Central Excise Act, 1994

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Transcript of Central Excise Act, 1994

APPLIED TAXATION MBA 2nd SEM

CAREER POINT UNIVERSITY

KOTA (Raj.)

An Overview of CENTRAL EXCISE DUTY, 1944

APPLIED TAXATION

Submitted To- Submitted By-CA MANOJ KUMAR YADAV Ashim Roy (Asst. Prof. of School (K13226)Of Commerce and MGMT)

ACKNOLODGEMENTWe would like to express our special thanks of gratitude to our teacher CA MANOJ YADAV SIR as well as our HOD Mr. Ashish Suri Sir who gave us the golden opportunity to do this wonderful project on the topic A REPORT ON CENTRAL EXCISE DUTY, 1944, which also helped us in doing a lot of Research and we came to know about so many new things. We are really thankful to them. Secondly we would also like to thank our parents and friends who helped us a lot in finishing this project within the limited time.We are also making this Assignment not only for marks but also to increase our knowledge.THANKS AGAIN TO ALL WHO HELPED US.

CONTEXT:

INTRODUCTION TO TAXPG. 04 INTRODUCTION TO CENTRAL EXCISE ACT, 1944PG. 05 BRIEF HISTORY & DEVELOPMENTPG. 06 ADMINISTRATION OF CENTRAL EXCISE ACTPG. 07 NATURE OF EXCISE DUTYPG. 07 TAX PAYERS' ASSISTENCE & RESPONSIVENESSPG. 09 ASSESSE & ASSESSMENTPG. 10 TYPES OF EXCISE DUTYPG. 11 GOODSPG. 12 MANUFACTUREPG. 14 REGISTRATIONPG. 15 PROCEDURE FILLING VALIDITY CANCELLATION & SUSPENSION NEW EXCISE CONTROL CODE (E.C.C)PG. 22 CENTRAL EXCISE FORMS, RETURNS & CHALLANPG. 26 LIST OF DOCUMENTS REQUIRED FOR REGISTRATIONPG. 33 PROCEDURE OF OBTAINING REGISTRATIONPG. 34

INTRODUCTION TO TAX:Government needs funds for various purposes like maintenance of law & other order, defence, social/ health services etc. Government obtains funds from various sources, out of which one main source is Taxation. Justice Holmes of US Supreme Court has long ago rightly said that Tax is the price, which we pay for a civilized Society.Taxes are conventionally broadly classified as Direct Taxes & Indirect taxes. Direct taxes are those, which the taxpayer pays directly from his Income/Wealth/Estate etc. Indirect taxes that the taxpayer pays indirectly while purchasing goods & commodities, paying for the services etc. In case of indirect taxes one person pays them but he recovers the same from another person. Thus the person who actually bears the tax burden (the ultimate consumer) pays it indirectly through some other person, who practically, merely acts as collecting agent. Broadly speaking, direct taxes are those, which paid after the income reaches in the hands of tax payer. Important Direct taxes are Income Tax, Gift Tax & Wealth Tax. Import Indirect taxes are Central Excise (Duty on manufacture), Customs (Duty on Imports & Exports), Central Sales Tax (CST) & Service Tax. As tax payers does not feel a direct pinch while paying indirect taxes, resistance to indirect taxes is much less compared to resistance of direct taxes. Manufacturers/ Dealer psychology also favours indirect taxes because they feel that they only collect the tax & not pay the tax. Indirect taxes are easier to collect & tax evasion is comparatively less in Indirect taxes. The manufacturer/ trader who collects the taxes in his invoice and pays it to the govt., has a psychological feeling that he is only collecting the taxes and is not paying out of his own pocket (though this feeling may not be always correct). It has been observed that top management takes very keen interest in direct tax matters, while matters relating to Indirect taxes are usually handled by lower management, though revenue implications are much higher in Indirect Taxes.Government can judiciously use the Indirect taxes to support development in desirable areas, while discouraging it in others e.g. reducing tax on goods manufactured in tiny or small scale units, lowering taxes in backward areas etc. In the basic scheme of taxation in India, it is envisaged that Central Government will get tax revenue from Income Tax (except on Agricultural Income), Excise (except on alcoholic drinks) & Customs. State Government will get tax revenue from sales tax excise on liquor & tax on Agricultural Income. Municipalities will get tax revenue from Octroi & House Property Tax. Income Tax, Central Excise & Customs are administered by Central Government. As regards Sales Tax, Central Sales Tax is levied by Central Government while State Sales Tax is levied by Individual State Governments. Though Central Government levied the central Sales Tax, it is administered by State Governments & tax collected in each state is retained by that state Government itself. INTRODUCTION TO CENTRAL EXCISE ACT, 1944:Central excise tax is indirect tax imposed by government on excisable goods which are produced within India. It is a major source of revenue for the government. It is a tax levied on the production of goods and not upon the sale of goods. These good should be excisable i.e. only those goods excise duty is charged which comes under the regime Excise Duty. It is to be noted that excise duty is levied on excisable goods. Excisable goods are goods which are specified in the first or second schedule of Central Excise Tariff Act, 1985. Goods can be categorized as non-excisable in following situation:1. If goods are immoveable.2. If goods are non-marketable.3. If goods are not produced/manufactured in India.4. Any goods not specified in the first or second schedule to Central Excise & Tariff Act (CETA), 1985.Central Excise forms the major source of revenue for the government. The taxable event under the Central Excise law is manufacture and the liability of Central Excise duty arises as soon as the goods are manufactured and is unrelated to weather the goods are sold or not. Various types of excise duty are as follows: Basic Duty (CENVAT) Special Duty Additional Duty

BRIEF HISTORY & DEVELOPMENT: 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 under Seventh Schedule read with Article 226 of the Constitution of India.

The Central Excise duty is levied in terms of the 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 event 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 (Goods of Special Importance) Act, Additional Duties (Textiles and Textiles Articles) Act, and Cess etc.

Till 1969, there was physical control system wherein each clearance of manufactured 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. Now, the assesses 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 now affected on manufacturers own invoice. Another major change was brought about in 1996, when the Self-Assessment system was introduced. This system is continuing today also. The assesse himself assesses his Tax Return and the Department scrutinises it or conducts selective audit to ascertain correctness of the duty payment. Even the classification and value of the goods have to be merely declared by the assesse 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 Rules, 2001 have replaced the Central Excise Rules, 1944 with effect from 1st July, 2001. 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 32 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 10 Zones and a Chief Commissioner of Central Excise heads each Zone. There are total 61 Commissionerates in these Zones headed by Commissioner 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:1. Physical Control Applicable to cigarettes only. Here assessment precedes clearance which takes place under the supervision of Central Excise officers;2. Self-Removal Procedure Applicable to all other goods produced or manufactured within the country. Under this system, the assesse himself determines the duty liability on the goods and clears the goods. NATURE OF EXCISE DUTY:

Indian Constitution has given powers to Central Govt. and State Govt. to levy various taxes & duties. Powers of Central & State Govt. are enlisted in 7th Schedule to our constitution. Entry No.84 of list I of 7th Schedule to the Constitution read as follows: Duties of excise on tobacco & other goods manufactured or produced in India, except alcoholic liquors for human cons