Excise General procedure ICSI Professional

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CHAPTER 5 GENERAL PROCEDURES

DEPARTMENTAL CONTROLS ON CENTRAL EXCISE ASSESSEE'S

(1) PHYSICAL CONTROL: Under this system, excisable goods are removed under the control and supervision of the Central Excise officials. The assessee has to prepare an invoice which is counter signed by the Superintendent or Inspector of Central Excise and only then the goods are removed under his supervision. This scheme is known as Physical Control. In this case, assessment is done by Excise Officials. At present, it is applicable to cigarettes.

(2) SELF‐ASSESSMENT [Rule 6 of Central Excise Rules, 2002]: Under this system, the assessee himself determines the correct classification and valuation of goods and the duty liability on such goods. The goods are removed under cover of invoice signed by him. Thus, the assessee makes self assessment and has to submit monthly/quarterly returns as required by Rule 12. If, on scrutiny of returns by Central Excise Officer, it is found that duty of excise is not levied or short levied or not paid or short paid or erroneously refunded, a show cause notice is issued under section 11A for recovering such duty.

(3) Special Procedure for payment of duty or COMPOUNDED LEVY SCHEME [Rule 15]: Compounded levy scheme is an optional scheme and is covered under Rule 15 of central Excise Rule, 2002. This scheme is meant for small scale decentralised sectors and at present, it covers stainless steel pattis/patta and aluminium circles. Duty is fixed on the basis and number of types of machine and payment of such duty absolves the manufacturer from maintenance of day to day excise records and other excise formalities. The rate of excise duty for the sectors covered under the compounded levy scheme has been fixed as follows –

• Stainless steel pattis/patta = Rs.40,000 per machine per month. (EC+SHEC) • Aluminium circles produced from sheets manufactured on cold rolling machines:‐ Rs. 12,000 per machine

per month. (EC+SHEC)

THE ADMINISTRATIVE SET UP UNDER THE CENTRAL EXCISE ACT, 1944

Designation Work Profile 1 Central Board of Excise and Customs (CBEC)

constituted under the Central Board of Revenue Act,1963

Highest administrative authority issuing orders, instructions and directions under Section 378 of the Central Excise Act, 1944

2 Chief Commissioner of Central Excise Head of Zones and supervisory in nature 3 Commissioner of Central Excise Administrative‐in‐charge of Commissionerates 4 Commissioner of Central Excise (Appeals) Appellate Authority equal in rank of Commissioner 5 Additional Commissioner of Central Excise Restricted power of adjudication and for appellate

purposes, lower in rank of Commissioner 6 Joint Commissioner of Central Excise Lower in rank of Commissioner 7 Deputv / Assistant Commissioner Head of divisional office 8 Superintendent of Central Excise Head of range office and officer of gazette rank 9 lnspector of Central Excise Sector officers


REGISTRATION UNDER CENTRAL EXCISE

Persons required to obtain Registration:

The persons required to obtain registration as per Section 6 of the Central Excise Act, 1944 and Rule 9 of the Central Excise Rules, 2002, are as follows ‐

(1) Every manufacturer of dutiable excisable goods (including Central/State Government undertakings or undertakings owned or controlled by autonomous corporations).

(2) First and second stage dealers (including manufacturer's depots and importers) desiring to issue Cenvatable invoices.

(3) Persons holding warehouses for storing non‐duty paid goods. (4) Persons who obtain excisable goods for availing end use based exemption. (5) Exporter‐manufacturers under rebate/bond procedure; and Export Oriented Units, which have interaction

with the domestic economy (through DTA sales or procurement of duty free inputs). (6) Persons who get yarns, fabrics, ready‐made garments etc. manufactured on job work under Rule 128.

PERSON EXEMPT FROM OBTAINING REGISTRATION

The following categories of persons are exempt from obtaining registration under Central Excise as per Notification No. 36/2001‐C,E. (N.7,), dated 26‐6‐2001:

(1) Persons who manufacture the excisable goods, which are chargeable to nil rate of excise duty or are fully exempt from duty by a notification.

(2) SSI manufacturers having annual turnover below the specified exemption limit. However, in case of SSIs wholly exempted from duty under Notification No. 8/2003‐CE, declaration is required only if value of clearances computed as per the said Notification during the preceding financial year was Rs. 90 lakhs or more or, in case of new unit, such clearances are expected to be Rs. 90 lakhs or more during current financial year.

