Central Excise Duty - Introduction

For the Assessment Year 2009-10

Excise duty rate on items currently attracting 4% to be raised to 8% with following major exceptions: Specified food items including biscuits, sharbats, cakes and pastries Drugs and pharmaceutical products falling under Chapter 30 Medical equipment Certain varieties of paper, paperboard and articles thereof Paraxylene Power driven pumps for handling water Footwear of RSP exceeding Rs.250 but not exceeding Rs.750 per pair Pressure cookers Vacuum and gas filled bulbs of RSP not exceeding Rs.20 per bulb Compact Fluorescent Lamps Cars for physically handicapped Specific component of excise duty applicable to large cars/utility vehicles of engine capacity 2000 cc and above to be reduced from Rs. 20,000/- per vehicle to Rs.15,000 per vehicle. Excise duty on petrol driven trucks/lorries to be reduced from 20% to 8%. Excise duty on chassis of such trucks/lorries to be reduced from ‘20% + Rs.10000’ to ‘8% + Rs.10000. Excise duty on Special Boiling Point spirits to be reduced to 14%. Excise duty on naphtha to be reduced to 14%. Duty paid High Speed Diesel blended with upto 20% bio-diesel to be fully exempted from excise duties. The ad valorem component of excise duty of 6% on petrol intended for sale with a brand name to be converted into a specific rate. Consequently, such petrol would now attract total excise duty of Rs.14.50 per litre instead of ‘6% + Rs.13 per litre’. The ad valorem component of excise duty of 6% on diesel intended for sale with a brand name to be converted into a specific rate. Consequently, such diesel would now attract total excise duty of Rs.4.75 per litre instead of ‘6% + Rs.3.25 per litre’. Excise duty on manmade fibre and yarn to be increased from 4% to 8%. Excise duty on PTA and DMT to be increased from 4% to 8%. Excise duty on polyester chips to be increased from 4% to 8%. Excise duty on acrylonitrile to be increased from 4% to 8%. The scheme of optional excise duty of 4% for pure cotton to be restored. Excise duty for man-made and natural fibres other than pure cotton, beyond the fibre and yarn stage, to be increased from 4% to 8% under the existing optional scheme. An optional excise duty exemption to be provided to tops of manmade fibre manufactured from duty paid tow at par with tops manufactured from duty paid staple fibre. Suitable adjustments to be made in the rates of duty applicable to DTA clearances of textile goods made by Export Oriented Units using indigenous raw materials/ inputs for manufacture of such goods. Full exemption from excise duty to be provided on goods of Chapter 68 of Central Excise Tariff manufactured at the site of construction for use in construction work at such site. Excise duty exemption on ‘recorded smart cards’ and ‘recorded proximity cards and tags’ to be made optional. Manufacturers have the option to pay the applicable excise duty and avail the credit of duty paid on inputs. EVA compound manufactured on job work for further use in manufacture of footwear to be exempted from excise duty. Benefit of SSI exemption scheme to be extended to printed laminated rolls bearing the brand name of others by excluding this item from the purview of the brand name restriction. On packaged or canned software, excise duty exemption to be provided on the portion of the value which represents the consideration for transfer of the right to use such software, subject to specified conditions. Excise duty on branded articles of jewellery to be reduced from 2% to Nil.

The Customs Act was formulated in 1962 to prevent illegal imports and exports of goods. Besides, all imports are sought to be subject to a duty with a view to affording protection to indigenous industries as well as to keep the imports to the minimum in the interests of securing the exchange rate of Indian currency.

Duties of customs are levied on goods imported or exported from India at the rate specified under the customs Tariff Act, 1975 as amended from time to time or any other law for the time being in force. For the purpose of exercising proper surveillance over imports and exports, the Central Government has the power to notify the ports and airports for the unloading of the imported goods and loading of the exported goods, the places for clearance of goods imported or to be exported, the routes by which above goods may pass by land or inland water into or out of Indian and the ports which alone shall be coastal ports

In order to give a broad guide as to classification of goods for the purpose of duty liability, the central Board of Excises Customs (CBEC) bring out periodically a book called the "Indian Customs Tariff Guide" which contains various tariff rulings issued by the CBEC. The Act also contains detailed provisions for warehousing of the imported goods and manufacture of goods is also possible in the warehouses.

For a person who do not actually import or export goods customs has relevance in so far as they bring any baggage from abroad.

Importance of Central Excise Duty

Central excise revenue is the biggest single source of revenue for the Government of India. The Union Government tries to achieve different socio-economic objectives by making suitable adjustments in the scope and quantum of levy of Central Excise duty. The scheme of Central Excise levy is suitably adapted and modified to serve different purposes of price control, sufficient supply of essential commodities, industrial growth, promotion of small scale industries and like Authority for collecting the Central Excise duty.

Article 265 of the Constitution of India has laid down that both levy and collection of taxes shall be under the authority of law. The excise duty is levied in pursuance of Entry 45 of the Central List in Government of India Act,1935 as adopted by entry 84 of List I of the seventh Schedule of the Constitution of India. Charging section is Section 3 of the Central Excises and Salt Act,1944.

Liability to pay Central Excise Duty

Section 3 of the Central excises and Salt Act,1944 provides that there shall be levied and collected in such manner as may be prescribed, duties of excise on all excisable goods other than salt which are produced or manufactured in India at the rates set forth in the schedule to the Central excise Tariff Act,1985.it is therefore clear that as soon as the goods in question are produced or manufactured, they will be liable to payment of Excise duty. However for convenience duty is collected at the time of removal of the goods. While Section 3 of the Central Excises and salt Act,1944 lays down the taxable event, Rules 9 and 49 of the Central excise Rules,1944 provides for the collection of duty.