CENTRAL EXCISE RULES, 2017 – PART I

[Mr. M. GOVINDARAJAN]

The GST subsumes excise duty, service tax and other indirect taxes levied by the State Governments.  After the implementation of GST, the Central Government, in exercise of the powers conferred by Section 37 of the Central Excise Act, 1944 and in supersession of the Central Excise Rules, 2002, except as respect of things done or omitted to be done before such supersession, made the ‘Central Excise Rules, 2017’(‘Rules’ for short).

These Rules contains 35 rules.  They extend to the whole of India.  These Rules came into force with effect from 01.07.2017.

Registration

Rule 9 provides that every person, who produces, manufactures, carries on trade, holds private store room or warehouse or otherwise uses excisable goods or an importer who issues an invoice on which CENVAT credit can be taken, shall get registered.  The registration obtained under Central Excise Rules, 2002 shall be deemed to be valid as the registration made under these rules.  The Board may, by notification and subject to such conditions or limitations as may be specified, specify person or class of persons who may not require such registration.  The registration is subject to such conditions, safeguards and procedures as may be specified in the notification.

Duty payable on removal

Rule 4 provides that every person who produces or manufactures any excisable goods or stores such goods in a warehouse shall pay the duty in the prescribed manner.   No excisable goods shall be removed without payment of duty from any place, where they are produced or manufactured or from a warehouse, unless otherwise provided.  The Principal Commissioner or Commissioner may permit  to remove the goods without payment of duty subject to such condition as he may specify, in exceptional cases considering the nature of goods and shortage of storage space of the premises.

Valuation

Rule 5 provides that the rate of duty or tariff value applicable to any excisable goods shall be the rate or value in force on the date when such goods are removed from a factory or a warehouse.    If any excisable gods are used within the factory, the date of removal of such goods shall mean the date on which the goods are issued for such use.

Self Assessment

The assessee shall himself assess the duty payable on excisable goods.  In case of cigarettes, the Superintendent or Inspector shall assess the duty payable before removal by the assessee.

Provisional assessment

Rule 4 provides for provisional assessment.  Where the assessee is unable to determine the value of excisable goods or determine the rate of duty applicable thereto, he may request the Assistant Commissioner/Deputy Commissioner in writing giving reasons for payment of duty on provisional basis.  The concerned officer may order allowing payment of duty on provisional basis at such rate on such value as may be specified by him.

The assessee, for this purpose, is to execute a bond in the form prescribed by the Board with such other surety or security in such amount as the Assistant/Deputy Commissioner deem fit, binding the assessee for payment of difference between the amount of duty as may be finally assessed and the amount of duty provisionally assessed.

The concerned officer shall pass order for final assessment as soon as may be, after the relevant information, as may be required for finalizing the assessment is available, but within a period of not exceeding six months from the date of communication of the order issued.  The said period may be extended on sufficient cause being shown and the reasons to be recorded in writing by the Principal Commissioner or Commission for a further period not exceeding 6 months and by the Principal Chief Commissioner or Chief Commissioner for such further period as he may deem fit.

The assessee shall be liable to pay interest on any amount paid or payable on goods under provisional assessment, but not paid on the due date at the rate specified by the Central Government under section 11AA of the Act, for the period starting with the first day after the due date till the date of actual payment, whether such amount is paid before or after the issue of order for final assessment.

If the assessee is entitled for refund consequent to an order of final assessment there shall be paid an interest on such refund as provided under section 11BB of the Act.

Any amount refund shall be credited to the Fund.  The amount of refund, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to-

• the duty of excise paid by the manufacturer, if he had not passed on the incidence of such duty to any other person; or
• the duty of excise borne by the buyer, if he had not passed on the incidence of such duty to any other person.

Payment of duty

Rule 8 provides for the manner of payment of excise duty.  The duty on the goods removed from the factor or a warehouse during a month shall be paid by 6^th day of the following month if the duty is paid electronically through internet banking and by the 5^th day of the following month, in any other case.   In case of goods removed during the month of March, the duty shall be paid by 31^st March itself.

If an assessee is eligible to avail of the exemption under a notification based on the value of clearances in a financial year, the duty on goods cleared during a quarter of the financial year shall be paid by the 6^th day of the month following that quarter, if the duty is paid electronically through internet banking and in any other case, by the 5^th day of the month following that quarter.  For the last quarter the duty is to be paid on 31^st March itself.