(3) In respect of branded ready‐made garments, the job‐worker need not get registered if the principal manufacturer undertakes to discharge the duty liability.

(4) Persons manufacturing excisable goods by following the warehousing procedure under the Customs Act, 1962.

(5) The person who carries on wholesale trade or deals in excisable goods (except first and second stage dealer, as defined in Cenvat Credit Rules, 2004 and the depots of a registered manufacturer).

(6) A 100% Export Oriented Undertaking or a unit in Free Trade Zone or SEZ, is licensed or appointed, as the case may be, under the provisions of the Customs Act, 1962 other than having dealings with DTA.

(7) Persons who use excisable goods for any purpose other than for processing or manufacture of goods availing benefit of concessional duty exemption notification.


(8) In respect of branded jewellery, the job‐worker need not get registered if the principal manufacturer undertakes to discharge the duty liability.

When a manufacturer is exempt from obtaining registration he is required to file a declaration to the Jurisdictional Divisional Officer i.e. Assistant Commissioner of Central Excise.

PROCEDURE IN RESPECT OF REGISTRATION

(1) Application for Registration : Every specified person & unless exempted, shall get himself registered with the Jurisdictional Deputy or Assistant Commissioner of Central Excise by applying in the Form A‐1/ A‐2/ A‐3.

(2) Registration of different premises of the same registered person: If the person has more than one premises requiring registration, separate registration certificate shall be obtained for each of such premises. However, where two or more premises are actually part of the same factory where processes are inter‐linked, but they are segregated by public road, canal or railway line, then they do not therefore require separate registration.

(3) Registration Certificate and Number: Registration Certificate in the form specified in RC containing registration number shall be granted within 7 days of the receipt of the duly complete application.

(4) No fee for Registration: Registration Certificate is issued free of charge and there is no fee prescribed for the same.

(5) Transfer of business: Excise registration is premises‐specific. But it is non‐transferable and hence, when the business is transferred to another person by way of sale or lease, the person taking over the business (transferee) should take fresh registration in his name.

(6) Same form for intimation of changes: The same application form is to be used for intimating any change in the information furnished originally at the time of applying for registration certificate.

(7) Change in the Constitution: If the entity holding Central Excise Registration is a firm or company or association of persons, then any change in the constitution should be intimated to the concerned Central Excise Officer within 30 days.

(8) De‐registration: Every registered person who ceases to carry on the operation for which he is registered shall de‐register himself by making a declaration in the specified form and depositing his registration certificate with the Superintendent of Central Excise.

(9) Revocation or suspension of registration: A registration certificate granted under this rule may be revoked or suspended by the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, if the holder of such certificate or any person in his employment, is found to have committed breach of any of the provisions of the Act or the rules made there under or has been convicted of an offence u/ s 161, read with Section 109 or with Section 116 of the Indian Penal Code.

(10) Loss of Registration Certificate: When the Registration Certificate is lost, a Duplicate Certificate can be issued only on a written application made by the person to the Range Officer.

VALIDITY OF REGISTRATION CERTIFICATE

REGISTRATION CERTIFICATE IS PERMANENT: Registration certificate once granted, assumes a permanent characteristic i.e. it is valid throughout, unless it has been suspended or revoked by the authorities in pursuance of the Central Excise law or it has been surrendered by the assessee or ceases to be valid on the death of the Assessee.


Effect of certain events on validity of registration certificate –

Death of the Individual: Registration certificate shall cease to be valid. Death of a director of a limited company: company being an entity distinct from its members and having perpetual succession, hence death of any director/member shall not affect the validity of the certificate.

Death of a partner of a partnership firm : If the death of a partner results in dissolution of firm and consequent dissolution of business, the registration certificate will cease to be valid. However, if the remaining partners continue to carry on same business in the same name, then the registration certificate shall remain valid.

