Central Excise - ICSI Presentation
Central Excise - ICSI Presentation
Basic Concepts
V S Datey
laws in India
It is mother of all laws in India, law how to
make laws
All other laws and Parliamentary or
Government actions are subordinate to
Constitution.
Act contrary to provisions of Constitution is
Ultra vires the Constitution and void
Constitutional
Background
India, that is Bharat, shall be a Union of States
[Article 1(1)]
Article 246 read with Seventh Schedule gives
bifurcation of powers between Union and
State List I Union List
List II State List
List III Concurrent List
Taxation
in
Union
List
newspapers
Entry 91 - Stamp duty on specified
transactions
Entry No. 92A - Taxes on the Sale or
purchase of goods other than newspapers,
where such sale or purchase takes place in
the course of Interstate trade or
commerce.
List I (Continued)
Entry No. 92C Tax on services (Entry passed
education cess
India
Illustration of Goods
Electricity
Water
Software packaged and tailor made
Air
Photograph
normally salable.
Waste and scrap is dutiable only if
manufactured.
Waste and scrap is dutiable only if it is
specified in Central Excise Tariff
Excisable Goods
Section 2(d) - Excisable Goods means Goods
Manufactured or
Produced
Production is broader than manufacture.
Production
Items like ore, asbestos, coffee, tea, tobacco,
Meaning of Manufacture
Manufacture as specified in various Court
Issues relating to
Manufacture
Repairs, testing
Packing, Labelling not manufacture except
Deemed Manufacture
Processes specified as amounting to
Manufacturer
Section 2(f) - the word manufacturer shall be
Duty Liability
Duty liability is on manufacturer rule 4(1)
Who is Manufacturer
Person who actually brings new and
Principal to Principal
Relation
Contractor undertaking contract work within
Manufacture must be in
India
Imported goods
Imports of CKD packs assembly in India will
not be manufacture
Why Classification?
Classification tells you rate of duty, while
Background of Tariff
Harmonised Commodity Description and
Arrangement of Tariff
Classification of goods from groups to sub-
Eight Digit
classification
First two digits indicate chapter number. Two
Exemption Notification
Notifications are issued by Government by
Notification
Nil duty means the Tariff itself specifies duty
as Nil
Exempt from duty means exempted by a
notification
Some Exemption
Notifications
SSI Exemption 8/2003-CE
Exemption to goods manufactured in
Overview of SSI
Exemption
Notification No. 8/2003-CE dated 1-3-2003
Unit whose turnover was less that Rs 4
Valuation
After determining that excise duty is payable,
Composition Scheme
Compounded levy scheme under rule 15 of
Duty on Production
Capacity
Section 3A of CEA provides for payment of
Tariff Value
In some cases, tariff value is fixed by Government
Ad valorem duty
This is residual method of valuation
Duty is payable on value as per section 4 of
place of removal.
Buyer and assessee should not be related.
Price should be the sole consideration for the
sale.
Each removal will be treated as a separate
transaction and 'value' for each removal will
be separately fixed.
Inclusions in Assessable
Value
Packing
Valuation Rules
If transaction value is not acceptable,
Job Work
Since excise duty is on manufacture, duty
Basics of Vat
Vat is tax on value added
Broadly, value added is difference between
100
110
40
165
35
100
10
150
15
200
20
110
165
220
Details
Purchase
s
Value
Added
Subtota
l
Add Tax
Total
Transaction without
VAT
A
-
B
110
100
A
-
B
100
40
100
40
100
150
100
140
10
110
15
165
10
110
14
154
Highlights of Cenvat
Instant Credit You need not wait till actual
use
One to one co-relation not required in
Vat/Cenvat
Credit on inputs, input services as well as
capital goods
Destination principle
Other procedures
Exports
Receipt of goods for repairs/reconditioning
Provisional assessment
Warehousing of goods
Adjudication, appeals and settlement
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