$5 92!: ET 1 9*C:

. to constitute manuacture it is not necessar0

t'at one s'ould a8solutel0 ma4e out a ne t'in6

8ecause it is ell settled t'at one cannot

a8solutel0 ma4e a t'in6 80 'and in t'e sense t'at

no8od0 can create matter 80 'and 9scientifcall0:<

It is transformation of matter into something

else that would amount to manufacture T'at

somet'in6 is a =uestion o de6ree<

anuacture

2$

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&'at comes out ater processin6 is a

dierent commercial commodit0 'avin6 its

distinct c'aracter, use and name and is

commerciall0 4non as suc', is an

important consideration in determinin6

'et'er t'ere is a manuacture<

anuacture

2

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(DI ;s arle roducts, 1% 9"%: ET %2

9*C: - &'et'er or not somet'in6 results in

manuacture ould depend on t'e acts o

t'e case 8ut an0 num8er o processes

underta4en 'ic' do not result in a

commerciall0 dierent commodit0 cannot

result in manuacture<

anuacture

3!

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(@a6ar rints ;s (DI, 1$$ 93$: ET 535 9*C: .

revalent and 6enerall0 accepted test to ascertain

'et'er t'ere as manuacture as 'et'er t'e

c'an6e or t'e series o c'an6es 8rou6't 80

application o processes ta4e t'e commodit0 to

t'e point 'ere, commodit0 can no lon6er 8e

re6arded as t'e ori6inal commodit0 8ut is, instead,

reco6nised as a distinct and ne article t'at 'as

emer6ed 8ecause o t'e result o t'e processes<

anuacture

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T'ere mi6't 8e 8orderline cases 'ere

eit'er conclusion can 8e reac'ed it'

e=ual @ustifcation< Insistence on an0 s'arp

or intrinsic distinction 8eteen processin6

and manuacture results in an over

simplifcation o 8ot' and tends to 8lur t'eirinterdependence in cases<

anuacture

32

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anuacture involves a series o processes<

+ process is one o t'e activities

underta4en or manuacture o a product

rom input materials<

anuacture - processes

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Conversion o @um8o rolls o p'oto6rap'ic

flms into small Oats and rolls in t'e desired

sies . Indian Cine +6encies ;s CIT

urifcation and fltration done to product

'0droc'loric acid and sulp'uric acid

mar4eta8le in t'e international mar4et .CCEx ;s +lo4 Enterprises

rocess amountin6 to anuacture

3%

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rocess o slittin6 and cuttin6 o steel s'eets and

pol0ester flms, 'ic' are used or lamination, as t'e

resultant product as not 'avin6 dierent c'aracter,

name and use<

ic4lin6 and oilin6 o metals as preparator0 steps does

not amount to manuacture . Circular 2"A1"A2!1! .

deemed in 2!12rocess o cleanin6 Lused mo8il oil doesnGt amount to

manuacture as no ne commercial commodit0 comes

into existance<

rocesses not amountin6 toanuacture

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)ictionar0 meanin6 o FproduceG . to 8rin6 orard,

to 8rin6 ort' or out, to 8rin6 9to a specifed

condition:, to 8rin6 into existence or 8ein6, to or4

up rom ra material, manuacture 9material:

o8@ects<

H0dera8ad +s8estos td ;s (DI, 1$! ET "35 .

manuactured and produced ere s0non0mous .

same test s'ould 8e applied<

roduced used in respect o natural items<

anuacture vs production

3#

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rocesses 'ic' ma0 not amount to

manuacture in t'eir natural meanin6

rou6't under tax am8it 80 t'e artifcial

defnition

rocesses mentioned in CET+ as manuacture

T'ird sc'edule in CET+ . repac4in6, re-

la8ellin6, puttin6 or alterin6 retail sale price

etc< . mostl0 consumer 6oods<

)eemed manuacture

3"

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rocesses 'ic' are specifed in relation to

an0 6oods in t'e *ection 7otes or C'apter

7otes to t'e /irst *c'edule to CET+>

ere specifcation o a process in t'e Tair

entr0 not sucient>

*'ould 8e specifcall0 stated t'at t'e process

amounts to manuacture<

)eemed anuacture 29:9ii:

