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CENTRAL EXCISE DUTY NATURE & MEANING CENTRAL EXCISE DUTYEXCISE DUTYCentral excise duty is an indirect tax, levied in goods manufactured in India. The tax is administered by the central government under the authority of entry 84 of the union list (list 1) under 7 schedule, read with article 256 of the constitution of India. The word excise is derived from a Dutch term acise , which itself is derived from the Latin word accensay , which means to tax excise is a word of wide import any & according to dictionary meaning, denotes an in direct tax on commodity manufactured ,produced ,sold ,used or transported by the country. Excise duty is a duty levied on the goods that are indigenously manufactured. Excise duties having been defined in this manner in sec. 3 of the that act, it immediately follows from the very defined that for anything to be liable to excise duties, it must fulfill all the following conditions.
(A) It must be goods. (B) It must be excisable goods. (C) It must be either produced or manufactured in India. While the duty no doubt is on goods as such, still goods themselves cannot pay duty. This takes us to the next concept of taxable event. For every tax, whether direct or indirect, there is a taxable event. That is the event or situation which gives rise to the liability which he has created, which would mean that he should be the person to pay the duty. Since the taxable event is production/manufacturer. Excise duty is today the most important source of revenue in India. It constitutes about 1/5 of the total yearly receipts of the central government.
The finance act, 2000 has renamed the duty of excise. The central value added tax (CENVAT), which term is the term duty, duties, excise duty or duties of excise.
The Websters New International Dictionary defines excise duty as :(A) Any duty, toll or tax ; (B) An inland duty or imposed, levied upon the manufacture, sale or consumption of commodities within the country. (C) A tax upon the pursuit or fall of certain sports, trades or occupation, usually taking in this case, the form of exactions for licenses. The supreme court of India has defined Excise duty as a tax on the production or manufacture of excisable goods produced or manufactured within the country Nature of Excise Duty A few special features describing the nature of excise duty are as follows:1. The duty of excise is not levied on directly on the goods but is levied on the manufacture or production of a new commodity. Hence it is called an indirect tax. 2. Excise duty is payable by the manufacturer or the producer, not by the consumer. However the incidence of duty is always indirectly on the consumer. 3. Excise duty is levied on goods &the taxable events is manufacture or production if a new commercial commodity. The levy collection of excise duty is practically made at a stage next to the manufacture of goods, i.e. removal of goods.
4. The taxable event is not independent of liability to pay duty from levy of duty. Therefore there cannot be different taxable events for different purposes. 5. The method of collection does not effect the essence of excise duty, but only relates to the machinery of collection for administration convenience. Excise differentiated from other duties: Excise v/s custom duty :Excise duty is levied on manufacture or production of goods within the country. Thus it is related to industrial activity. Custom duty, on the other hand, is attracted on the movement of goods across the custom frontier. Excise duties are the duties, payable on goods produced at home, where as custom duties on goods imported into country from abroad. Excise v/s sales tax :Excise duties are the duties levied upon a manufacture or producer of specified goods, in respect of their manufacture & production in a factory within the country. It is not related to sale of goods or proceeds of such sale. Sale tax , on the contrary is levied on the vendor of goods, in respect of his sale. The taxable event in case of excise duty is the coming into existence of a commodity. However in case of sale tax , the taxable event is the sale of a commodity. The event of a sale of a commodity is immaterial for levy of excise duty. In 1939, the duty of excise included the tax on sales as well. However, when the government of India Act 1985, delegated powers to levy tax on sale to another authority, it was distinguished from excise duty.