PENAL PROVISIONS FOR NON OBTAINING REGISTRATION‐

(1) Fine and Imprisonment : As per Section 9(1)(a) of the Central Excise Act, 1944‐

Any person who fails to obtain registration when he is so required to do so shall be punishable –

Condition Punishment The duty leviable on excisable goods exceeds Rs. 50,00,000. [Amended by Finance Act, 2013, w.e.f 10‐05‐2013. Prior to amendment it was Rs.30,00,000

Imprisonment for a term, which may extend to 7years and with fine. (However, in absence of special and adequate reasons to the contrary to be recorded in judgment of the Court, such imprisonment shall not be for less than 6 months.)

In any other case Imprisonment for a term extending to 3 years or with fine or with both.

(2) Confiscation and penalty [Rule 25 of the Central Excise Rules, 2002]: Where any manufacturer or producer engages in manufacture, production or storage of any excisable goods without having applied for registration certificate, as required under section 6 of the Act, then, all such goods shall be liable to confiscation. Moreover, such manufacturer or producer shall also be liable to a penalty not exceeding‐ (a) the duty on such excisable goods, or (b) Rs. 2000, whichever is greater.

(3) Opportunity of being heard: Such order of confiscation and penalty shall be passed only after giving the assessee an opportunity of being heard.

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WHO IS THE PERSON LIABLE TO PAY EXCISE DUTY AND WHEN SUCH DUTY IS PAYABLE

[RULE 4]

(1) Liability to pay duty is on manufacture/warehouse keeper : According to Rule 4(1) of the Central Excise Rules, 2002, every person who –

(a) produces or manufactures any excisable goods, or (b) stores such goods in a warehouse,

shall be liable to pay duty leviable on such goods.


(2) Merchant manufacturer liable to pay duty in case of ready‐made garments and made‐up articles of textiles [Rule 4(1A)] : In case of ready‐made garments and made‐up articles of textiles manufactured on job‐work basis, liability to pay duty is on the merchant manufacturer (person on whose behalf the goods are manufactured by job‐workers), as if such goods have been manufactured by such person.

(3) Procurer liable to pay duty in case of khandsari molasses [Rule 4(2)] : Where molasses are produced in a khandsari sugar factory, the person who procures such molasses, whether directly from such factory or otherwise, for use in the manufacture of any commodity, whether or not excisable, shall pay the duty leviable on such molasses, in the same manner as if such molasses have been produced by the procurer.

(4) Duty payable on removal: Duty is payable on removal of excisable goods from place of production or manufacture. Thus, no excisable goods, on which any duty is payable, shall be removed without payment of duty from any place, where they are produced or manufactured, or from a warehouse.

[Rule 4(4) of the Central Excise Rules, 2002, the storage of non‐duty paid goods outside the factory can be permitted by the Commissioner of Central Excise, subject to such safeguards as he may specify. Such storage outside the factory premises is permissible in exceptional circumstances having regard to the nature of the goods and shortage of storage space in the factory.]

DATE FOR DETERMINATION OF DUTY AND TARIFF VALUATION

[RULE 5]

(1) Excisable goods other than kandsari molasses: The rate of duty or tariff value applicable to any excisable goods, shall be the rate or value in force on the date when such goods are removed from a factory or a warehouse, as the case may be. In case of captive consumption: If any excisable goods are used within the factory, the date of removal of such goods shall mean the date on which the goods are issued for such use.

(2) KHANDSARI molasses: The rate of duty in the case of khandsari molasses shall be the rate in force on the date of receipt of such molasses in the factory of the procurer of such molasses.

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ASSESSEE [RULE 2(C) means any person who is liable for payment of duty assessed or a producer or

manufacturer of excisable goods or a registered person of a private warehouse in which excisable goods are stored and includes an authorized agent of such person.

ASSESSMENT [RULE 2(B) includes self‐assessment of duty made by the assessee and provisional

assessment under Rule 7 of the Central Excise Rules, 2002. Assessment is the procedure adopted for fixing the duty liability by correctly determining the classification of goods and valuation of goods.

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[RULE‐7] PROVISIONAL ASSESSMENT

1. Provisional assessment is resorted to in the event the duty cannot be determined at the point of clearance of the goods. Thus, provisional assessment is resorted to where the assessee is unable to determine,‐


(a) the value of the excisable goods, or (b) the rate of duty applicable thereto.