Every assessee shall electronically pay the duty through internet banking.  The Assistant/Deputy Commissioner, for reasons to be recorded in writing, may allow an assessee payment of duty by any mode other than internet banking.

The duty of excise shall be deemed to have been paid for the purposes of these rules on the excisable goods removed and the credit of such duty allowed, as provided by or under any rule.

Failure to pay duty

If the assessee fails to pay the duty, he shall be liable to pay the outstanding amount along with interest at the rate specified by the Central Government vide notification under Section 11AA of the Act on the outstanding amount, for the period starting with the first day after due date till the date of actual payment of the outstanding amount.

If the assessee fails to pay the duty declared as payable by him in his return within a period of one month from the due date, then the assessee is liable to pay the penalty at 1% on such amount of the duty not paid, for each month or part thereof calculated from the due date, for the period during which such failure continues.

Recovery of duty

Rule 8(6) provides that the provisions of Section11 of the Act shall be applicable for recovery of duty as assessed and mentioned in the return, the interest and the penalty in the same manner as they are applicable for recovery of any duty or other sums payable to the Central Government.

The duty liability shall be deemed to have been discharged only if the amount payable is credited to the amount of the Central Government by the specified date.  If the assessee deposits the duty by cheque, the date of presentation of the cheque in the bank designated by the CBE&C for the purpose shall be deemed to be the date on which the duty has been paid subject to realization of that cheque.

Daily stock account

Rule 10 provides that every assessee shall maintain proper records, on daily basis, in a legible manner indicating the particulars regarding description of the goods produced or manufactured, opening balance, quantity produced or manufactured, inventory of goods, quantity removed, assessable value, the amount of duty payable and particulars regarding the amount of duty actually paid.

The first page and last page of each such account shall be duly authenticated by the producer or the manufacturer or his authorized agent.  All such records shall be preserved for a period of five years immediately after the financial year to which such records pertain.  The records may be preserved in electronic form and every page of the record so preserved shall be authenticated by means of a digital signature.  The Board may, by notification, specify the conditions, safeguards and procedure to be followed by an assessee preserving digitally signed records.

Goods to be removed on invoice

Rule 11 provides that the excisable goods shall be removed from a factory or a warehouse under an invoice signed by the owner of the factory or his authorized agent.  IN case of cigarettes, each such invoice shall also be countersigned by the Inspector or the Superintendent before the cigarettes are removed from the factory.  The invoice shall be serially numbered and contain the registration number, address of the division, name of the consignee, description, classification, time and date of removal, mode of transport and vehicle registration number, rate of duty, quantity and value of goods and the duty payable thereon.   In case of a proprietary concern or a business by HUF shall also be mentioned in the invoice.

If the goods are directly sent to a job worker on the direction of a manufacturer, the invoice shall also contain the details of the manufacturer as buyer and contain the details of the job worker as the consignee.  If the goods are directly sent to any person on the direction of the registered dealer, the invoice shall also contain the details of the said registered dealer as the buyer and the person as the consignee and that person shall take CENVAT credit on the basis of the registered dealer’s invoice.  If the goods are imported under the cover of a bill of entry are sent directly to buyer’s premises, the invoice issued by the importer shall mention that goods are sent directly from the place or port of import to the buyer’s premises.

Preparation of invoice

The invoice shall be prepared in triplicate in the following manner-

• the original copy being marked as Original for buyer;
• the duplicate copy being marked as Duplicate for transporter;
• the triplicate copy being marked as Triplicate for assessee.

Invoice book

Only one copy of invoice book shall be use at a time, unless otherwise allowed by the Assistant Commissioner of Central Excise in the special facts and circumstances of the case.  Before making use of the invoice book, the serial numbers of the same shall be intimated to the Superintendent of Central Excise having jurisdiction.

Invoice for import

The provisions of these rules shall apply mutatis mutandis to goods supplied by an importer who issues an invoice on which CENVAT credit can be taken or a first stage dealer or a second state dealer.   In case of the first stage dealer receiving imported goods under an invoice bearing an indication that the credit of additional duty shall not  be admissible, the said dealer shall on the resale of the said imported goods, indicate on the invoice issued by him that no credit of additional duty shall be admissible.  In case of the second stage dealer, receiving imported goods under an invoice bearing an indication that the credit of additional duty of customs levied on the said goods shall not be admissible, the said dealer shall on the resale of such imported goods, indicate on the invoice issued by him that no credit shall be admissible.

