Legal Aspects of Tax and Business -- CENTRAL EXCISE

7/31/2019 Legal Aspects of Tax and Business -- CENTRAL EXCISE

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An excise or excise tax (sometimes called a duty of

excise or a special tax) is commonly understood torefer to an inland tax on the sale, or production for

sale, of specific goods; or, more narrowly, as a tax on

a good produced for sale, or sold, within a country.


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In India, an excise is described as an

indirect tax levied and collected on the

goods manufactured in India.


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In many countries, excise duty is applied by the affixation of

revenue stamps to the products being sold. In the case of

tobacco or alcohol, for example, the producer buys a certain

bulk amount of excise stamps from the government and is then

obliged to affix one to every packet of cigarettes.


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Critics of excise tax have interpreted and described excise

duty as simply a government's way of levying further and

unnecessary taxation on the population. The presence of

"refunds of duty" under the UK's list of excisable activities has

been used to support this argument, as it results in taxation

being implemented on persons even where they would

normally be exempt from paying other types of taxes


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Specific duty-This Duty is payable on the basis of

certain unit like volume, weight, length etc.

Eg. Duty on cigarette is paid on the basis of length ofcigarette


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Tariff Value-tariff value is fixed by the government.

Government can fix different tariff values for different classes

of goods or goods manufactured by different classes or sold todifferent classes of buyer

Value based on maximum retail price-Central Excise Act

empowers the Central Government to specify goods on whichduty will be payable based on retail sale price


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Following types of control have been proscribed for the levyand collection of Central Excise duties: -

PHYSICAL CONTROL

Under the physical control system the manufactured goods are

removed form the place of manufacture under the supervision

of the Central Excise officers on after the assessment and

payment of appropriate Central Excise duty


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Under the Self-Removal Procedure (SRP) the goods areremoved on payment of duty and against invoices

signed by the assess.


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Packaging charges-Cost of packaging will be covered

in connection with or in respect of sales.

Design and Engineering charges-Essential for the

purpose of manufacture.


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Consultancy Charges relating to manufacturing

Pre-delivery inspection charges for vehicles-The

vehicles sold to the dealers, conduct pre-delivery

inspection

Loading and handling charges within the factory-

Royalty charged in franchise agreement.

eg: Pepsi and Coca-Cola.


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Price escalation clause-Additional price is payable if

there is an escalation in prices.

Additional consideration should be added to the price


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Deduction of Taxes from Assessable Value:

Taxes payable on finished product are to be excluded for the

purpose of evaluation.

Trade Discount:

Trade discount are allowed as deduction for valuationpurposes. Trade discount given to the buyer is not commission.


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The Goods are not sold at the time of Removal:

This rule applies in case of removal of free samples or supply

under warranty claims.

In Case of Goods Sold at Different Places:

Actual cost of transportation from place of removal up to place

of delivery of the excisable goods will be allowable as deduction.


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Valuation in Case of job Work:

Valuation can be done on the basis of job charges plus material

cost without considering traders profit.

Sale at Depot/Consignment Agent:

Price prevailing at depot shall be the basis of Assessable Value.


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Goods Sold Solely through Related Person

Best Judgment Assessment

If assessment is not possible under any of the foregoing rules,

assesment will be done by best judgement


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Every person who produces or manufactures excisable goods,

it requires to get registered, unless exempted [Rule 9 of central

excise(No. 2) Rules, 2001]

Manufactures is required to maintain daily stock accounts of

goods manufactured, cleared and stock [Rule 10 of central

excise(No. 2) Rules, 2001]


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Goods must be cleared under Invoice of assessee, duly

authenticating by the owner or his authorized agent. In case of

cigarettes, invoice should be countersigned by Excise officer,[Rule 11 of central excise(No. 2) Rules, 2001]

Duty is payable on fortnightly basis through challan / cenvatcredit. [quarterly in case of SSI].


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Manufactures of matches have to pay duty by affixing central

excise stamps. [[Rule 13 & 14 of central excise(No. 2) Rules,

2001].

Cenvat records and return to be submitted by 5th of the

following month [Cenvat credit rules,2001]


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Monthly returns in form ER-1 should be filled by 10th of

following month (SSI unit to file quarterly return) [Rule 17(3)

of central excise(No. 2) Rules, 2001]

Every assessee is required to submit a list in duplicate of

records maintained in respect of transactions of receipt,

purchase, sales or delivery of goods including inputs and

capital goods [Rule 22(2)]


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If products of manufacturer are completely and

unconditionally exempt from duty is required to file

declaration in prescribed form to central excise authorities

Some goods are exempted on basis of value of clearances.


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If duty on ready made garments is paid by raw material

supplier.

If whole production is exported


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Goods in store room are liable for duty

Remission of duty can be given by the Commissioner if the

goods are destroyed by natural causes.

Proof has to be provided

If goods are not entered in Daily Stock Account question ofremission of duty does not arise.


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Legal Aspects of Tax and Business -- CENTRAL EXCISE

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