2. REQUEST of provisional assessment in writing to AC/DC : Wherever an assessee finds that self assessment is not possible, he will make a detailed request in writing to the Divisional Deputy/AC of Central Excise, indicating : (i) Specific grounds/reasons, and the documents or information for want of which final assessment cannot

be made. (ii) Period for which provisional assessment is required. (iii) The rate of duty or the value or both, as the case may be, proposed to be applied by the assessee, for

Provisional Assessment. (3) Execution of BOND by assessee : The payment of duty on provisional basis may be Allowed, if the assessee

executes a bond in the FORM B‐2 with such SURETY OR SECURITY in such amount as the AC/DC of Central Excise, as the case may be, deem fit, binding the assessee for payment of difference between the amount of duty as may be finally assessed and the amount of duty provisionally assessed.

(4) Order of provisional assessment : where the AC/DC is satisfied with the genuineness of the assessee's request, he will issue a specific order directing provisional assessment, clearly stating: (a) the grounds on which Provisional Assessment has been ordered. (b) the rate and/ or value, as the case may be, at which duty has to be provisionally paid.

(5) Final Assessment to be made by AC/DC (6) Time limit for finalisation of assessment ‐ 6 months from the date of communication of order of

provisional assessment. The said period can be extended on sufficient cause being shown and the reasons are to be recorded in writing. Such period can be extended by the Commissioner for a further period not exceeding 6 months, and by the CCEx for such further period as he may deem fit.

(7) Payment of differential amount along with interest: along with interest at the rate specified in section

11AA of the Act i.e. 18% p.a. from the first day of the month succeeding the month for which such amount is determined, till the date of payment thereof.

(8) Grant of refund along with interest: under section 11BB of the Act. Thus, interest shall be payable from the date after expiry of 3 months from the receipt of duly completed application till the date of refund.

(9) Refund to be credited to Consumer Welfare Fund: Any amount of refund determined above shall be credited to the Consumer Welfare Fund. However, the amount of refund, instead of being credited to Consumer Welfare Fund, be paid to the applicant if such amount is relatable to,‐ (a) the duty of excise paid by the manufacturer, if he had not passed on the incidence of such duty to any

other person; or (b) the duty of excise borne by the buyer, if he had not passed on the incidence of such duty to any other

Person. Rule 7 does not give power to the department to order provisional assessment on its own. Thus, the

excise department cannot suo motu issue directions for resorting to provisional assessment.

Duty can be demanded by making proper assessrnent if self‐assessment made by the assessee is not in order

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[RULE 8] MANNER OF PAYMENT

1. Rule 8 of Central Excise Rules,2002 provides the following manner of payment of duty ‐

ASSESSEE DUE DATE OF PAYMENT

(1) Monthly payment in case of assessees other than those eligible for SSI exemption

Duty on goods removed from factory or warehouse during a month is payable as follows – For period other than the month of March ‐

(a) If duty is paid electronically through internet banking : 6th day of following month;

(b) In any other case: 5th day of following month .

For the month of March ‐ duty shall be paid by 31st March.

(2) Quarterly payments in case of an assessee eligible to avail of the exemption under a notification based on the value of clearances in a financial year (i.e. assessees eligible for SSI exemption)

Duty on goods removed from factory or warehouse during a quarter payable as follows – For a quarter other than the quarter ending 31st March ‐

(a) If duty is paid electronically through internet banking : 6th day of month following that quarter;

(b) In any other case: 5th day of the month following that quarter.

For the quarter ending 31st March: duty shall be paid by 31st March.

ELIGIBILITY FOR SSI EXEMPTION: An assessee shall be eligible for SSI exemption if his aggregate value of clearances of all excisable goods for home consumption in the preceding financial year, computed in the manner specified in the said notification DID NOT EXCEED RS. 400 LAKHS.

Applicability for, Financial Year: The manner of quarterly payment of duty as specified above shall be available to the assessee for the whole of the financial year.

(2) Mandatory electronic payment in case duty paid last year is Rs. 10 lakh or more : An assessee, who has paid total duty of Rs 10 lakhs or more including the amount of duty paid by utilization of CENVAT credit in the preceding financial year, shall, thereafter, deposit the duty electronically through internet banking.

(3) Discharge of duty liability : For the purposes of this rule,‐ (a) the duty liability shall be deemed to have been discharged only if the amount payable is credited to the

account of the Central Government by the specified date;


(b) if the assessee deposits the duty by cheque, the date of presentation of the cheque shall be deemed to be the date on which the duty has been paid subject to realization of that cheque.