3$

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Cha1ter (

Sect!o/ Notesfor

2rocesses amou/t!/g to Deemed

3a/ufacture

Dres, *la6 and+s'

rocess o convertin6 ores into concentrate

ar8le, ranite,

sandstone, etc

rocess o cuttin6 or sain6 or siin6 or polis'in6

o 8loc4s or an0 ot'er process o convertin6 stone8loc4s into sla8s or tiles

+luminium Tu8esK ipe

T'e process o drain6 or redrain6

Iron and *teel rocess o drain6 or redrain6 a 8ar, rod, ire

rod, round 8ar or an0 ot'er similar article into8ri6't 8ar<rocess o 6alvaniation

evera6e, *piritand ;ine6ar

a8ellin6 or rela8ellin6 o containers, or, pac4in6or repac4in6 rom 8ul4 pac4s to retail pac4s, or,adoption o an0 ot'er treatment to render t'e

product mar4eta8le to t'e consumer

)eemed anuacture 29:9ii: .Example

3

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)eemed anuacture 29:9ii: .Example

Cha1ter ( Sect!o/

Notes for

2rocesses amou/t!/g to Deemed

3a/ufacture

isc edi8lepreparations

a8ellin6 or re-la8ellin6 o containers or re-pac4in6 rom 8ul4 pac4s to retail pac4s o panmasala, 0east, sauces, extracts rom teaAcoees'all amount to manuacture

ade up textilearticles> sets> ornclot'in6 K orntextile articles>ra6s

+xin6 8rand name, la8ellin6 or re-la8ellin6 orrepac4in6 rom 8ul4 pac4 to small pac4 oread0made 6arments 9+rticles o +pparel: ismanuacture

7atural or coloured

pearl> precious orsemi preciousstones> preciousmetals> Imitation

@eeller0> Coin

rocess o refnin6 dore 8ar

*ound recordersand reproducers Recordin6 o sound or ot'er p'enomena onaudio or video tapes s'all amount to%!

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oods specifed in T'ird *c'edule to CET+

ac4in6 or repac4in6 in a unit container

a8ellin6 or re-la8ellin6 o containers includin6

t'e declaration or alteration o retail sale price

on t'e container or

+doption o an0 ot'er treatment on t'e 6oods

to render t'e product mar4eta8le to consumer<

)eemed manuacture 29:9iii:

%1

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+ir i=uide 7ort' India vt< td< ;s CCEx<

P2!11J 2"1 ET 321 9*C:

Rela8elin6 and repac4in6 o 6as in small

c0linders

Helium 6as rendered mar4eta8le to ultimate

consumers t'ereo

+mounts to manuacture

)eemed manuacture 29:9iii:

%2

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erson 'o carries on t'e activit0 o

manuacture<

No8 or4er

rand oner not manuacturer . Ci8atul td

;s (DI, 1"$ 922: ET 3!2 9*C: . principal

to principal 8asis<

*'ould not 8e dumm0<

anuacturer

%3

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+rt<3##912: . oods include all materials,

commodities and articles<

*ale o oods +ct, 13! . section 29": . oods .

ever0 4ind o movea8le propert0 ot'er t'an

actiona8le claims and mone0> and includes stoc4s

and s'ares, 6roin6 crops, 6rass and t'in6s

attac'ed to and ormin6 part o t'e land 'ic' are

a6reed to 8e severed 8eore sale or under t'e

contract o sale<

oods

%%

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(DI ;s )el'i Clot' ills, 1" 91: ET N<1

9*C:, - in order to 8e 6oods, t'e articles

must 8e capa8le o comin6 to t'e mar4et to

8e 8ou6't and sold< T'ereore t'e items

must 8e moveable and marketable<

oods

%5

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ovea8ilit0?

)C case

*out' i'ar *u6ar ills ;s (DI, 1"$ ET N<33# 9*C:

T'e articles must 8e somet'in6, 'ic' can

ordinarily come or can be bought to the

market to be bought and sold < +s opposed to

movea8le 6oods, immovea8le propert0 cannot 8e

8rou6't to t'e mar4et to 8e sold<

oods

%#

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*ection 393#: C +ct, 1$" . movea8le 6oods

mean propert0 o ever0 description except

immova8le propert0

*ection 392#: C +ct, 1$" . immovea8le

propert0 s'all include land, 8enefts to arise

out o land, and t'in6s attac'ed to t'e eart'

or permanentl0 astened to an0t'in6

attac'ed to t'e eart'<

oods

%"

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ar4eta8ilit0?

