Certificate Course in C.excise

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Transcript of Certificate Course in C.excise


INTRODUCTIONWhat is tax Lord Justice Holmes of U.S. Supreme Court has defined tax as under Tax is the price which we pay for the civilized society. Types of taxes Taxes are broadly classified into two categories as Direct Taxes. Indirect Taxes. Direct taxes are paid and borne by the same person whereas Indirect taxes are paid by one person and borne by another person. Examples of Direct Tax: are Income Tax, Wealth Tax, Gift Tax. Examples of Indirect Tax: are Excise, Customs, Sales Tax, Service Tax.

In 1990-91, share of Indirect Taxes was about 80% of the total tax revenue whereas that of Direct Taxes was 20%. In 2008-09, share of Indirect Taxes was 48% and the share of Direct Taxes has increased to 52%. Share of Central Excise duty alone was 27% and share of Customs Duty was around 25%. Share of Income tax was 20% and that of Corporate Tax was 28%. In the financial year 2007-08,first time the collection from Direct Taxes exceeded Indirect Tax collection. Service tax has been introduced from 1994 and its share is 10% of the Total Tax Revenue in the year 2008-09.

Constitutional BackgroundConstitution of India came into existence on 26th January, 1950 and it is the Supreme Law in the country. All the laws and rules are subordinate to the Constitution. India is a union of states. Central Governments has certain powers and State Governments/ Union Territories have certain powers. Article 246 of the Constitution indicates the bifurcation of these powers and the details are listed in three lists of the Seventh Schedule of the Constitution. List I.( Union List.) contains the matters which can be dealt with by Central Government. e.g. Defence. Foreign Affairs, Banking etc. List II (State List) Contains the matters which can be dealt with by State Government. e.g Public Health, Police, Agriculture etc. List III ( Concurrent list ) contains the matters which can be dealt by both Central Government as well as State Government. e.g Criminal Law, Trust, Trade Unions etc.

Excise Duty and Sales Tax appear in Union List as well as State List. Excise duty levied under Union List is called Central Excise duty and the excise duty levied under State List is called State Excise duty. Similarly, Sales Tax is also divided into two types viz., Central Sales Tax and State Sales Tax. State Excise duty is levied only on three goods viz., Alcoholic Liquor, Opium and Narcotics and on all other goods manufactured in India, Central Excise Duty is levied. Central sales tax is collected on the sale of goods which takes place in the course of Inter-state trade whereas state sales tax is collected if the goods are sold within the state.

Landmark changes in Central Excise Law:In India, Excise Duty was first levied on cotton yarn in 1894, and then gradually on other products like Motor Spirits (1917), Kerosene (1922), Silver (1930), Sugar and Matches (1934). Many more goods got covered under the net of Excise duty after 1943. In 1944, a consolidated Act was passed, viz., Central Excises & Salt Act, 1944 which is still in force with the changed name as Central Excise Act, 1944. Earlier each commodity was covered under the Tariff item but with the enactment of Central Excise Tariff Act, 1985, the goods are classified under various Chapter Headings based on the classification under Harmonised System of Nomenclature (HSN).

To avoid cascading effect (i.e. tax on tax) of taxation, MODVAT (Modified Value Added Tax) scheme was introduced with effect from 1.3.1986 which is now known as CENVAT (Central Value Added Tax) scheme with effect from 1.4.2000. MODVAT was introduced only for certain inputs in 1986 but was extended to Capital Goods also with effect from 1994.Today,practically all the inputs are covered under Cenvat Credit scheme with major types of Capital Goods. In 1992, Excise licensing (on annual basis) was scrapped and was replaced by one time registration. In 1994, system of Excise Gatepass and submission of Price List was abolished and was replaced by Excise Invoice.

In the same year, Dealers Registration was introduced covering First Stage and Second Stage Dealers. In 1995, submission of Classification List was abandoned. Self assessment procedure was introduced w.e.f. 1996. In 1999 the rates of Central Excise Duty were reduced from 22 to only three, i.e, 8%, 16% and 24% and since 2000, most of the goods attract 16% duty. In 2000, all statutory records were abolished and a new Section 4 and Valuation Rules were introduced for the purpose of valuation of goods Central Excise Rules, 1944 were scrapped w.e.f. 1.4.2001 and new set of rules was introduced. In 2004, new Cenvat Credit Rules, 2004 were introduced in which the Excise Duty as well as Service Tax were included for the first time.

