Excise duty borne by customer ?

Excise duty is a duty in the goods manufactured and NOT on the Goods Sold. Hence sale value is not taken, only the COST OF PRODUCTION forms the basis of Excise Duty.

VAT is a multi-point tax on value addition which is collected at different stages of sale with a provision for set-off for tax paid at the previous stage/tax paid on inputs.

But at the time of goods being sent from the manufacturer to wholesaler or any agent, the invoice contains both VAT and Excise . So its atleast a 2 form tax on one single amount . If a manufacturer invoices goods worth Rs.1,00,000 then he charges Excise Duty - 16% + Cess on 1,00,000 and also VAT 4% on same amount of Rs.1,00,000 . So isnt it tax collected in 2 different forms for the same amount of Rs.1,00,000 ???

Originally posted by : Aditya Jain
	But at the time of goods being sent from the manufacturer to wholesaler or any agent, the invoice contains both VAT and Excise . So its atleast a 2 form tax on one single amount . If a manufacturer invoices goods worth 1,00,000 then he charges Excise Duty - 16% + Cess on 1,00,000 and also VAT 4% on same amount of 1,00,000 . So isnt it tax collected in 2 different forms for the same amount of 1,00,000 ???

at manufacturing point excise duty is charged at the time of clearance, 

at trading points excise duty is not claimed as input, and as trader is not a manufacturer, he is not entitled to pay excise duty, but the goods are deemed as duty paid from the point of manufacture, 

sales tax/ vat/ cst is the tax which is charged on sales, not on manufacturing, so its get charged and paid at the time of sales, while excise is a manufacturing tax, hence its charged only at the point of manufacture. 

Dear Aditya

In a simple manner, Excise is a manufacturing tax. When you have manufactured some finished products, then you are being liable to pay excise duty . But there is a provision in excise, to pay excise duty at the time of its clearance.

So on the other hand, Sales tax is chagred at the the of SALE. so it is called sales tax. Sales tax can be on form of VAT & CST.

When there is a inter unit transfer of goods, excise duty wil be paid but sales can not be . Because sale has not taken the place.

Hope, the things are clear now.

Regards

HS Negi

Hey thanks for the explanation . I am clear now that Sales tax is on Sales and Excise Duty is on manufacture . The example of Inter Unit transfer made things clear .

But the point is still the same right ? On the same amount, Excise Dpartment also claims Tax at time of clearing and Also Sales tax Department claims tax when the clearing of goods is done to SELL it to someone .

If i do a costing of Inter Unit Transfer of a good passing through 3 process :

Process 1 - Cost - 30000 - I Pay E.D. on 30000

Process 2 - Cost - 25000 - I Pay E.D. on 25000

Final Process 3 - Cost 45000 - I Pay E.D. on 45000

Then when i sell such a Finished Good worth Rs.1,00,000 adding my margin 10% - Rs.1,10,000 then i pay Sales Tax on entire 1,10,000 . So the portion of Rs.1,00,000 is being Taxed 2 times . One by the Excise Department and one by Sales Tax Department right ?

Originally posted by : Aditya Jain
	Hey thanks for the explanation . I am clear now that Sales tax is on Sales and Excise Duty is on manufacture . The example of Inter Unit transfer made things clear . But the point is still the same right ? On the same amount, Excise Dpartment also claims Tax at time of clearing and Also Sales tax Department claims tax when the clearing of goods is done to SELL it to someone . If i do a costing of Inter Unit Transfer of a good passing through 3 process : Process 1 - Cost - 30000 - I Pay E.D. on 30000 - it should be the transaction value e g materials plus processing charges Process 2 - Cost - 25000 - I Pay E.D. on 25000 - if process 2 is done on process 1, then process 1 value would be added when making clearance from process 2 site Final Process 3 - Cost 45000 - I Pay E.D. on 45000 - it will add process 1 and 2 value also Then when i sell such a Finished Good worth 1,00,000 adding my margin 10% - 1,10,000 then i pay Sales Tax on entire 1,10,000 . So the portion of 1,00,000 is being Taxed 2 times . One by the Excise Department and one by Sales Tax Department right ?

if the goods move from one manufacturer to another for further process, then the goods would be taxed in whole at the time of clearance, ( input credit can be availed by manufacturer on past receipt)

sales tax is payable on goods value + ED value

Ya exactly . Thanks a lot sir . Now i am very much clear about it . Thanks everyone for ur help .