(4) Deemed payment for CENVAT credit: The duty of excise shall be deemed to have been paid for the Purposes of these rules on the excisable goods removed in the manner provided above and the credit of such duty allowed, as provided by or under any rule.

IF DUTY IS NOT PAID FULLY ON THE DUE DATE OR WITHIN 30 DAYS AFTER THE DUE DATE

(1) Interest leviable @ 18% p.a. in case of default in payment of duty by due date [Rule 8(3)] (2) Forfeiture of facility in case of defaults in payment of duty beyond thirty days from the due date [Rule

8(3A)]: the assessee shall pay excise duty for each consignment at the time of removal, without utilizing the CENVAT credit till the date the assessee pays the outstanding amount including interest thereon; and in the event of any failure, it shall be deemed that such goods have been cleared without payment of duty and the consequences and penalties as provided in these rules shall follow.

(3) Recovery of duty and interest as per Section 11 [Rule 8(4)] : The provisions of Section 11 of the Act shall be applicable for recovery of the duty and interest in the same manner, as they are applicable for recovery of any duty or other sums payable to the Central Government.

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PERSONAL LEDGER ACCOUNT

(a) Personal ledger Account is an account with the Central Government, which is utilized for payment of duty of excise.

(b) The account is credited when the sum is deposited into the treasury and debited on payment of excise duty. Each debit and credit entry should be made on separate lines and assigned a running serial number for the financial year.

(c) The PLA must be prepared in triplicate by writing with an indelible pencil and using double sided carbon. Original and duplicate copies of PLA shall be sent to the Central Excise Officer in charge along with the monthly/ quarterly return.

(d) The assessee may make credit in the PLA by making cash payment into the treasury or authorised bank through GAR‐7 challan. Copy of each such challan shall be sent by the assessee to the Central Excise Officer along with the monthly/quarterly return.

(e) No restrictions exist with regard to any minimum amount, which should necessarily remain in balance to the credit of an assessee in his PLA. With the monthly payment system, there should be enough credit at the time of payment of duty for the month.

(f) Mutilations or erasures of entries once made in the PLA are not allowed. If any correction becomes necessary, the original entry should be scored out and attested by the assessee or his authorized agent.

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1. In view of the self‐assessment procedure wherein the assessee himself assesses the duty liability, the Departmental officers have been entrusted with the responsibility of scrutinizing the assessment for verification of its correctness.


2. For this purpose, the proper officer may, on the basis of information contained in the return filed by the assessee and after such further enqulry as he may consider necessary, scrutinize the correctness of the duty assessed by the assessee on the goods removed, in the manner to be prescribed by the Board [Rule 12(3)].

3. officers empowered to conduct scrutiny. 4. After scrutiny of the records, if the Central Excises Officers is satisfied that the duty of excise is not

levied/short levied, short paid / not paid, or erroneously refunded then, he will serve a show cause notice and after hearing the assessee he will confirm the demand or drop it.

ANNUAL FINANCIAL INFORMATION STATEMENT

(1) Annual Financial Information Statement : Every assessee shall submit to the Superintendent of Central Excise, electronically an Annual Financial Information Statement for the preceding financial year to which the statement relates, in ER4 form by 30th day of November of the succeeding year.

(2) Contents Of Return: The main contents of the retum are as under – (a) Financial year to which it relates; (b) Registration Number; (c) Name of the Assessee; (d) Details of Expenditure; (e) Details of Income ; (f) CENVAT credit details.

(3) Persons exempt from filing Annual Information Statement: (a) the assessee who paid duty of excise less than Rs. 100 lakhs, in aggregate, through account cunent or by

utilising Cenvat credit or by both during the financial year to which the Statement relates; and (b) Indian ordnance factories, Department of Defense production.

(4) Penalty for non submission of Annual Financial Information Statement: The maximum penalty for non submission or late submission can be Rs. 5,000 under Rule 27 of the Central Excise Rules, 2002.

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ANNUAL INSTALLED CAPACITY STATEMENT ER‐7

1. Every assessee has to submit to the Superintendent of Central Excise, an Annual Installed Capacity Statement electronically in ER‐7 declaring the annual production capacity of the factory for the financial year to which the statement relates, by 30th April of the succeeding financial year [Rule 12(2A)].