Capa8ilit0 o a product o 8ein6 put into t'e mar4et or

sale<

(nion Car8ide India ltd ;s (DI, 1$# 92%: ET 1# 9*C: .

+n article must 8e somet'in6 'ic' can ordinaril0 come

to t'e mar4et to 8e 8ou6't and sold< +rticles in crude

or elementary form are not dutiable as t'e0 are

merel0 intermediar0 products and not 6oods< +luminum

cans or torc' 8odies produced 80 extrusion process .

neit'er sold nor mar4eta8le . not 6oods<

oods

%$

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CCE ;s +m8alal *ara8'ai Enterprises, 1$ 9%3:

ET 21% 9*C: . )ut0 o excise is on t'e manuacture

o 6oods and or an article to 8e 6oods, it must be

known in the market as such or must 8ecapable of being sold in the market as goods<

+ctual sale is not necessar0< (sa6e in captive

consumption is not determinative o 'et'er t'e

article is capa8le o 8ein6 sold in t'e mar4et or is

4non in t'e mar4et as 6oods<

oods

%

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Even transient itemsAarticles can 8e 6oods,

provided t'e0 are 4non in t'e mar4et as

distinct and separate articles, 'avin6

separate uses< T'us, 6oods it' unsta8le

c'aracter can 8e t'eoreticall0 mar4eta8le i

t'ere as a mar4et or suc' transient t0pes

o articles, 8ut one 'as to 8e ta4e a practical

vie on t'e 8asis o availa8le evidence<

oods

5!

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'or Industries td ;s CCE, 1$ 9%!: ET

2$! 9*C: . erel0 8ecause an article is

specifed under t'e Tari, it ould not 8e

correct to state t'at it is c'ar6ea8le to

dut0, unless it is proved that the goods

are marketable< *ee also Ion Exc'an6e

India td ;s CCE, 1 9112: ET "%# 9*C:

oods

51

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7um8er o purc'asers not relevant<

)oes not confne to territorial limits o India<

T'e act t'at 6oods are not actuall0

mar4eted is o no relevance nor is it

necessar0 t'at t'e 6oods in =uestion s'ould

8e 6enerall0 availa8le in t'e mar4et<+*E case<

oods

52

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*ection 2 9d: o CE +ct . it means 6oods specifed

in t'e /irst and *econd *c'edules to t'e CE Tari

+ct, 1$5 as 8ein6 su8@ect to a dut0 o excise and

includes salt<

Explanation . oods include an0 article, material

or su8stance 'ic' is capa8le o 8ein6 8ou6't

and sold or a consideration and suc' 6oods s'all

8e deemed to 8e mar4eta8le< 92!!$ amendment:

Excisa8le 6oods

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CET+ . 1st and 2nd sc'edule

*ection ise . eac' section 'as c'apters .

eac' c'apter . 'eadin6Asu8-'eadin6<

Tou6' mentioned in t'e said sc'edules,

8ut it' lan4 at t'e rate column, not

excisa8le 6oods

Excisa8le 6oods

5%

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oint o lev0 K Collection

ev0 is on anuacture,Collection is postponed as set out in Rules

I lev0 attracted on t'e activit0, t'eassessment ould 8e 8ased on removal

CCE ;s< ;air *ultan To8acco Co< td< 1#9$3: ET 9*C:

&allace /lour ills td ;s CCE, 1$ 9%%:

ET 5$ 9*C: K (DI ;s 7andi rinters <td,2!!1 912": ET #%5 9*C:<

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CourtGs vies?

T'e rovince o adras ;s oddu aidanna K *ons, 1"$ 92:

ET N<2"2 9/C:?

