What is Excise Duty
The primary and fundamental meaning of "excise duty"
or Duty of excise is tax on articles produced or manufactured in
the taxing country and intended for home consumption (i.e. consumption
within the same country). It is an indirect duty which the manufacture
or producer passes on the ultimate consumer, that is, its ultimate
incidence will always be on the consumer. What attracts the duty
of excise is an activity, namely, the production or manufacture
Nature and chargeability of Central Excise duty.
Central Excise duty is an indirect tax levied on
goods manufactured in India. 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 duty, though it
becomes payable on the manufacture of goods, is collected at the
time of removal of goods from the factory.
Acts and Rules for the collection of duty of Excise.
The Central Excise duty is collected under the authority
of the Central Excise Act, 1944 at the rates specified under Central
Excise Tariff Act, 1985. This duty is commonly referred as the Basic
Excise Duty. In addition to this duty a few textile items, like
fiber, yarn etc. also attract Additional Excise Duty under Additional
Duties of Excise (Textiles and Textile Articles) Act, 1975. The
Additional Duties of Excise (Goods of Special Importance) Act, 1957
and Miscellaneous Cess Acts provide authority for collection of
Additional Excise Duty and Cess respectively on several manufactured
items over and above Basic Excise Duty.
Procedure for collection of duty.
The following types of procedures are being followed
by the Central Excise department for levy and collection of the
Central Excise duties:-
- Physical Control – Applicable to cigarettes only. Here assessment
precedes clearance which takes place under the supervision of
Central Excise officers;
- Compounded levy scheme – Applicable to Stainless Steel Pattis/Pattas,
Aluminium circle, Processed textile fabrics – by independent processors,
Embroidery in the piece, in strips or motifs, ingots and billets
of non alloy steel falling under heading no.7206.90 and 7207.90
and Hot re-rolled products of non alloy steel of headings nos.
7211.11, 7211.19, 7211.30, 7211.52, 7211.59, 7211.60, 7211.92,
7211.99, 7213.90, 7214.90, 7215.90, 7216.10 and 7216.90. In this
case the duty is charged at a flat rate depending upon the capacity
of plant and machinery.
- Self Removal Procedure – Applicable to all other goods produced
or manufactured within the country. Under this system, the assessee
himself determines the duty liability on the goods he clears.