THE CENTRAL EXCISE

ACT, 1944

Group Members:

Matthew
Kunal
Jumi
Dharnab
 WHAT IS EXCISE?
 HISTORY

 Central Excise levy was existing for years. But in 1944, 11 different Acts were
combined into one Act and this was then named as "TheCentral Excise and Salt
Act, 1944".

 In 1996 it was renamed as "The Central Excise Act, 1944".

 This Act is the original Act for excise, which contains the Tariff Items1 to 67.

 In 1975 the Tariff Item 68 was introduced with the description "allother goods
not elsewhere specified".The Industry starteddescribing it as "Terror Items".

 In 1985 the controversial Tariff Item 68 was abolished and a newTariff Act known
as "THE CENTRAL EXCISE TARIFF ACT, 1985"(CETA) was introduced. This new
act replaced the first schedule tothe original Act.
Excise Duty

 Excise is one of the important indirect taxes.

 To simply state Excise is a tax levied on goods manufactured
or produced in India.
◦ Central Excise duties are the single largest source of Revenue
for the Central Government of India. On an average, out of every
oneRupee Government earns, 19 paise is contributed by Excise.

 Apart from the Basic Excise duty, the following types of

duties arealso levied :
◦ Special duty of excise specified in the Second Schedule to
theCentral Excise Tariff Act, 1985 leviable under the Central Excise
Act,1944.
◦ Additional duty of excise under the Additional Duties of
Excise(Textiles & Textile Articles) Act, 1978.
◦ Additional duty of excise under section 3 of the Additional Duties
of Excise (Goods of Special Importance) Act, 1957.
Excise Duty Collection.
 They are levied and collected by Central ExciseDepartment
under the authority of the Central Excise Act, 1944 and
Central Excise Rules, 1944.

 Section 3 is the charging section which in turn derivesthe

power to impose this tax from the Entry 84 of theUnion list
under the Seventh Schedule read with Article246 of the
Constitution of India. The Entry empowers theCentral
Government to levy Duty on all articles producedor
manufactured in India (including tobacco) except Alcohol and
Opium.

 The power to collect Excise duty on Alcohol and Opiumhas

been assigned to States and it is known as StateExcise duty.
CONCEPT OF MANUFACTURE AND
MANUFACTURER

 Manufacture not only includes any process incidental

or ancillary to the completion of manufactured product but
also what is stated to be amounting to manufacture as per
section notes or chapter notes of the Central Excise Tariff
Act, 1985.
 The following four aspects must exist to attract the
definition of manufacturing as given in central excise law
◦ A process to be carried out.
◦ The process carried out must result in the manufacture of a new
product than what was originally before.
◦ The product so produced must have a marketability and
commercially known and sold as such.
◦ The product must be movable in nature.
ONE UNIT ONE REGISTRATION

 Under the Excise Rules each and every

factory engaged in the manufacture of
Excisable goods, is required to obtain
registration and will be an assessee for the
purpose of levy and collection of excise duty.
 Therefore, if a company has got 3 or 4
factories located at different places, each of
the factory will obtain Registration though it
may belong to one company only.
Excisable Goods
 Excisable goods refer to those Goods which are
mentioned in the Central Excise Tariff Act, 1944.
 Goods as per this Act must possess the following
characteristics. These are the 4Ms
◦ The goods should be MOVABLE. (no duty on immovable
goods).
◦ The goods should be MARKETABLE (capable of being bought
and sold).
◦ The goods should arise out of MANUFACTURING process.
◦ The goods should be MENTIONED in the Central Excise
Tariff Act. (if one of the criteria mentioned above is absent,
the itemcannot be described as goods to attract Excise
levy, even if there is entry in the tariff).
 Excisable Goods are of two kinds:
 Unmanufactured Goods (Coffee, Tobacco)
 Manufactured Goods.
 Rates of duty are of three kinds:
◦ Specific; i.e., per kg.
◦ Ad valorem; i.e., on the value of goods
expressed interms of % of the value.
◦ Duty on production capacity : On certain
NotifiedGoods under section 3A.
Definitions. -
 (a) "Adjudicating authority"
◦ (aa) "Appellate Tribunal”
◦ (aaa) "broker" or "commission agent”
 (b) "Central Excise Officer”
 (c) "curing”
 (d) "excisable goods”
 (e) “factory"
◦ (ee) “Fund”
 (f) "manufacture“
◦ (ff) "National Tax Tribunal“
 (g) "prescribed"
 (h) "sale" and "purchase“
 (k) "wholesale dealer"
 Importance of Excise Duty:
◦ 1.Major source of Government revenue
◦ 2.Psychological advantages to tax payer
◦ 3.Easier to collect
◦ 4.Balanced Industrial Growth
◦ 5.Less collection cost
◦ 6.Tax evasion difficult
◦ 7.Control over wasteful expenditure

