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Excise

Excise

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Excise

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  1. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 1 Name: Central Excise Act 1944 W.e.f.: 28.02.1944 Extends: Whole of India Further Extended to Designated Areas in Continental Shelf & Ex Economic Zones (upto 200 NM) Note: High Sea (beyond 200 NM) = NO ED SEZ (Inside But Excluded from levy) = NO ED Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  2. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 2 Definitions a) Adjudicating Authority He is Central Excise Officer with Quasi Judicial Functions (But =/= Judge) Functions under the Act are Performed by CEO. But Power to take Decision or Pass Order vest with AA. Power rises from AC to CC However Following are not AA • Commissioner (Appeals) • CBEC • CESTAT Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  3. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 2 Definitions aaa) Broker / Comm Agent P in OCB makes Contract for S/P of EG for Others He becomes “Wholesale Dealer” if also acts as Stockiest Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  4. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 2 Definitions b) Central Excise Officer He is equivalent to = Proper Officer in Customs Includes CC to AC/ DC or any other P of CE Dept & Any other P who has been asked to Perform the functions under the Act by Board Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  5. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 2 Definitions c) Curing Process that amounts to Manufacture Hence curer liable to pay ED (Eg Coffee curer) Curing includes following Process Wilting Drying Fermenting Any Other which render unmanufactured product fit for Marketing or manufacture Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  6. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 2 Definitions d) Excisable Goods All those Goods which find place in CE Tariff (Schedule – I) [Eg Salt, But Ladoo are not covered] Goods =/= defined under the Act But as per JP: it must be = MOVABLE & MARKETABLE Both Conditions must be satisfied Actual Sale =/= necessary Again mere salability =/= enough (There should be a Whole Sale Market) FA 2008 added following Explanation w.e.f. 10.05.2008: “Goods includes AMS which is Capable of being B/S for a Consideration. Such Goods deemed to be Marketable” Capable: means Commercially Capable Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  7. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 2 Definitions e) Factory Any Premises (W Registered or not. It may be even a House) Including Precincts(Cycle stand, Canteen, Club inside compound wall) Where EG (OT Salt) = Manufactured Notes: Any place where EG are manufactured = Factory (If Goods =/= ED then Place is =/= Factory) Salt Pans are Excluded from Factory (because keeps on Changing) But Salt is EG But Rate = NIL Must be Nexus b/w Manufacturing Process & Production of EG Every Factory need Registration u/s 6 [Registration is Factory wise & Not Ownerwise] Two Machines with different compound wall = Each one Factory Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  8. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 2 Definitions ee) Fund Consumer Welfare Fund created u/s 12 Refund of Custom, Excise & ST is credited to Fund (& Not given to applicant) Money is used for welfare of consumer Its Different from Consolidated Fund of India (used for welfare of all the People of India) Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  9. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 2 Definitions f) Manufacture Levy of ED is on Manufacture of EG. It’s an inclusive definition As per JP: Manufacture need Process (But every P =/= M) Must be some input which is subjected to Process Process must result in Finished Product with Distinct = NAME, CHARACTER & USE Eg: Cutting of Log of wood (It P but =/= M) Manufacture Vs Production Word “Produce” = used in juxtaposition with word “Manufacture” Main Product (its manufacture) Vs By Product (its produced in Process) For Excisability Manufacture or Production = criteria (Main or By Product = irrelevant) Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  10. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 2 Definitions f) Manufacture i) M includes = Incidental / Ancillary Process Incidental = Occasional Casual Not absolute necessity (Optional) [Painting of Car] Ancillary = Auxiliary (Absolute necessity) (Compulsory) [Packing & Labeling of Drugs] ii) Deemed Manufacture (Inside Factory) As per JP: Tape is Tape (W sound recorded or not) = hence NOT a M But these Processes are now brought under deemed Manufacture. Section Notes & Chapter Notes under Tariff Act mentions Processes that amounts to M Eg. Refining Vegetable Oil iii) Deemed Manufacture (Outside Factory) Processes mentioned under Schedule III [For goods covered by Sec 4A (MRP based valuation) Packing, Repacking, Labeling, Relabeling, Altering Retail Price etc Aim to make product marketable to consumers 2(f) Part II Manufacturer: the word Manufacturer shall be construed accordingly W manufacturing himself or by applying additional labour W for Sale or Captive consumption Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  11. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 3 Charging Section 1) ED = Leviable on All EG M/P = In India All Goods in Schedule- I = Cenvat Duty All Goods in Schedule-II = SED [These all already covered in Schedule-I] ED collected at = Removal (as per Rate in Tariff) EG M/P in = SEZ = Excluded from Levy [Removal to DTA NO ED But attract ALL CD as per Custom Act) EOU/EHTP/STP/BTP = Attract ED on Removal to DTA (But as per Custom Tariff & Valuation)(Only BCD,CVD & Sp CVD) (BCD is exempt upto 50%) Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  12. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 3 Charging Section 1A) Govt Goods: At par with NON Govt Goods 2) Tariff Value TV is Fixed by CG on certain Goods (as per WST Price) (Fluctuate with Change in WST Price) May Vary as per = Class of Goods / Manufacturer / Buyer Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  13. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 3A Levy = Based on Production Capacity [Mandatory] [By FA 2008 wef 10.05.2008] For G Notified by CG = ED payable on basis of Annual Production Capacity APC = determined by AC/DC Paid on Fixed Monthly Basis (M/P or Removal = irrelevant) NA = to Goods M/P in EOU Factory closed for 15Days/M (Then ED Proportionately Reduced) Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  14. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 4 Valuation 1 Applies When ED payable on = Advalorem 1(a) AV => Transaction Value => Invoice Price Conditions There must be = Sale Delivery at = Time & Place of Removal Buyer = Unrelated Person 1(b) IF above conditions are not satisfied. Valuation = as per Valuation Rules 2000 Eg Consignment, Depot T/F, Samples, Explanation SP = 120 (ED not charged assuming Goods are exempted) [treat 120 as CumDuty] CumDuty(@20%) Price 120 [But later on collected 20 as additional Consideration, then 20 will also be treated as cumduty] CumDuty(20%) Price 120 [But Actual @30%, No Additional sum collected] 2 AV = Tariff Value Goods for which Tariff Value is Fixed by CG Price = Sole consideration Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  15. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 4(3) Definitions (a) Assessee: P Liable to pay ED (Includes Agent) (b) Related Person: A & B deemed to be RP Conditions They are: (Inter connected U/K) OR (Relatives) Buyer is: (Relative Cum Distributor of A) OR (Sub Distributor of RCD of A) They have: Mutual Interest in Business of one another (D/IN) Note: ICU = as per MRTP Act Relative = as per 2(41) of Companies Act [Mem of HUF + Spouse + 22 Relations] Two Companies =/= Relative [Even if Directors are Relatives] Mutual Interest = Bilateral [Extent of Interest =/= mentioned] Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  16. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 (c) Place of Removal Three places recocgnised for this Factory (or Any P Where EG = M/P) Bonded Warehouse (or Any P Where EG = permitted to be deposited without paying ED) Depot /Place of C. Agent (or Any P from where EG to be sold after clearance from Factory) (cc) Time of Removal [FA 2003, wef 14.5.2003][Only for Removal from F => D] Time at which they are cleared from Factory Pay ED at the Rate in force on DOR from Factory [On Normal TV at Depot on that Date] Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  17. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 (d) Transaction Value Price actually = Paid/Payable Plus = Any other Amount Buyer is liable to pay to A (in connection with Sale) Plus = Any Amount Charged by Buyer to A (for Adv, Publicity, Marketing, Warranty etc) Less = Taxes & Duties paid or payable on those Goods by A Note: If not possible to determine TV = Then go to Valuation Rules 2000 Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  18. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 4A Retail Sale Price Valuation Conditions Goods = EG Sold in Packages to Consumer RSP is marked on Package (because of Statutory Compulsion)(Std of W&M Act Applies) Lastly Goods = Mentioned in Schedule – III (around 100 Goods) [Eg: Chocolate, Pan Masala, Tooth Powder, Tooth Paste etc] 1) RSP Based Valuation = Above Goods are to be valued as per 4A(2) 2) AV = RSP – Abatement For Different Abatement Rates has been prescribed for different Goods 3) Basis of Abatement RSP include different Taxes Duties & Margins of Traders 4) Offences a) Removal from Factory = (Without Declaring RSP) OR (Declaring False RSP) b) Tampering, Obliterating, Altering = RSP (after Removal) Punishments (Double Blow) Confiscation + RSP determined in prescribed manner Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  19. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 4A Retail Sale Price Valuation Notes: • RSP => its MRP at which Packaged Goods can be sold to ultimate Consumer • But if Price is NOT the Sole Consideration[Then MRP =/= treated as RTP) • Cum Tax or Sans Tax RSP = MRP (Mostly Cum Tax) (Rarely Sans Tax, if permitted by S of W&M Act) • More than One MRP on Package = Highest • MRP at the Time of Clearance = Inc/Dec [Then ED Payable on New MRP] • MRP after removal = Inc [Then Deemed Manufacture for Schedule III Goods] • (In Practice Dealer Takes Credit on Purchase & Pays Duty on Sales) • Diff Packages have Diff MRP for Diff Area/Customers [Each MRP = AV for such A/C] Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  20. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 5 Remission of ED ED attarct on M/P [But Discharged at Time of Removal] ED is Payable on Entrire Qty M/P [& Not on Qty Left & Removed] 1) Natural Loss If there is no theft & Malafide intention Qty Left for Removal < Qty M/P [Buse of Natural Losses] Here CG = Empowered to make Rules for Remission 2) Norms for Rules Nature of EG & Process Period of Storage & Transit Note Upper Limit for % of Remission be fixed Dept will go into the bonafide of Loss due to Flood, Fire, Evoparation Dept will use its discretion for granting remission Theft =/= Natural Loss (NO Remission) % of Loss due to evaporation may vary depending upon Variety, Area, Season Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  21. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 5A Power to Grant Exemption 1) By General Notification CG = If Satisfied that its necessary in Public Interest To Grant Exemption Generally (To All) Through Notification (Absolutely or Subject to condition) Wholly (100% Exemption) Partly (Reduced Rate) Notes: Applies to EG M/P in DTA [EOU/EHTP/STP/BTP cannot enjoy unless covered by Notification] If subject to Condition [Conditions must be stated in Notification, Fulfill after / before clearance] If Its wholly & absolutely = then its Mandatory [A has no Option of not to claim] Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  22. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 5A Power to Grant Exemption 2) By Special Order If CG = Satisfied that its necessary in Pblic Interest To Exempt any EG from ED [Allways 100%] Then May Grant Exemption by “Special Order” In Each Case (case to case basis) Under = Exeptional Circumstances (to be stated in Sp Order) Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  23. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 2A CG Empowered to Clarify the Scope & applicability from DO= N/O (Be effective from DO=N/O) Notes N/O need not be in same form/ method [may be Adveloram or Specific Rate] If Concessional Rate > Tariff Rate [Then will be restricted to TR] Notification = be published & offered for Sale on or Before Date on which it will be effective CG u/s 38 = required to Lay before Parliament Every Exemption Notification u/s 5A(1) Every Sp Exemption Order u/s 5A(2) [OT Order of = Strategic, Secret, Individual,Personal Nature] Placement = Be Soon after issue in Both Houses [For 30 Days in one or more sessions] Any Modification = have Prospective effect only Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  24. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 5B Non Revarsal of Credit A Takes Credit of ED on IP,CG,IPS & Pays ED on FP If Court holds Process =/= M & Duty is not payable on FP Then Credit taken by A need to be Reversed However CG is Empowered to Order Non Reversal of Credit by Manufacturer (If has not obtained the Refund of ED paid on FP) Also Non Reversal of Credit taken by Buyer of said FP Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  25. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 6 Registration Every P handling EG in following manner need Registration M/P or any Process of M/P of EG S/P of EG in Whole Sale Trade including S/P through Agent Storage of EG Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  26. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 9 Offence & Penalties Evasion of ED Removal of EG in Contravention of Act, Rules Handling in manner likely to be confiscated Misuse of Cenvat Failure to supply Information Punishment (First Time Conviction) Duty Effect > 1Lac [Upto 7 yr & Fine] <= 1Lac [Upto 3yr OR Fine OR Both] Punishment (Subsequent Offences) Min 6 Months Upto 7 Yr & Fine Min may be less than 6 Months for = Special & Adequate Reasons Except following Reasons First Time Offence Suffering Punishment 2nd Time under the same Act Accused is not the Principal Offender Age of the Accused Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  27. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 9A Non Cognizable Offences Offence under the Act = Non Cognizable under Cr PC (Action by Police at the instance of Dept only) Offence (u/s 3 to 12 = Levy & collection of ED) = Compoundable by CC (Before /After Prosecution) Except Offence u/s 9 (1) (a) to (c) = Already Compounded in any case Offence Narcotic Drugs & Psychotropic Substances Act 1985 Offence > 1Cr already compounded Court Conviction cases Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  28. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 9AA Offence by Companies Directors & Officers responsible will be booked along with Company 9B Publication of Names Particulars of P convicted may be published at the Cost of offenders 9C Culpable mental State In All Cases Court will assume existence of Culpable mental State Defense will have to prove otherwise Fact is said to be proved when court believe it to Exists = Beyond reasonable Doubt Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

  29. Prof. S. S. Pethe’s Notes = Central Excise Act 1944 9D Relevancy of Statements Statement made by P before CEO(Gazeted Rank) = Relevant (If such P is dead, Missing, incapable etc, It can be admited as Evidence ) 10 Forfeiture Court may Order Forfeiture of Goods, Packages, Conveyance etc to Govt (If Satisfied Offence under the Act/Rule is committed) Prof. S. S. Pethe @ 9860544418 [cacscwa.coach @gmail.com] [Skype: cacscwacoach]

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