L )uties o excise were on manufacture or production o an article and alt'ou6' t'e expression

Ldut0 o exciseM as ide enou6' to include sales tax,

in vie o t'e poer expressl0 6iven to anot'er

aut'orit0 to lev0 a sales tax, t'e said expression must

8e 6iven a more restricted meanin6 t'an it mi6't

ot'erise 8ear<

7ature o Excise dut0

5#

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In appeal 8eore t'e riv0 Council in

overnor eneral in Council ;s rovince o

adras, 1"$ 92: ET N<2$! 9C: . Excise as

primaril0 a dut0 levied upon a manuacturer

producer on t'e commodit0 manuactured or

produced<

Tax on 6oods and not on sales or sale

proceeds<

CourtGs vies

5"

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T'ere as no overlappin6 o excise dut0 and sales

tax<

R<C<Nall arsi and Drs ;s (DI, +IR 1#2 *C 12$1 .

Excise dut0 is primaril0 a dut0 on production ormanuacture o 6oods it'in t'e countr0<

It is an indirect dut0 passed on to ultimate

customer<

(ltimate incidence ill ala0s 8e on t'e customer<

Can 8e levied at an0 convenient sta6e<

CourtGs vies

5$

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CCE ;s +cer India td, 2!!% 91"2: ET 2$ 9*C: .

)ut0 o excise is a tax upon 6oods and not sale or

proceeds t'ereo< Taxable event is manufacture

or production

CourtGs vies

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(DI ;s om8a0 T0res International, 1$3 91%:

ET 1$# 9*C:?

(ltimate incidence o an excise dut0, a

t0pical indirect tax, must ala0s 8e on t'e

consumer, 'o pa0s as 'e consumes or

expends and it continues to 8e an excise

dut0 on 'omemade 6oods, no matter at 'at

sta6e it is collected<

CourtGs vies

#!

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Removal o oods

#1

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Rule % - Removal

RL +. Dut5 1a5a6'e o/ remo&a'. 791: Ever0 person 'o produces or

manuactures an0 excisa8le 6oods, or 'o stores suc' 6oods in aare'ouse, s'all pa0 t'e dut0 levia8le on suc' 6oods in t'e mannerprovided in rule $ or under an0 ot'er la, and no excisa8le 6oods, on 'ic'an0 dut0 is pa0a8le, s'all 8e removed it'out pa0ment o dut0 rom an0place, 'ere t'e0 are produced or manuactured, or rom a are'ouse,unless ot'erise provided ?

P91+: 7otit'standin6 an0t'in6 contained in su8-rule 91:, ever0 person 'o6ets t'e 6oods, allin6 under C'apter #1 or #2 or #3 o t'e /irst *c'edule tot'e Tari +ct, produced or manuactured on 'is account on @o8 or4, s'allpa0 t'e dut0 levia8le on suc' 6oods, at suc' time and in suc' manner as isprovided under t'ese rules, as i suc' 6oods 'ave 8een manuactured 80suc' person ?

2ro&!ded t'at 'ere an0 person 'ad, instead o pa0in6 dut0, aut'oried @o8

or4er to pa0 t'e dut0 levia8le on 6oods manuactured in 'is 8e'al undert'e provisions o su8-rule 91+: as it stood prior to t'e pu8lication o t'isnotifcation, 'e s'all 8e alloed to o8tain re6istration and compl0 it' t'eprovisions o t'ese rules it'in a period o t'irt0 da0s rom t'e date opu8lication o t'is notifcation in t'e Dcial aette<J<

#2

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Rule % - Removal

92: 7otit'standin6 an0t'in6 contained in su8-rule 91:,'ere molasses are produced in a 4'andsari su6ar actor0,t'e person 'o procures suc' molasses, 'et'er directl0rom suc' actor0 or ot'erise, or use in t'e manuacture oan0 commodit0, 'et'er or not excisa8le, s'all pa0 t'e dut0levia8le on suc' molasses, in t'e same manner as i suc'

molasses 'ave 8een produced 80 t'e procurer<P93: J

9%: 7otit'standin6 an0t'in6 contained in su8-rule 91:,Commissioner ma0, in exceptional circumstances 'avin6re6ard to t'e nature o t'e 6oods and s'orta6e o stora6e

space at t'e premises o t'e manuacturer 'ere t'e 6oodsare made, permit a manuacturer to store 'is 6oods in an0ot'er place outside suc' premises, it'out pa0ment o dut0su8@ect to suc' conditions as 'e ma0 speci0<

#3

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Rule 5 )ate or determination