Excise v/s service tax :Service tax is a tax on the services provided by the specified category of person to their clients & customers. On the contrary, excise duty is a tax on removal of goods from the place of manufacture or production, irrespective Of whether the same are used by customer or not. Excise v/s octroi :Octroi is charged on the entry of goods & a specified area. This is generally levied & collected by the local governments. While excise duty is levied on the goods manufactured &produced &the country. Octri is a kind of entry tax. The levy of excise duty is therefore not conflict with the levy & imposition of octroi. Types of excise duty:Central excise duties can be classified into the following categories:(A) Basic excise duty (BED):- BED is levied under the central excise act 1994, on specified goods manufactured or produced in India at the rates specified in the Central Excise Tariff Act 1985. The basic excise duty may be:(1) Ad Valorem Duty i.e. duty levied at the specified rate on the volume of goods. (2) Specific Duty i.e. duty levied at the specified rate on the unit, weight, volume, length or area of goods. There is a fixed rate of duty @ 16% is charged. The basic excise duty is shared between the Union & the States. (B) Special duties also known as auxillary duties, are the regulatory duties, which are levied as surcharge on certain specified goods. The purpose of special duties to raise
additional resources for some specified objects. Special excise duty is the percentage of effective basic duty is calculated & relief exemptions & rebates is granted. Thus, if the basic excise duty is nil the special excise duty would also be nil. The special duties were first introduced in India in 1963 at the time of Chinese aggression. Special excise duties are generally announced through the Finance Bill. (C) Additional duties:- Additional duty is collected on certain specified goods & products under the provisions of separate status. The additional duty is levied with the object to, either curb the demand or consumption of the particular commodity or to generate revenue sources from the commodity, which can, for the time being, bear the extra load of taxation. These additional duties are in addition to the basic excise duty & special excise duty. (D) National calamity contingent duty [finance act 2001]:- A national contingent duty is imposed by a finance act 2001. This duty shall be in addition to any another duties of excise chargeable on such goods under the Central Excise Act 1944 or any other law for the time being in force. This duty is imposed on Pan masala, Cigarettes, Bidies & other tobacco products. (E) Special Additional Excise Duty [finance act 2002]:- In the case of goods specified in the 8th schedule, beings goods manufactured, there shall be levied and collected for purpose of the union by surcharge, a duty of excise to called the special additional excise duty at the rates specified in the said schedule, This duty shall be in additional to any other duty on such goods under central excise duty 1944 or any other law for the time being in force. The 8th schedule:1. Motor Spirit (Petrol), 2. High Speed Diesel Oil
State excise duty:- It is imposed on manufacturing or production of items listed in state constitution. According to list 2nd of 7th schedule entry 51 the state governments are authorized to levy excise duty on the production & manufacture of the followings goods:1. Any alcoholic liquor meant for human consumption. 2. Opium, bhang, narcotics drugs and other narcotics. The duty by the Central government on the production & manufacture of goods in India is called excise duty while the duty levied by the state government on the production & manufacture of narcotics in order to get for the sake of convenience called state excise. (G) Cesses:- Cess is a tax imposed for specified purpose with reference to some goods. The cess is collected separately & the collecting autority is under obligation to utilize the same for the specified purpose only. BASIS OF EXICE DUTY: The basic conditions of excise liability are:1:- The duty is on goods. 2:- The goods must be excisable 3:- The goods must be produced 4:- Such manufacture must be in India Excise is levied on the following basis; 1:- Specific duty 2:- Ad-valorem duty 3:- Compounded duty
1:- SPECIFIC DUTY:It is the duty payable on the basis of certain units like weight, length, volume, thickness etc. for example duty on cigrattes is payable on the basis of its length. Duty on sugar is based on per kg. etc. In such cases calculation of duty is payable in comparatively easy. In view of simplicity many goods were earlier covered under specific duty. However this disadvantage is that even if the selling price of product increases and the revenue earned by the government doesnt increase accordingly. Frequent revision of the rates have to be done which is slow and time consuming process hence now most of the goods are covered under Ad-valorem duty. Presently specific rates amended for:1:- Cigrattes on the basis length, match box on the basis of per hundred boxes/ packs. 2:- Marbles slabs and tiles on the basis of square mt.basis 3:- Colour t.v. based on screen size in centimeter. 4:- Sugar per quintal basis. 5:- Cement on ton basis.
2:- AD-VELORAM DUTY:Fixing specific duty or tariff value is possible only for few selected items like sugar pan masala cons