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Central Excise Duty- Introduction and Overview. Submitted By:- Sandee p Lecturer in Commerce. Introduction. Central Excise Duty form the single largest source of indirect taxes for central Government

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central excise duty introduction and overview

Central Excise Duty-Introduction and Overview

Submitted By:-


Lecturer in Commerce

  • Central Excise Duty form the single largest source of indirect taxes for central Government
  • Over the last few years steps have been taken to reform Indian indirect tax structure by reducing the number of rates, removing exemption and by switching over to ad valorem rates. Central Excise duties have also been revamped and moved closer to a Value Added Tax with the introduction of CENVAT to almost all items necessary for the manufacture of goods.
excise duty historical glance in india
Excise Duty-Historical Glance in India
  • 1894-Levied on finest quality of cotton thread for the first time.
  • 1896-On fine quality cloth but cancelled in 1924-25.
  • 1934-Reimposed.
  • 1917-Levied on Motor Spirit.
  • 1920-Imposed on Kerosene Oil.
  • 1934-List of Dutiable Goods increased. Match Box, Sugar, Steel Added.
  • 1941-Types and Tubes.
  • 1943- Vegetable Products.
  • 1944- Till 1944, there were separate laws for different products. In 1944, by consolidating these, Central Excise Duty and Salt Act 1944.
  • 1996-The word ‘Salt’ deleted.
nature of excise duty
Nature of Excise Duty
  • Power to levy excise duty is derived from Constitution. Excise is a duty on excisable goods manufactured or produced in India.

Basic conditions of excise liability - 

  • Section 3 of Central Excise Act (often called the ‘Charging Section’) states that ‘There shall be levied and collected in such manner as may be prescribed duties on all excisable goods (excluding goods produced or manufactured in special economic zones) which are produced or manufactured in India - . - . -'.
  • The words ‘goods which are manufactured or produced in India’ are same as those used in Entry No 84 to list I. Thus, the power to levy Central Excise duty is derived from the Constitution.
nature of excise duty1
Nature of Excise Duty

There are four basic conditions for levy of Central Excise duty.

  • The duty is on goods.

(2) The goods must be excisable.

(3) The goods must be manufactured or produced 

(4) Such manufacture or production must be in India. 

Unless all of these conditions are satisfied, Central Excise Duty cannot be levied. Each of these requirements needs close scrutiny.

non excisable goods
Non-excisable Goods

Goods can be non-excisable in any of the following situations:

  • If it is immovable
  • If it is non-marketable
  • If it has not been specified in the schedule to Central Excise & Tariff Act.

Excise duty is paid by manufacturer in the first instance and then he passes it on to the ultimate consumers, that is why it is called as indirect tax.

taxable event for excise duty
Taxable Event for Excise Duty
  • ‘Taxable event’ is that on happening of which the charge is fixed.
  • It is that event, which on its occurrence creates or attracts the liability to tax. Such liability does not accrue at any earlier or later point of time.
  • Tax becomes payable when liability to pay tax arises and liability to pay tax arises by the happening of the taxable event.
types of excise duties a from the viewpoint of nomenculture and supporting legislation
Types of Excise DutiesA) From the viewpoint of Nomenculture and supporting Legislation
  • Basic Excise duty (BED) or CENVAT- u/s 3(1)
  • Special Duty of Excise- u/s 3(i) (b)
  • Additional duty on goods of Special Importance
  • National Calamity Contingent Duty (NCCD)
  • Cess- education cess-2%, secondary and higher education cess-1%
from the view point of basis of levy
  • Specific duty
  • Ad- Valorem duty
  • Specific cum Ad-Valorem duty
  • Duty based on Fixed Tariff Value
  • Compounded duty- It is levied on the capacity of production of the plant irrespective of actual production. Central Excise duty shall be paid on the capacity e.g. 1000 units but not on actual production e.g. 850 units.
central excise laws
Central Excise Laws
  • 1.Central Excise Act, 1944
  • 2. Central Excise Rules, 2002
  • 3. Central Excise Tariff Act 1985 (CETA)
  • 4.Central Excise (Valuation) Rules 2000
  • 5. Notifications
  • 6.Custioms, Excise and Service Tax Appellate Tribunal (Procedure) Rules 1982
  • 7. Additional Duties of Excise (Goods of Special Importance ) Act, 1957
  • Adjudicating authority
  • Broker
  • Curing
  • Excisable goods
  • Exempted goods
  • Difference b/w Goods and Excisable goods
  • Difference b/w Excisable and Dutiable goods
  • Factory
  • Difference b/w Levy and Collection