RL 8. Date for determ!/at!o/ of dut5 a/d tar!9&a'uat!o/. 7 91: T'e rate o dut0 or tari valueapplica8le to an0 excisa8le 6oods, ot'er t'an 4'andsarimolasses, s'all 8e t'e rate or value in orce on t'e date'en suc' 6oods are removed rom a actor0 or a

are'ouse, as t'e case ma0 8e<92: T'e rate o dut0 in t'e case o 4'andsari molasses,

s'all 8e t'e rate in orce on t'e date o receipt o suc'molasses in t'e actor0 o t'e procurer o suc'molasses<

!xplanation - I an0 excisa8le 6oods are used it'int'e actor0, Ft'e date o removal o suc' 6oodsG s'allmean t'e date on 'ic' t'e 6oods are issued or suc'use<

#%

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No8 &or4 under Central Excise

#5

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)ictionar0 eanin6

(na8rid6ed )ictionar0?&or4 done 80 No8

C'am8ers )ictionar0?

+ tas4, 8it o or4 . C'am8ers )ictionar0

##

(nder notifcation 21%A$# -

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(nder notifcation 21%A$# CE

No8 or4 meansi< rocessin6 or or4in6 upon ra materials

or semi-fnis'ed 6oods

ii< *upplied to t'e No8 or4er

iii< To complete a part o 'ole t'e process

iv< Resultin6 in manuacture or fnis'in6 oan article or an0 operation

v< Essential or t'e process

#"

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No8 &or4 under Cenvat Credit Rules

*imilar defnition as discussed undernotifcation 21%A$# . CE dated 25<!3<1$#

#$

No8 &or4 under ;aluation

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No8 &or4 under ;aluationRules

No8 &or4er means a personi< En6a6ed in t'e manuacture or

production

ii< Dn 8e'al o t'e rincipal manuacturer

iii< /rom inputs and capital 6oods supplied 80

i< rincipal manuacturer

ii< +n0 person aut'oried 80 'im

#

*upreme Court on No8 &or4

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*upreme Court on No8 &or4 .resti6e En6ineerin6

7o ne article s'ould 8e manuactured i<e< No8or4er is a person contri8utin6 onl0 la8our ands4ill on t'e supplied materials<

No8 &or4er s'ould return t'e same article ater

processin6 to t'e customer+n activit0 ould not 8e @o8 or4 'en @o8

or4er contri8utes on material it' materialsupplied to manuacture dierent 6oods< none article s'ould 8e manuactured at t'e 'ando t'e @o8 or4er and 'e s'ould return t'e samearticle ater processin6 to t'e customer

"!

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No8 or4 ;As anuacture

+ @o8 or4er can 8e construed as amanuacturer dependin6 on t'e process

rocess underta4en 80 No8 &or4er caneit'er amount to manuacture or not

No8 or4er ould 8e construed asmanuacturer even t'ou6' t'e materialsare not oned 80 t'e @o8 or4er

"1

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Hired a8our

+ person 'o 'ires 'imsel out to or4 orand under control o anot'er or a6es<

Controlled and supervised 80 manuacturer'o 'ires t'em<

+ person 'o 'as no independent entit0it' separate esta8lis'ment unit<

Hoever, i manuactures on on account,'e cannot 8e said to 'ave 'ired 'imselout<

"2

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Hired a8our ;As No8 &or4

I master . servant relations'ip or principal. a6ent relation exists 8eteen ramaterial supplier and @o8 or4er<

Ra material supplier ould 8e t'e

manuacturer

"3

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;aluation under No8 or4

Excise dut0 in 'ands o @o8 or4er is notpa0a8le i materials A semi-fnis'ed 6oodsare sent under?7otifcation 21%A$# . CE

Cenvat Credit rovisions

"%

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Rule 1!+ o ;aluation Rules

T'is provision provides t'at&'ere 6oods are manuactured 80 @o8 or4erDn 8e'al o principal manuacturer

)ut0 ould 8e pa0a8le on t'e sale value at

'ic' principal manuacturer sells t'e 6oods*old rom actor0? transaction value

*old rom depot? 7ormal transaction value

rice is not sole consideration? Rule # o valuationrules

/or consumption 80 sister units? Rule $ o valuationrules

"5

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;aluation upto arc' 2!!"

