CENTRAL EXCISE

Excise Duty

 

In today’s World the relevance of taxes are a lot more than just financial aid to the Government. It is also, the money that goes in for building the future of a nation. India being a democratic country requires this aid through taxes. The Central Government levies taxes along with the state government to their respective states. There are a few taxes that are levied by the local Municipality as well. Excise Duty falls under the Central Government of India.

What is Excise Duty?

This tax is levied on certain goods for their production or sale catering or on licenses on specific services and activities. Excise duty is an inland tax unlike custom duties is an inland tax. Also this duty charges are a form of indirect tax. Indirect taxes are generally collected by a retail store or an intermediary body from the person who ultimately bears the responsibility of paying the tax as a consumer. The producer of the goods then pays this tax to the government. This amount is excise of the VAT (Value Added Tax) and sales tax that is charged to the consumers when purchasing a good.

The excise duty falls under the Excise Duty Act, 1944. The State Government charges them on certain goods such as narcotics, alcohol or alcoholic products, the duty charges on other goods are collected by the Central Government, hence the term, ‘Central Excise Duty’. The tax is however, collected by the Government when the good are being removed from the factory and dispatch.

Acts and Rules For The Collection of Excise Duty:

Under the authority of the Central Excise Act, 1944, the taxes are levied on manufacturing or production of goods. The rates for the taxes are specified under the Central Excise Tariff Act, 1985. This duty is chargeable on certain textile products such as yarn, fiber, etc. also excluding the Additional Excise Duty under Additional Duties of Excise (Textiles and Textile Articles) Act, 1975, which are also charged.. The Additional Duties of Excise (Goods of Special Importance) Act, 1957 and Miscellaneous Cess Acts permits and mandates collection of Additional Excise Duty and Cess respectively on many products over Basic Excise Duty authoritated by the Central Excise Act, 1944.

Central Board of Excise and Customs:

Established in 1855, by George Robinson, the British Governor General of India at the time, Central Board of Excise and Customs was intended to administer and manage customs laws in the country as well as the collection of import duties and land revenue. It is said to be one of the oldest government departments of India.

The Central Board of Excise and Customs (CBEC) is functions under the the Union Ministry of Finance’s Department of Revenue. The responsibility for administering the laws that govern laws under the following, and are not restricted to excise taxes alone:

• Policy making for levying and collecting central and customs and excise duties
• Management of Customs, Narcotics and Central Excise as per the prior set limits
• Prevention the goods smuggling

There are certain subsidiary organizations that function under the Central Board of Excise and Customs including:

• Custom Houses
• Central Excise Commission rates
• Central Revenues Control Laboratory

Products with Excise Duty Charges:

Besides narcotics and alcohol, collected by the corresponding state Government, the Central Government charges excise duty on the following products:

1. Live Animals and Animal Products: This includes live animals, meat and edible meat offal, Fish and Crustaceans, Molluscs and other Aquatic Invertebrates, Birds' Eggs, Natural Honey; Edible Products of Animal Origin, not elsewhere specified or included, Products of Animal Origin, not elsewhere specified or included.
   
2. Vegetable Products: This category includes Live trees and other Plants; Bulb, Roots and the like; Cut flowers and Ornamental Foliage, Edible Vegetables and Certain Roots and Tubers.
   
3. Other Products: Edible Fruit and Nuts; Peel of Citrus Fruit or Melons, Coffee, Tea, Mate, Spices, Products of the Milling Industry; Malt; Starches; Inulin; Wheat Gluten, cereals, Products of the Milling Industry; Malt; Starches; Inulin; Wheat Gluten, Oil Seeds and Oleaginous Fruits; Miscellaneous Grains, Seeds and Fruit; Industrial or Medicinal Plants; Straw and Fodder, Gums, Resins and other Vegetable Saps and Extracts and Vegetable Plaiting Materials.
   
4. Products Made Out of Non-renewable Sources: Products made from precious Metals and other Metals, other industrial chemicals.
   

All the rates are available under Central Excise Tariff & Central Excise Duty of 2015, as of August 2015.

Sales Tax/VAT V/S Excise Duty:

The biggest difference between VAT/sales tax and excise duty is that the prior to be charged on consumption of goods, whereas excise is charged on the manufacture and production of goods. Excise duties are also chargeable on a narrower range of products, as compared to VAT and sales tax. For example, excise is not chargeable on fossil fuels unlike sales tax and VAT. The excise amount is generally accounts for a higher percentage of the maximum retail price of the products. Excise is chargeable on per unit basis, i.e. it is calculated on the costing of good for a specific amount in the form of volume, weight or units. VAT and sales tax amounts are calculated proportional to the maximum retail price of the product or services.

