Excise Duty

What is Excise Duty? Is it collected by the State Government or the Central Government? How is it different from Sales Tax?

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 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.


What categories of persons are required to obtain registration with the Central Excise department?

Subject to specified conditions, generally the following categories of persons are required to get themselves registered with the Central Excise department:

(i) Every manufacturer of dutiable excisable goods;

(ii) First and second stage dealers or importers desiring to issue Cenvatable invoices;

(iii) Persons holding bonded warehouses for storing non-duty paid goods;

(iv) persons who obtain excisable goods for availing end-use based exemption.


Is there any category of persons who are exempt from obtaining registration?

Yes. Subject to specified conditions, the following categories of persons need not obtain Central Excise registration.

(i) Manufacturers of goods which are chargeable to nil rate of duty or are fully exempt;

(ii) 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;

(iii) Job-workers of ready-made garments if the principal manufacturer undertakes to discharge the duty liability;

(iv) Approved/licensed units in Export Processing Zones, Special Economic Zones and 100% Export Oriented Units.


What is the procedure for obtaining 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, as far as possible.


What are the items on which Central Excise duty is leviable?

All goods listed in the Central Excise Tariff Act, 1985 attract Central Excise duty unless specified to the contrary in the Act itself or under any notification issued under the Central Excise Act, 1944 by the appropriate statutory authority.


Who is liable 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.



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