7o specifc provision in valuation rules;aluation as 8ased on material cost S @o8

c'ar6es

T'e a8ove mec'anism as confrmed 80

*upreme Court in(@a6ar rints ;As CCE'armasia ltd

I 6oods are under R- R lessa8atement

"#

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No8 or4 under service tax

No8 or4 under sec #591:9v: . Productionor processing of goods for, or on behalf of,the client. (prior to 01.07.2012)

+ter !1<!"<2!12 . 6ets covered under

service defnition and is lia8le 'enprocess is not amountin6 to manuacture

Exempted 80 7otifcation 7o< 25A2!12-*Ti ?It is intermediate process as @o8 or4> anderson sendin6 t'e 6oods ould pa0

appropriate dut0 on fnal products<

""

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Exemptions

Exemptions rom pa0ment o dut0 'en? No8 or4 is under Cenvat provisions No8 or4 under notifcation 21%A$#

No8 or4 or **I units

"$

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No8 &or4 under Cenvat

Rule %95:9a: allos manuacturer to sendmaterials or @o8 or4<

T'e 6oods ater processin6 can 8e 8rou6't8ac4 or urt'er processin6

oods can also 8e dispatc'ed directl0 romplace o @o8 or4 su8@ect to permissionrom commissioner

T'ese are independent o exemptionprovided under notifcation 21%A$#

"

No8 &or4 under Cenvat .

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NContd<

oods s'ould 8e returned it'in 1$! da0sater @o8 or4

rovision applies 'et'er or not @o8 or4underta4en amounts to manuacture

+n0 input can 8e sent under t'e saidprovision

$!

No8 or4 under notifcation

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N21%A$#

T'is notifcation as issued to 6rantexemption rom @o8 or4 amountin6 tomanuacture

ot' ra material and semi-fnis'ed 6oods

can 8e sentExemption is availa8le even i t'e activit0

results in intermediate product

Exemption is availa8le su8@ect to t'edeclaration to 8e fled it' t'e @urisdictionalocer o @o8 or4er

$1

No8 or4 under notifcation

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N21%A$#

No8 or4er ould 8e exempt rom all dutiesand cess su8@ect to underta4in6 romprincipal manuacturer

7o time limit 'as 8een prescri8ed or return

o 6oods*ome inputs are excluded rom provisions

o t'e notifcation

$2

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No8 or4 or **I units

+s t'e0 donGt pa0 dut0, 6oods cannot 8esent under cenvat provision

**I unit 'as to fle a declaration to +C t'at6oods ater @o8 or4 ill 8e used in actor0

or manuacture o products exempt romdut0

**I unit is also re=uired to fle anot'erdeclaration to +C o @o8 or4er t'at 6oods

ill 8e used ater @o8 or4Exemption is availa8le onl0 or 6oods

covered 80 **I exemption

$3

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Dt'er removals

Rule 1#+ allos or removal o?Inputs received in actor0+s suc' or ater partiall0 processed

/or urt'er processin6, testin6, repair, re-

conditionin6/ulfllment o conditions specifed 80

Commissioner o Central Excise

$%

Removal o semi-fnis'ed 6oods .

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Removal o semi fnis'ed 6oods Rule 1#

T'e manuacturer su8@ect to conditions oCommissioner can remove semi-fnis'ed6oods

T'e removal s'ould 8e or carr0in6 out

manuacturin6 process

$5

*p< rocedure or excisa8le 6oods .

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*p< rocedure or excisa8le 6oods Rule 1#C

+ manuacturer it' specifc permissioncan remove excisa8le 6oods

/or carr0in6 out test or an0 process notamountin6 to manuacture

T'e provision doesnGt appl0 to proto t0pesent out or trial and development

Conditions as specifed in permission ill'ave to 8e olloed

$#

No8 &or4 ;As &or4s Contract -

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;+T

+ pure @o8 or4 not lia8le to ;+T i<e< t'ereis no transer o propert0

&'ere t'ere is transer o propert0 . ;+Tould 8e applica8le

&or4s contract is a contract or or4 i<e< itinvolves use o 8ot' material and la8our

T'e tax can 8e levied onl0 on t'e 6oodsinvolved in t'e contract and not on contract

I t'e @o8 or4 transaction involves use ortranser o material, @o8 or4er ould 8elia8le or ;+T

$"

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