FAQ ON CENTRAL EXCISE - Central Excise Practice Manual (OLD) - Central Excise

PART- V: FREQUENTLY ASKED QUESTIONS - FAQ ON CENTRAL EXCISE 1. 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 the 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. 2. Whether a manufacturer or producer of goods is required to obtain a license from the Central Excise department for payment of Central Excise duty? No license is required and a simple registration with the Central Excise department would suffice. 3. 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. 4. 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 exceeds Rs.90 lakhs, they should give the prescribed declaration to the Jurisdictional AC/DC; (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. 5. 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 verification, Registration certificate in Form RC is normally issued immediately, as far as possible. 6. 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. 7. Who is liable to pay Central Excise duty? 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. 8. What is the rate of duty on various category of goods? The rate of duty on each item is specified in the Central Excise Tariff Act, 1985 . In some cases, the statutory rates of duty have been lowered or reduced to Nil by the Central Government in terms of Section 5A of the Central Excise Act, 1944. Anyone interested in knowing the effective rates of duty in respect of any goods must refer to the Tariff or seek guidance from the nearest Central Excise Officer, if necessary. 9. Is there any exemption from payment of duty for Small Scale Industries? The Small Scale Units, which manufacture the goods specified in the relevant exemption Notifications and fulfill the conditions specified in such exemption Notifications, are exempt from payment of duty till their aggregate value of clearances do not exceed Rs.1.5 Crores in a financial year. The Small-Scale units whose clearances in the previous financial year exceeded the limit of Rs.4 Crores (including the value of exempted goods but excluding the value of export clearences), are not entitled to such exemption. For further details, please consult the nearest Central Excise Range Office. 10. What is the period for filing returns by the assessee? An SSI unit is required to file returns on quarterly basis within 20 days from the date of completion of the quarter, but non-SSI units are required to file returns on monthly basis within 10 days from the date of completion of the month. 11. What action department takes for non-filing of returns? A penal action is envisaged on failure to file the returns in time. Penalty may extend upto Rs.5000/- 12. How and when Central Excise duty is to be paid? An SSI unit has to pay duty on monthly basis by 15 th of the succeeding month (16 th in case of e-payment). Other units are required to pay duty on monthly basis within 5 days (6 days in case of e-payment) of completion of the month in question. The assessee is required to deposit the amount of duty payable in the nominated bank along with the prescribed GAR-7 Challan and on this amount being credited in the government account, he can take credit in the PLA register. Such credited amount can then be utilized for discharging the duty on goods cleared from his factory. However, for the month of March, the duty has to be paid by 31 st March, both for SSI and Non SSI units. Further, in case of default in payment of duty, the interest is leviable @ 13% starting from the date on which the duty was required to be paid till the date of payment (subject to the interest not exceeding the duty amount). 13. What is the facility for mitigating the cascading effect of duty? What is CENVAT? In order to mitigate the cascading effect as a result of duty on duty, CENVAT Credit scheme is introduced under the CENVAT Credit Rules, 2004 facilitating the manufacturers/ Service providers to avail the credit of duties/Tax paid on the inputs/Capital goods/ Input services, subject to certain conditions. To avail the facility, the assessee has to obtain the documents specified in the CCR from the consignor and take credit of such duty amount in the account maintained for this purpose. The Credit can be utilized for the payment of the duty on the goods cleared from his factory. Please consult the nearest Central Excise Range Office for further information. 14. What formality of Customs is to be fulfilled at the time of export from the factory or what is the procedure for export of goods? The assessee is required to inform the Superintendent/Inspector in the Range Office 24 hours in advance about the proposed consignment of export. The Central Excise officer remains present while stuffing the goods in the container. After completion of the stuffing, the container is sealed with the Central Excise seal in the presence of the said officer. Necessary documents such as ARE-1, invoice, packing list are also signed by the said officer. Self-sealing facility is also available under which the assessee himself stuffs the container and effects clearance. For more details, please contact the nearest Central Excise Range Office. 