2. Persons exempt The assessees manufacturing – (a) biris, (b) matches, (c) reinforced cement concrete pipes under prescribed conditions, are exempt from the submission of

Annual Installed Capacity Statement. 3. ER‐7 to be amended if capacity increased by more than 25%: In case, any substantial expansion/ addition of

machineries is carried out during the year resulting into increase in the installed capacity by more than 25% of. one class of product, an amendment to the declaration should be filed within 30 days of commencement of production of the new machineries.

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REMOVAL OF GOODS BY A 100% EXPORT ORIENTED UNDERTAKING FOR DOMESTIC TARIFF AREA Goods to be removed under cover of invoice and duty to be paid as Per Rule 8 Statutory Records to be maintained Filing of monthly return electronically in ER‐2 Form within 10 days from the close of the month to which the return relates,

VARIOUS EXCISE RETURNS (ERS) FORM PERIODICITY PURPOSE LAST DATE ER‐1 Monthly Return for production and removal of goods and

CENVAT credit to be filed by every assessee (in duplicate)

10th of every month (for removals during the previous month)

ER‐2 Monthly Return to be filed by 100% EOU in respect of excisable goods manufactured and inputs/capital goods received in unit (in duplicate)

10th of every month (for removals during the previous month)

ER‐3 Quarterly Return for clearance of goods and Cenvat Credit to be filed by.SSI units and other units required to file quarterly return claiming clearance based exemption (in duplicate)

SSI units : 10th of the month following the particular quarterand Other Units: 20th of the month following the particular quarter.

ER‐4 Annually Annual Financial Information Statement to be filed by assessees paying duty of Rs. 1 crore or more (in duplicate)

30th day of November of the succeeding year

ER‐5 Annually Annual declaration of information relating to principal inputs to be filed by assessees paying duty of Rs. 1 crore or more

30th April of each financial year

ER‐6 Monthly Return of information relating to principal inputs to be filed by assessees paying duty of Rs. 1 crore or more

10th of every month (for the receipts and consumption of principal inputs during the previous month)

ER‐7 Annually Annual Installed Capacity Statement declaring the annual production capacity of the factory for every financial year

30th April of the succeeding financial year.

ER‐8 Quarterly Quarterly Return by an assessee manufacturing only the excisable goods falling under Notification No. 1/2011‐CE, dated 1‐3‐2011 or Sl. No. 67 128, 199(1) and 200(I), of Notification No. 12/2012‐CE, dated 17‐3‐2012 and availing exemption there‐under.

10th of the month following the particular quarter.

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CREDIT OF DUTY ON GOODS BROUGHT TO THE FACTORY [RULE 16]

(1) Goods can be returned for remaking, repairs etc.: The goods on which duty had been paid at the time of removal thereof can be brought to same factory in which they were produced or any other factory for being re‐made, refined, re‐conditioned or for any other reason.

(2) Proper records to be maintained (3) Assessee entitled to take the GENVAT credit of duty paid on goods so returned


(4) Procedural compliances on subsequent removal of such goods : (a) If the process does not amount to manufacture: the manufacturer shall‐pay an amount equal to the

CENVAT credit taken at the time of return of such goods. (b) If the process amounts to manufacture: the manufacturer shall pay duty on goods at the rate applicable

on the date of removal and on the value determined under section 3(2) ,4 or section 4A of the Act, as the case may be.

(5) Buyer of goods entitled to CENVAT credit : The amount paid under this sub‐rule shall be allowed as CENVAT credit as if it was d duty paid by the manufacturer who removes the goods.

Removal of goods for job work etc. [Rule 16A] Any inputs received in a factory may be removed as such after being partially processed to a job worker for further processing, testing, repair, re‐conditioning or any other purpose subject to the fulfillment of conditions specified in this behalf by the Commissioner of Central Excise having jurisdiction.

Special procedure for removal of semi‐finished goods for certain Purposes [Rule 16B] Special procedure for removal of excisable goods for carrying out certain processes [Rule 16C] The Commissioner of Central Excise may, by special order permit a manufacturer to remove excisable goods manufactured in his factory, without payment of duty, for carrying out tests or any other process not amounting to manufacture.

