Central excise duties are levied by the Union Government on commodities manufactured or produced within the country and consumed within the country, as against the State excise duties which are levied on alcoholic drinks, opium, etc. Commodities liable to central excise duties are listed in the Schedule to the Central Excise Tariff Act, 1985 (Act 5 of 1986) which came into effect from 28.02.1986. Prior to this, excisable commodities were contained in the First Schedule to the Central Excises and Salt Act, 1944. The current Tariff is an exhaustive code covering each and every commodity manufactured or produced in the country. Central excise duty is an indirect tax, i.e. each person, rich or poor, is liable to pay tax indirectly on purchase of goods which have already been charged to duty. This tax is administered under the authority of Entry 84 of Union List of the Seventh Schedule read with Article 226 of the Constitution of India.
What is Central Excise Duty?
Goods are traditionally categorized based on their purpose and area of use, with certain goods meant to be produced and consumed locally. Goods and products which are manufactured and consumed within India have to pay an indirect tax to the government, with this tax being called Central Excise Duty. While the tax is paid by the manufacturer, the onus of additional payment for a product to account for this duty/tax falls on the consumer.
Excise duty can be levied only on certain products which are mentioned in the First and Second Schedule of the Central Excise Tariff Act, 1985 and other goods are not covered under the ambit of excise duty.
Central Board of Excise and Customs
The Ministry of Finance is the apex body in charge of maintaining financial rules and regulations in the country, and as such has the Department of Revenue under its ambit. The Central Board of Excise and Customs is a part of this Revenue Department and handles policies related to levying and collecting Customs and Central Excise Duties from relevant individuals. It also collects Service Tax apart from handling administration related to Narcotics, Customs, Service Tax and Central Excise.
Central Board of Excise and Customs also functions as an administrative authority to organizations like Custom Houses, Central Revenues Control Laboratory and Central and Service Tax Commissionerates, which are expected to report to it.
Central Excise Act
Excise Duty in India has its roots in the British Era, when the ruling British taxed the production and manufacture of salt. Over the years the number of products under the ambit of this duty increased, until finally, in 1944 the Central Excise Act was passed. This Act forms the framework for Excise Duty implementation and collection in India, encompassing a wide range of possibilities, powers and duties of officers and relief available to concerned parties. The provisions under this Act are applicable throughout the entire territory of India.
The Government of India, in the year 1986 passed the Central Excise Tariff Act, 1985, providing provisions for tariff on Central Excise Duties. This Act contains a list of products and the duties associated with them.
Central Excise Registration
The Government of India, in a bid to simplify the entire Central Excise domain has developed an online portal to offer convenience to users. Automation of Central Excise and Service Tax or ACES as it is called is a one stop solution for everyone looking for a quick answer to their customs related queries. Individuals can register online, through this website by providing their basic information like name, contact details, company/manufacturer details, designation and name of a unit. Registration through this portal is quick, transparent and efficient, ensuring that a level of accountability is maintained throughout. On successful registration, an individual will be provided a 15 digit assessee code which he/she can use for further correspondence through the website.
Central Excise Rates
Central Excise rates are determined by the Ministry of Finance, with rates changing during budgets. These rates are a reflection of economic trends in the country and are generally designed keeping in mind multiple requirements. Central Excise Duty rates were increased from 12.36% to 12.50%.
Central Excise E-Filing
Individuals who need to pay customs duty can e-file their taxes online, through the ACES website. One needs to log onto the website and choose the e-filing tab, post which they are directed to a page wherein they can download forms related to custom duty payment. Post downloading they need to fill in these forms with the relevant data and use their registration ID to make the payment. The form contains details about their products, including the number of products produced apart from having financial information related to these products.
FAQS
What is meant by 'manufacture' for the purposes of Central Excise?
‘Manufacture’ under Central Excise includes any process that brings about a transformation in goods, resulting in a new and distinct product with a different identity, character, or use. It encompasses activities such as production, processing, assembly, and more.
Who is liable to pay Central Excise duty?
The liability to pay Central Excise duty typically falls on the manufacturer or producer of goods. However, in some cases, it can also be payable by the person who holds the goods in their possession or control at the time of their removal from the place of manufacture.
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