15. Whether Central Excise registration is separately required by 100% EOU? No. The licence granted by the jurisdictional Customs Officer under Section 58 of the Customs Act, 1962 is sufficient. However, in case of clearance of goods to Domestic tariff area (D.T.A.), Registration is required under the Act. 16. What benefit does a 100% Export Oriented Unit get from the Central Excise? Subject to prescribed conditions, no Excise/Customs duty is payable on the capital goods, raw materials, spares, consumables, etc imported/indigeneously procured by the 100% EOU. 17. What is the procedure to be followed for setting up a 100% EOU? On obtaining LOP from the Development Commissioner, a manufacturer is required to approach the Commissioner of Central Excise for declaration of the place as a warehousing station under Section 9 of the Customs Act. Thereafter, the manufacturer is required to obtain private bonded warehouse licence under Section 58 of the Customs Act and permission to manufacture goods under Section 65 of the Customs Act from the jurisdictional Deputy/ Assistant Commissioner. 18. What is CT-3 certificate and who issues it? CT-3 certificate is required to be obtained from the Range Superintendent of Central Excise on the basis of which a 100% EOU can procure duty free indigenous goods. 19. What is the periodical return to be filed by a 100% EOU and when? The 100% EOU is required to file monthly return in the prescribed form. 20. Is it permissible for 100% EOU to sell the goods in local market? Yes. Under certain circumstances, 100% EOUs are permitted by the Development Commissioner to sell the goods in the local market on payment of appropriate duty. (Based on the material downloaded from CBEC website: www.cbec.gov.in) MILESTONES OF THE DEPARTMENT In tune with the liberalization policy of the Government, the Department undertakes various innovative initiatives periodically to serve the Nation as well as the Trade and General Public. The significant milestones of the Department in the journey towards Trade facilitation are as follows: 1969: The "Physical Control System" was replaced by "Self Removal Procedure" signalling the change of attitude of the Department towards the assessees. 1986: MODVAT scheme (presently known as CENVAT Scheme) was introduced to facilitate the manufacturers to set off the duty paid on the inputs and capital goods against the duty payable on the final products. 1994: Service Tax, the new concept of levying tax on the services was introduced for the first time with an initial coverage of 3 services. The coverage has now expanded to 106 services. 1994: The gate pass system for clearance of Excisable goods based on the authentication of the Officers of the Department was replaced with Invoice system facilitating the assessees to remove the goods based on their own Invoice with the authentication of the Authorized representative of the assessees. 1996: The "Self Assessment Procedure" was introduced in the year 1996 which vested total freedom and trust in the assessees. 2003: The restrictions for movement of excisable goods on the Budget day were removed. 2004: Cenvat Credit Rules, 2004 was introduced to facilitate both manufacturers and service providers for availment of Cenvat credit of duty/tax paid on the inputs, input services and Capital goods. Trade friendly measures of the Commissionerate The Coimbatore central Excise Commissionerate ever since its creation in 1983 is undertaking various Trade friendly measures with a view to facilitate the Trade and Industry to comply with the statutory provisions voluntarily for building a stronger Nation. The steps taken in this direction are as follows: * The assessees are educated and encouraged to opt for e-filing of the Returns and for e-payment of the duties/Tax. This Commissionerate enjoys the proud distinction of being the first to facilitate e-filing of the Return; * Public Grievance Committee Meetings and Regional Advisory meetings are convened periodically to redress the grievances of the assessees and to provide solution for their problems relating to taxation; * For the benefit of the Central Excise and Service Tax assessees, the Pilot Project of ACES (Automation of Central Excise and Service Tax) is proposed to be launched to enable online transactions in a hassle free manner. * For the benefit of the Exporters and Importers, ICES 1.5 Project is proposed to be launched to enable the Exporters and Importers to file the Bills and most of the transactions online including receipt of Drawback payments; The journey continues ..