 Disadvantages of Excise Duty:

◦ 1.Increase the Price of goods
◦ 2.The incidence is uniform
◦ 3.Reduces demand of goods
◦ 4.Increases project costs
Present Scenario:
 The Central Excise was with the implementation of Goods & Services Tax
on 1st July, 2017
 Some of the points which makes you clear what is the exact difference
between the Past Taxation and the GST are as follows:

 Broad Scheme
◦ Past Taxation- There are separate laws for separate levy. For e.g.
Central Excise Act, 1944, respective State VAT laws.
◦ GST- There will be only one such law because GST shall subsume
various taxes.

 Tax Rates
◦ Past Taxation- There are separate rates. For e.g. Excise 12.36 % and
Service Tax 14%.
◦ GST- There will be one CGST rate and a uniform rate of SGST across
all states.
 Tax Burden
◦ Past Taxation- Under past scenario, tax burden on tax payer is
high.
◦ GST- Under this, tax burden is expected to reduce since all
taxes are integrated which make it possible the burden to be
split equitably between manufacturing and services.

 Cost Burden on Consumers

◦ Past Taxation- Due to presence of cascading effect, certain
taxes become part of cost.
◦ GST- As GST mechanism removes such effect by providing
credit, cost burden is reduced.

 Concurrent Power
◦ Past Taxation- At present, there is no such power to both
Center and State on same subject tax matter
◦ GST- Both Center and State are vested with the power to make
law on GST by virtue of proposed Article 246A of the
Constitution.
 Compliance
◦ Past Taxation- Tax compliance is complex because of multiplicity of
laws and their provisions to be followed.
◦ GST- Tax compliance would be easier as only one law subsuming
other taxes need to be followed

 Transparent Tax Administration

◦ Past Taxation- Presently, tax is levied at two stages in broad manner
i.e.
1. When product moves out of factory.
2. At retail outlet.
◦ GST- GST is to be levied only at final destination of consumption and
not at various points. This brings more transparency and corruption
free tax administration.