Excise Duty V/s Customs Duty:

If you take a look at both of these taxes at first, both are taxes levied by the government of India but the most significant difference between the two is that customs duty is a tax levied upon goods imported into the country from foreign countries while excise duty is levied by the government on the goods manufactured in the country. It is important to note that many provisions are common to both customs and excise duty. Also, both taxes have similar procedures of administration, tribunal and settlement. At the same time the refund search, principles of valuation, confiscation and appeal are similar for both taxes.

What is the Purpose of Excise Duty?

There is a necessity of taxes in any country but it is important to know what the Government does with that money. Taxes are levied to ensure the smooth running of the public services in India. Excise duty is a part of it.

It makes sure that the manufacturing sector is involving themselves in the taxation to cover all aspects. Taxes can also be a tool to control the sale of a good, especially narcotic substances and alcohol. The increase in tax amount of such products may have eventually lead to reduction of purchase due to ill affordability.

Taxes in general, help Governments in infrastructure projects such as building roads, railway networks that are used by the public. It also helps to ensure that the defense forces i.e. navy, airforce and army are being maintained and the required arms are being funded, so that taxpayer or not, a citizen of India feels safe and secure at home. Other maintenances such as public parks, water treatment and cleanliness in public places are funded by such taxes. A lot of free public healthcare is funded through these taxes. Any Government or public building, organization, area or service is indeed funded by such taxes.

Also, under the Indian law system excise tax, unless exempted under the corresponding acts. If an individual or an organization is caught evading excise tax, the penance could be a fine of 20-50% of duty evaded. It also spoils the organization and the involved individual’s image. Hence, the importance of excise duty.

How do you Evaluate Excisable Goods?

It is done in the basis any one of the 2 two provisions enshrined in the Central Excise law in India. These provisions are Valuation under section 4 of the Central Excise Act, 1944 and the Central Excise Tariff Act, 1985, The earlier act is based on normal price where maximum retail price is not to the Central Government or where Tariff values have not been fixed for the articles. Under section 3(2) of the Central Excise Tariff Act, 1985 the valuation is simply based on maximum retail price (MRP) under section 4A of the Central Excise Act, 1944. Section 4A of the Central Excise Act of 1944 applies on the excisable goods that are notified by the Central Govt.

News About Excise Duty

• Jewellers' strike continues against Excise Duty

  New Delhi: Several jewellery showrooms across major cities in the country remained shut on Thursday as bullion traders continued their protest calling for a rollback of the proposed 1% excise duty on non-silver jewellery, according to Surinder Kumar Jain, vice-president of the All India Sarafa Association.
  Jewellers who sell silver are also extending support to the strike which entered its 30th day on Thursday.
  The central government recently set up a panel headed by ex-chief economic advisor Ashok Lahri to review jewellers’ demand.
  
  
  
  

• 1% Excise Duty of Jewellery, forces jeweller’s to rally in Delhi

  After Arun Jaitley, the Finance Minister has rejected the demand to rollback the proposal of 1% excise duty, on non-silver jewellery. Many of the jewellers all over the country have decided to protest in a rally in New Delhi on March 17. Jewellers throughout the country have been on an indefinite strike in protest of the excise duty charges, and have suffered losses of almost Rs. 15,000 crore.
  
  
  
  

• Finance Ministry has asked Jewellers to suggest alternatives to the Excise Duty that is being charged on Gold

  Before the finance minister can roll back the excise duty on gold jewellery, he has asked the jewellers to give alternative solution. The ministry has rejected the suggestion of raising import duty on gold instead of slapping the excise duty at 1%. The jewellers believe that the rise in excise duty will discourage manufacturing. Jewellers are also protesting the requirement to quote PAN card number of customers whose transactions are Rs.2 lakh and above. The finance ministry has imposed the duty to keep track of gold products manufactures and to track the black money. But that can also be done without imposing excise duty.
  
  
  
  

• Cigarettes will cost more with the increase in the Excise Duty on Tobacco Products

  Prices of cigarettes to go up by 8 – 9% as the government increased tax for the 5th successive year on cigarettes. Excise tax has been increased on gutka, chewing tobacco and zarda scented tobacco. The government believes that the hike will lower the cigarettes sales volume. This has put a heavy pressure on the legal cigarette industry and they fear that the consumers may shift to low quality cigarette which might create an opportunity to illegal cigarette trade. The legal cigarettes contributes 87% of the excise revenue from tobacco though its consumption is 11% of total tobacco that is being consumed in India.
  
