Excise Duty, State Excise and Central Excise
Excise duty is a tax on manufacture or production of goods.
Excise duty on alcohol, alcoholic preparations, and narcotic substances is collected by the State Government and is called "State Excise" duty.
The Excise duty on rest of goods is called "Central Excise" duty and is collected in terms of Section 3 of the Central Excise Act, 1944.
Sales Tax And Excise Duty
Sales Tax is different from the Excise duty as former is a tax on the act of sale while the latter is a tax on the act of manufacture or production of goods.
Subject to specified conditions, generally the following categories of persons are required to get themselves registered with the Central Excise department:
- Every manufacturer of dutiable excisable goods;
- First and second stage dealers or importers desiring to issue Cenvatable invoices;
- Persons holding bonded warehouses for storing non-duty paid goods;
- persons who obtain excisable goods for availing end-use based exemption.
For obtaining Central Excise Registration apply to the nearest Central Excise Division Office in Form A.1 along with a self attested copy of the PAN issued by the Income Tax Department. After post verification, a regular Registration certificate in form RC is normally issued immediately.
Exemption from Registration
Yes. Subject to specified conditions, the following categories of persons need not obtain Central Excise registration.
- Manufacturers of goods which are chargeable to nil rate of duty or are fully exempt;
- SSI manufacturers having annual turnover of below Rs.90 lakhs. Once their turnover touches Rs.90 lakhs, they should give the prescribed declaration to the Jurisdictional Superintendent of Central Excise;
- Job-workers of ready-made garments if the principal manufacturer undertakes to discharge the duty liability;
- Approved/licensed units in Export Processing Zones, Special Economic Zones and 100% Export Oriented Units.
Liability to pay Central Excise Duty
Generally speaking, the manufacturer who actually undertakes manufacturing activity is liable to pay Central Excise duty. A person does not become a manufacturer simply by supplying raw materials to the manufacturer or getting his goods manufactured according to his own specifications, brand name or trade name, etc. However, for the textile sector, the option is with the supplier of raw materials or with the job worker to pay duty.
Central Excise Duty Rates
The rate of duty on each item is specified in the Central Excise Tariff Act, 1985. In some cases, the statutory rates of duty have been lowered or reduced to Nil by the Central Government in terms of Section 5A of the Central Excise Act, 1944. Anyone interested in knowing the effective rates of duty in respect of any goods must refer to the Tariff or seek guidance from the nearest Central Excise Officer, if necessary.
Exemption from payment of duty for Small Scale Industries
Generally speaking, the Small Scale Units, who manufacture the goods specified in the relevant exemption notifications and fulfil the conditions specified in such exemption notifications, are exempt from payment of duty till their aggregate clearances do not exceed Rs.1 Crore in a financial year. The Small-Scale units whose clearances in the previous financial year exceeded the limit of Rs.3 Crores, which will also include the value of exempted goods (excluding exports), are not entitled to such exemption. Generally speaking, the Small Scale units who are availing the CENVAT credit are required to pay duty at concessional rate of 60% of the prescribed rate till their clearances reach Rs.1 Crore. For further details, please consult the nearest Central Excise Range Office.
Filing of Returns & Penalty for non-filing or Returns
An SSI unit is required to file returns on quarterly basis within 20 days from the date of completion of the quarter, but non-SSI units are required to file returns on monthly basis within 10 days from the date of completion of month.
A penal action is envisaged on failure to file the returns in time. Penalty may extend up to Rs.2000/-.
Payment of Excise Duty
An SSI unit has to pay duty on monthly basis by 15th of the succeeding month. Other units are required to pay duty on monthly basis within 5 days of completion of the month in question. The assessee is required to deposit the amount of duty payable in the nominated bank along with the prescribed TR-6 challan and on this amount being credited in the government account, he can take credit in the PLA register. Such credited amount can then be utilized for discharging the duty on goods cleared from his factory. However, for the month of March, the duty has to be paid by 31st March, both for SSI and Non SSI units. Further, in case of default in payment of duty, the interest is leviable @ 2% per month or Rs. 1000/- per day, which ever is higher, starting from the date on which the duty was required to be paid till the date of payment (subject to the interest not exceeding the duty amount.
Subject to prescribed conditions, the assessee has to obtain a duty paid invoice from the consignor and then he can take credit of such duty amount in the account maintained for this purpose and the same can be utilized by him for the payment of the duty on the goods from his factory. This credit is called CENVAT. Please consult the nearest Central Excise Range Office for further information.
Exports and Central Excise
The assessee is required to inform to the Superintendent / Inspector in the Range Office 24 hours in advance about the proposed consignment of export. The Central Excise officer remains present while stuffing the goods in the container. After completion of the stuffing, the container is sealed with the Central Excise seal in presence of the said officer. Necessary documents such as ARE-1, invoice, packing list are also signed by the said officer. Self-sealing facility is also available under which the assessee himself stuffs the container and take clearance thereof. For more details, please contact the nearest Central Excise Range Office.
Subject to prescribed conditions, no Excise duty is payable on the capital goods, raw materials, spares, consumables, etc. procured by the 100% EOU. CT-3 certificate is required to be obtained from the Range Superintendent of Central Excise on the basis of which a 100% EOU can procure duty free indigenous goods.
The 100% EOU is required to file monthly return in prescribed form.