TaxTMI 
TaxTMI 
Basic Concept of Central Excise
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....ion referred to as the "Concurrent List"). (3) Subject to clauses (1) and (2), the Legislature of any State 1*** has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the "State List"'). (4) Parliament has power to make laws with respect to any matter for any part of the territory of India not included 2[in a State] notwithstanding that such matter is a matter enumerated in the State List. - Article - 265. - No tax shall be levied or collected except by authority of law. - Entry No. 84 of List 1 (Union List) - Seventh Schedule of Constitution of India Duties of excise on tobacco and other goods manufactur....
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....3 of the Central Excise Act, 1944. Unlike in Income Tax where tax is levied on income earned, and Sales tax is levied when good sold, excise duty is imposed when goods are manufactured. Though excise is levied on manufacture of goods, it is collected at the time of removal from the factor of production. Thus, till the time of removal of goods the collection of duty is deferred and permitted to store without payment of duty within the factory of production. As stated above, excise duty is imposed on manufacturing of goods and collected at the time of removal, therefore, it is not relevant that the manufacturer is the owner of the manufactured goods or not or the goods have been sold or not. Excise duty is payable even if finished goods con....
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....us purposes in the Central Excise. In first method the duty is calculated and collected on the basis of its transaction value. This method is common and used widely. The other method is duty is calculated on the basis of its Maximum Retail Price (MRP). The next method of collection of excise duty is compound levy on select items, which is charged with respect to number of machines and capacity of machines installed in a factory premises. Another method of charging excise duty is fixation of tariff value. In this situation the excise duty is calculated and collected on the basis of its fixed value as notified irrespective of the fact that it is sold in the market at lower or higher price actually. All these methods and procedures are discuss....
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.... includes any process,-- incidental or ancillary to the completion of a manufactured product; and which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or which, in relation to the goods specified in Third Schedule involves packing or re-packing of such goods in a unit container or labeling or re-labeling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer, and the word "manufacturer" shall be construed accordingly and shall include not only a person who employs hired labour in the producti....
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....e liable to pay any excise duty. The reason behind this is that these unit are treated as units situated out India to promote export. However, this exclusion is only for SEZ. Other export promotion zones are parks or unit will continue to pay excise duty. Though there is special method of collection of duty on unit established in FTZ and 100% Export Oriented Units. Manufacture of goods is a Taxable Event Once a good which is manufacture or produced, qualifies all the conditions as discussed above, duty is imposed. Calculation and Collection of duty is shifted to stage of removal. Collection of duty at the sage of removal does not mean that it is imposed on sale or transfer of ownership. It remains an excise duty on goods manufactured or ....
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....e is imposed on goods manufactured. Therefore, central excise follows the concept of removal of goods. Though the duty is calculated and collected on the basis of value of the goods removed but it is not necessary that goods must have been sold. Some examples are enumerated here showing that in these circumstances even if goods are not sold duty is payable: - Captive Consumption of intermediate goods Distribution of free samples Dispatch of goods to own depot or branches Lost / destroyed goods after their manufacturing Duty is payable even if not collected A manufacturer is liable to pay excise duty once he removes the goods manufactured from his factory. Later it became irrelevant that the buyer of that goods have not paid amount of ....