 Cascading Effect
◦ Past Taxation- This Problem arises because credit of CST and many
other taxes not allowed.
◦ GST- This situation will not arise as CST concept is being eliminated
with introduction of IGST.
List of Goods included:
 ANIMAL PRODUCTS
 VEGETABLE PRODUCTS
 ANIMAL OR VEGETABLE FATS AND OILS AND THEIR CLEAVAGE PRODUCTS;
PREPARED EDIBLE FATS; ANIMAL OR VEGETABLE WAXES.
 PREPARED FOODSTUFFS; BEVERAGES AND VINEGAR; TOBACCO AND
MANUFACTURED TOBACCO SUBSTITUTES
 MINERAL PRODUCTS
 PRODUCTS OF THE CHEMICAL OR ALLIED INDUSTRIES
 PLASTICS AND ARTICLES THEREOF: RUBBER AND ARTICLES THEREOF
 RAW HIDES AND SKINS, LEATHER, FURSKINS AND ARTICLES THEREOF;
SADDLERY AND HARNESS;TRAVEL GOODS, HANDBAGS AND SIMILAR
CONTAINERS; ARTICLES OF ANIMAL GUT (OTHER THAN SILK - WORM GUT)
 WOOD AND ARTICLES OF WOOD; CORKAND ARTICLES OF CORK;
MANUFACTURES OF STRAW,
OF ESPARTO OR OF OTHER PLAITINGMATERIALS; BASKETWARE AND
WICKERWORK
 PULP OF WOOD OR OF OTHER FIBROUS CELLULOSIC MATERIAL; RECOVERED
(WASTE AND SCRAP) PAPER OR PAPER- BOARD; AND ARTICLES THEREOF
 TEXTILES AND TEXTILE ARTICLES
 FOOTWEAR, HEADGEAR, UMBRELLAS, SUN UMBRELLAS, WALKINGSTICKS, SEAT-
STICKS, WHIPS, RIDING - CROPS AND PARTS THEREOF, PREPARED FEATHERES
AND ARTICLES MADE THEREWITH; ARTICIFICAL FLOWERS, ARTICLES OF
HUMAN HAIR
 ARTICLES OF STONE, PLASTER, CEMENT, ASBESTOS, MICA OR SIMILAR
MATERIALS: CERAMIC PRODUCTS:GLASS AND GLASSWARE
 NATURAL OR CULTURED PEARLS, PRECIOUS OR SEMI-PRECIOUS STONES,
PRECIOUS METALS, METALS CLAD WITH PRECIOUS METAL, AND ARTICLES
THEREOF: IMITATION JEWELLERY; COIN
 BASE METALS AND ARTICLES OF BASE METAL
 MACHINERY AND MECHANICAL APPLIANCES, ELEC-TRICAL EQUIPMENTS;
PARTS THEREOF; SOUND RECORDERS AND REPRODUCERS, TELEVISION IMAGE
AND SOUND RECORDERS AND REPRODUCERS, AND PARTS AND ACCESSORIES
OF SUCH ARTICLES
 VEHICLES, AIRCRAFT,VESSELS AND ASSOCIATED TRANSPORT EQUIPMENT
 OPTICAL, PHOTOGRAPHIC, CINEMATOGRAPHIC, MEASURING, CHECKING,
PRECISION, MEDICAL OR SURGICAL INSTRUMENTS AND APPARATUS; CLOCKS
AND WATCHES; MUSICAL INSTRUMENTS; PARTS AND ACCESSORIES THEREOF
 ARMS AND AMMUNITION, PARTS AND ACCESSORIES THEREOF
 MISCELLANEOUS MANUFACTURED ARTICLES
List of Goods exempted:
 I.VALUE BASED EXEMPTION NOTIFICATIONS FOR SMALL
SCALE SECTOR
 II. CENTRAL EXCISE EXEMPTION NOTIFICATIONS UNDER
VARIOUS EXPORT PROMOTION SCHEMES
 III. EXEMPTION NOTIFICATIONS RELATING TO GOODS
MANUFACTURED IN SPECIFIED AREAS
 IV. JOB WORK NOTIFICATIONS
 V. EXEMPTION TO GOODS CAPTIVELY CONSUMED
 VI. EXEMPTION TO GOODS MANUFACTURED IN GOVT.
FACTORIES AND SUPPLIES TO DEFENCE
 VII. EXEMPTION TO TECHNICAL, EDUCATIONAL AND
RESEARCH INSTITUTES
 VIII. EXEMPTION TO GOODS PRODUCED WITHOUT AID OF
POWER AND FOR UNITS IN RURAL AREAS
 IX. EXEMPTION TO CERTAIN GOODS FOR REHABILITATION
WORK
 X. EXEMPTION TO CERTAIN GOODS WHEN CLEARED
AGAINST A SERVED FROM INDIA SCHEME CERTIFICATE.
 THANK YOU

For more information, please visit, cbec.gov.in