  
  

• Revenue Generation for Domestic Focus might be generated through Excise Duty on Fuel

  The proposals of the Goods and Services Tax Bill, has been stagnant for some time and could be implemented in a different manner. The government may consider changing the basic tax structure in a way which possesses the requirement for the GST bill, at the same time getting rid of the state sales tax.
  This can be initiated everywhere in India, which would then in turn help increase domestic trade. As growth rates in the global economy have been seen volatility oil producing countries are being sucked out for more demand. Hence, increasing the excise duty on oil might be able help the Indian economy focus on the domestic infrastructure and serve the domestic demand. Also, the coming Budget could help India’s economic growth by increasing infrastructure spending through such initiatives by the Government.
  
  
  

• In preparation for GST, the Government may cut Excise Exemptions on some Groceries

  Government is in process of considering eliminating excise duty for certain types of groceries, thereby reducing your monthly grocery bill. The standard rate of 12.5% may be seen on products such as dairy products, yoghurt, cheese, any frozen products, ready to eat products, packaged fruit juices and soya milk. The GST deadline is 1st April 2016, and a list of 300 goods are expected to be on the list of exempt items. The suggested rate of GST was 17-18% and a concessional rate of 12%.
  
  
  
  

• Jayalalithaa Calls for Cuts in Excise Duty on Fuel

  Tamil Nadu Chief Minister Jayalalithaa has criticised the Union government for its constant hike in excise duty on petrol and diesel.
  She pointed out that since November 2014, excise duty on petrol has gone up by Rs. 11.77 and on diesel it has been hiked by Rs. 13.57. In 2016 alone, the excise duty has gone up by Rs. 2.12 for petrol and Rs. 5.50 for diesel. The latest hike in excise duty on petrol was increased by Re. 1 for petrol and Rs. 1.50 for diesel on January 31.
  She said withdrawing the excise duty hike would revive economic growth in the country.
  
  
  
  

 

 

 

 

 

 

Central Excise Forms in Excel format

Download Central Excise forms, which you can Fill before Print.

Form No. / Link	Description
Forms in Excel with formulas for auto calculation
GAR-7	Central Excise Challan Form
Form A-1	Application for Central Excise Registration
Form AAR(CE1)	Application for Advance Ruling
Form A.R.E. 1	Application for removal of excisable goods for export by (Air/Sea/Post/Land)
Form A.R.E.3	Application for removal of excisable goods from a factory or a warehouse to another warehouse
Form ER 1	Monthly Return for Production and Removal of Goods
Form E.R.2	Monthly Return for hundred percent export-oriented undertakings in respect of goods manufactured, goods cleared and receipt of inputs and capital goods
Form ER 3	Quarterly return for clearance of goods and CENVAT Credit
Form ER 4	Annual Financial Information Statement
Form ER 5	Annual Declaration
Form ER-6	Monthly Return of receipt and consumption of principal inputs and finished excisable good
Form ER 7	Annual Installed Capacity Statement
Form ER 8	Quarterly Return of excisable goods cleared @ 1% duty
Quarterly Return	Quarterly Return under Rule 7 of the CENVAT Credit Rules, 2002 for the Registered Dealers
Forms in Word format
Form A-2	Application form for central excise registration of powerloom weavers / hand processors / Dealers of Yarns and Fabrics/manufacturers of ready made Garments
Form A-3	Application form for Registration of manufacturers of hand rolled cheroots of tobacco
Instructions	Instructions for filling up the Application Form for Registration A-1
Form	Application for removal of stainless steel patties/pattas manufactured under the special procedure
Form CT3	Certificate for removal of excisable goods under bond
Annexure 4	Declaration Form
Annexure 5	Application for obtaining new Excise Control Code Number
Form	General Bond (Surety / Security)
Form A.R.E. 2	Combined application for removal of goods for export under claim for rebate of duty paid ...
Form A S P I	Application for permission to avail of the special procedure relating to embroidery
Form A S P II	Application for permission to avail of the special procedure relating to stainless steel patties or pattas or aluminium circles.
Form B-1	General Bond (Surety / Security)
Form B-3	General Bond (Security)
Form RC	Central Excise Registration Certificate
Application	Application for Compounding of Offence
Form EA-1	Form of Appeal to the Commissioner (Appeals) under section 35 of the Act
Form EA 3	Form of Appeal to Appellate Tribunal under section 35B of the Act
Application	Application to avail the facility of filing excise returns electronically
Proforma	Proforma of Running Bond Account in respect of B-1 Bond
Annexure 24	Form of Declaration for availing Benefit of Rebate of Center. Excise Duty Paid on Materials used in Manufacture and Packing of Export Goods
Form 'A'	Application for refund of CENVAT credit under rule 5 of the CENVAT
Annexure 20	Return for manufacturers following simplified export procedure
Form UT-1	Letter of Undertaking

About forms :-

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