Legal Framework of Central Excise Lawa) Central Excise Act, 1944: This is the basic Act providing charging of duty, valuation, offences and penalties, powers and duties of officers, adjudication and appeals etc. b)Central Excise Rules, 2002: These deal with the detailed procedures of Central Excise Law. c)Cenvat Credit Rules, 2004: These cover the provisions relating to Cenvat credit on inputs and capital goods as well as on Service Tax.. d)Central Excise (Appeals) Rules, 2001: These rules cover the appellate procedure. e)Central Excise Valuation ( Determination of Price of Excisable Goods) Rules, 2000 :- These rules deal with the valuation of goods where valuation is not possible under section 4 of the Central Excise Act, 1944.

f) Central Excise (Settlement of Cases) Rules, 2001 :These contain the provisions where assessee wants to settle the dispute with the Government. g) Central Excise (Removal of goods at concessional rate of duty for manufacture of Excisable Goods) Rules 2001:These relate to the procedure for removing the goods under special circumstances. h) Central Excise Tariff Act,1985:-This Act classifies all the goods into various Sections,Chapters & Chapter-Headings & rates of duties. i) CEGAT(Procedures) Rules,1982:- These provide for the procedures to be followed in CEGAT(now called CESTAT i. e. Central Excise & Service Tax Appellate Tribunal.) j) Notifications:- These are issued by Ministry of Finance & are of two types viz. C.E. Notifications & N. T.(Non-Tariff) Notifications- C.E. Notifications are issued when there are any changes in the rates of duty whereas N.T.

Notifications are issued prescribing the changes in the Central Excise Rules & Procedures. k) Board Circulars:- Central Board of Excise & Customs, the highest administrative body in Central Excise & Customs, issues Circulars giving clarifications on various matters. l) Trade Notices:-These are issued by Chief Commissioners & Commissioners of Central Excise & Customs giving clarifications & prescribing procedures. m) Case-Laws:-CESTAT, High Courts & Supreme Court gives various judgments in the Central Excise matters which are bindings on the Trade as well as on the Department.

Administrative Set-Up of Excise DepartmentMinistry of Finance | Central Board of Excise & Customs | Chief Commissioner | Commissioner | Additional Commissioner | Joint Commissioner | Deputy Commissioner | Assistant Commissioner | Superintendent | Inspector

NATURE OF EXCISE DUTYConstitution Of India Entry number 84 of List I (Union list) of Seventh Schedule to the Constitution of India reads as follows: Duties of Excise on tobacco and other goods manufactured or produced in India, except alcoholic liquors for human consumption, opium, narcotics, but including medical and toilet preparations containing alcohol, opium and narcotics. Central Excise Act, 1944 Section 3(a) of the Central Excise Act, 1944 states that there shall be levied and collected in such manner as may be prescribed duties on all Excisable goods (excluding goods produced or manufactured in Special Economic Zone which are produced or manufactured in India and at the rates, set forth in the First Schedule to the Central Excise Tariff Act, 1985).

Basic Conditions 1] The duty is on goods. 2] The goods must be excisable. 3] The goods must be manufactured or produced in India. Goods Manufactured In S.E.Z are not Exempted Goods but excluded goods. Taxable Event Taxable Event is that event, which on its occurrence, creates or attracts the liability Supreme Court Good Year India Ltd. Vs. State Of Haryana (1990) 76 STC 71. Manufacture or production in India of an Excisable article is a taxable event for Central Excise, though duty can be levied and collected at a later stage for

administrative convenience S.C. Shree Synthetics Ltd. Vs. UOI 1999 (113) ELT 774. Removal from factory is not a taxable event.

Person Liable To Pay Excise Duty Every person who produces or manufactures any Excisable goods or who stores such goods in a warehouse, shall pay the duty. [Rule 4 (1)]. In case of molasses manufactured in Khandsari Sugar Factory, the duty is payable by the person who procures it Rule 4 (2). Normally, the person who actually manufactures the goods is liable to pay the duty. In case of job work, if the conditions under Not. No. 214/86 dated 25.03.86 are satisfied, the job worker is exempted form paying the duty as the raw material supplier undertakes the duty payment. Similarly, if the goods are falling under CH. No 61 or 62 (i.e, Readymade garments), the raw material supplier is liable to pay the duty Rule 4 (3). Duty is payable even if not collected from the customer.

Rate Of Duty Though the taxable event is manufacture, duty becomes payable on the removal of goods from the factory and the rate of duty will be the rate which is applicable on the date of removal of goods Rule 5. In case of molasses, the rate will be the rate applicable on the date of receipt of molasses in the factory of the procurer. Types o