REMISSION OF DUTY (1) Remission of duty [Rule 21] : Where it is shown to the satisfaction of the Commissioner,‐

(a) that goods have been lost or destroyed by natural causes, or (b) that goods have been lost or destroyed by unavoidable accident or (c) that the goods are unfit for consumption or for marketing, as claimed by the manufacturer, at any time before removal, he may remit the duty payable on such goods, subject to such conditions as may be imposed by him by an order in writing.

(2) Authority competent to remit the duty

Competent Authority Amount of duty empowered to remit Monetary limit to supervise destruction

Inspector Superintendent Deputy/ Assistant Commissioner Additional/ Joint Commissioner Commissioner

None <= Rs 10,000 > Rs 10,000 but <= Rs 1,00,000 > Rs 1,00,000 but <= Rs 5,00,000 > Rs 5,00,000

Below Rs 5,000 Rs.1000 but upto Rs 20000 Exceeding Rs 20,000

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DUTY UNDER PROTEST If the assessee does not a6gee to the classification or assessable value of goods determined by the excise authorities, he can file an appeal and till the time the appeal is decided can pay the duty under protest if no stay is obtained from Appellate Authorities.


The assessee will inform the Superintendent/Inspector of Central Excise that he is paying duty under protest in writing.

The assessee shall obtain a dated acknowledgment as a proof of payment of duty under protest. If the case is decided against the assessee and a further period of appeal is available, then the assessee can continue to pay duty under protest.

if the appeal is not decided in his favour and the appellate remedy is exhausted, the assessee will lose the right to pay duty under protest. A letter of protest shall not constitute a claim of refund.

This right of payment of duty under protest is available only to a manufacturer. The refund claim has to be made within 1 year from the date when the protest stands vacated on account of disposal of appeal.

EXCISE AUDIT Slab of annual total duty payment (in Cash + CENVAT Credit)

Frequency of Audit Duration of Audit (from desk review to preparation of Audit results)

Above Rs 3 crores Between Rs 1 crore and Rs 3 crores Between Rs 50 lakhs and Rs 1 crore Less than Rs 50 lakhs

Every year Once every 2years Once every 5 years 10% of the units every year

7 working days 7 working days 7 working days 5 working days

PROVISIONS WITH REGARD TO SAMPLES (1) Categorization of samples : The samples can be categorized as under –

Trade samples sent to customers for trial; Samples for test; Samples for supply against sale contracts or for enforcements of control measures; Samples for display at exhibitions, fairs and in showcases; Samples for market enquiries by Central Excise Officers.

(2) Provisions regarding samples : The provisions in respect of samples to be followed are as under ‐ Samples will be removed under cover of invoice; The value of samples will be determined under Rule 4 of Central excise Valuation Rules, 2002; The duty on samples will be paid in accordance with provisions of Rule 8 Central Excise Rule, 2002 unless samples are exempt from payment of duty.

Subsequently, if samples are returned, then CENVAT credit of the duty paid on such samples is allowed and procedure specified in Rule 16 of Central Excise Rules, 2002 is followed.

(3) Procedure to be followed for testing/retesting of samples by department: The following procedure is to be followed for testing and re‐testing of samples drawn by the department ‐ (a) The samples are to be drawn in quadruplicate in the presence of the owner and manager oJ the factory. (b) The samples should be sealed with excise seals and a declaration obtained from the owners that the

samples are drawn from a representative lot. (c) The four samples drawn are to be clearly marked as ‐

Original for Chemical examiner; Duplicate for AC/DC; Triplicate for Range Officer; Quadruplicate to be given to the manufacturer for his own record.


(d) The Chemical examiner after test should retum the remnant sample (if fit) for retest along with his test report.

(e) If the assessee is dissatisfied with the test carried out by the chemical examiner, he can apply to, AC/DC for retest within 90 days from the date on which the test result was communicated to him.

(f) The retest can be carried out on the remnant sample or duplicate or triplicate copy of sample. The retest can be carried out in private laboratory at the request of the assessee, provided the assessee agrees to meet the cost of the re‐test. In case of two different opinions with regard to classification, opinion in favour of assessee will be taken.

(4) Reimbursement of Cost of Samples

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