Digital signature

An invoice issued under this rule by a manufacturer may be authenticated by means of a digital signature.  Where the duplicate copy of the invoice meant for transporter is digitally signed, a hard copy of the duplicate copy of the invoice meant for the transporter shall be used for transport of goods.  The Board may, by notification, specify the conditions, safeguards and procedure to be followed by an assessee using digitally signed invoice.

Filing of return

Monthly return

Rule 12 provides for filing of return by an assessee.  Every assessee shall submit to the Superintendent of Central Excise a monthly return in the form specified by notification by the Board, of production and removal of goods and other relevant particulars within 10 days after the close of the month to which the return relates.  An assessee, manufacturing pan masala containing tobacco falling under tariff item 2403 99 90 and paying duty more than ₹ 5 lakhs in the month, shall also file, along with the return, for the month to which the said return relates, a statement summarizing-

• the purchase invoices for the month with the names and addresses of the suppliers of betel nut, tobacco and packing material along with the quantity of the said goods purchased; and
• the sales invoices for the month and with the names and addresses of the buyers, description, quantity and value of goods sold by the assessee.

When the goods are not sold from the factory, the address of the premises to which the goods are dispatched from the factory shall be provided.  Where an assessee is eligible to avail of the exemption he shall file a quarterly return in the form specified, of production and removal of goods and other relevant particulars within 10 days after the close of the quarter to which the return relates.

The assessee shall be eligible, if his aggregate value of clearances of all excisable goods for home consumption in the preceding financial year computed in the manner specified did not exceed ₹ 4 crores.

Annual return

Every assessee shall submit to the Superintendent of Central Excise, an Annual return for the preceding financial year to which the return relates in the form specified by notification by the Board by 30^th day of November of the succeeding year.   The Central Government may specify assessee or class of assessees who may not be required to submit such an Annual Return.  These provisions shall mutatis mutandis apply to a 100% EoU.

Revised return

An assessee may submit a revised return by the end of the calendar month in which the original return is filed.  An assessee who has filed Annual Return by the due date may submit a revised return within a period of one month from the date of submission of the said Annual Return.

Scrutiny of returns

The proper officer may on the basis of information contained in the return filed by the assessee and after such further enquiry as he may consider necessary, scrutinize the correctness of the duty assigned by the assessee on the goods removed, in the manner to be prescribed by the Board.  Every assessee shall make available to the proper officer all the documents and records for verification as and when required by such officer.

Late fee

Where any return is submitted by the assessee after due date the assessee shall pay to the credit of the Central Government an amount calculated at the rate of ₹ 100/- per day subject to a maximum of ₹ 20,000/- for the period of delay in submission of each such return or statement.

Restrictions in certain type of cases

Rule 13 provides that where the Central Government, having regard to the extent of evasion of duty, nature and type of offences or such other facts as may be relevant, is of the opinion that in order to prevent evasion of, or default in payment of duty, it is necessary in the public interest to provide for certain measures including restrictions on a manufacturer, a registered importer, first stage and second stage dealer or an exporter may specify the nature of restrictions including suspension of registration in case of an import or a dealer, types of facilities to be withdrawn and procedure for issue of such order by the Principal Chief Commissioner of Central Excise or Chief Commissioner of Central Excise.

Special procedure for payment of duty

Rule 14 provides that the Central Government may specify goods, in a notification,  in respect of an assessee shall have an option to pay the excise duty on the basis of such factors as may be relevant to production of such goods and at such rate as may be specified, subject to limitations and conditions, including those relating to interest or penalty as may be specified.   The Central Government can also specify the manner of making an application for availing of the special procedure for payment of duty, the abatement, if any, that may be allowed on account of closure of a factory during any period and any other matter incidental thereto.

Return of goods

Rule 15 provides that where any goods on which duty has been paid at the time of removal thereof are brought to any factory for being re-made, refined, re-conditioned or for any other reason, the assessee shall state the particulars of such receipt in his records and shall be entitled to take CENVAT credit of the duty paid as if such goods are received as inputs under CNEVAT Credit Rules, 2017 and utilize his credit according to the said rules.

If the process to which the goods are subjected before being removed does not amount to manufacture, the manufacturer shall reverse the CENVAT credit taken.  In any other case the manufacturer shall pay duty on goods received at the rate applicable on the date of removal and on the value determined.

If there is any difficulty the assessee may receive the goods for being re-made, refined, re-conditioned or for any other reason and may remove the goods subsequently, subject to such conditions as may be specified by the Principal Commissioner or Commissioner.