INTRODUCTION AND AN OVERVIEW OF CENTRAL EXCISE - CBEC Manual (OLD) - Central Excise

CHAPTER 1 INTRODUCTION AND AN OVERVIEW OF CENTRAL EXCISE PART-I INTRODUCTION 1. Scope of this Manual 1.1 These instructions are supplemental to, and should be read in conjunction with the Central Excise Rules, 2002 (hereinafter referred to as the 'said Rules'). Only the general provisions and procedures applicable to the 'Manufactured Products' have been incorporated in this Manual. These instructions are applicable throughout India and should not be departed from, without the previous approval of the Commissioner, who will, where necessary, obtain Board's sanction for the deviations. 1.2 The Commissioner, the Chief Commissioner or Board, under Rule 31 of the said Rules are empowered to issue written instructions providing for any supplemental matters arising out of the said Rules. Such instructions may, where the Commissioner considers absolutely essential, permit temporary deviation from the standing instructions. However, such instructions should be at once communicated to the Board and unless of purely local interest, they will normally, if approved, be subsequently incorporated in this Manual. Additional/Joint Commissioners, Deputy/ Assistant Commissioner and Superintendent of Central Excise will be primarily responsible in their jurisdiction for the proper observance of the procedures and checks prescribed in this Manual, and the other instructions of the Board. They should refer any doubtful point for clarification to their immediate superior. 2. Publishing of Manual and amendments 2.1 The Manual will be published by way of placing it on Web-site www.cbec.gov.in and www.finmin.nic.in and also by printing hard copies/ making CDs by the Directorate of Publication and Publicity. This Manual will be made available for the trade and industry at such price as may be fixed from time to time by the Directorate. Amendments and additions to this Manual will be based upon the instructions issued by the Board and will be carried on, as far as possible, every year, in the month of September. PART -II AN OVERVIEW OF CENTRAL EXCISE 1. Brief history and developments 1.1 Central Excise duty is an indirect tax levied on goods manufactured in India. The tax is administered by the Central Government under the authority of Entry 84 of the Union List (List 1) under Seventh Schedule read with Article 246 of. the Constitution of India. 1.2 The Central Excise duty is levied in terms of the Central Excise Act, 1944 and the rates of duty, ad valorem or specific, are prescribed under the Schedule I and II of the Central Excise tariff Act, 1985. The taxable event under the Central Excise law is 'manufacture' and the liability of Central Excise duty arises as soon as the goods are manufactured. The Central Excise officers are also entrusted to collect other types of duties levied under Additional Duties -(Goods of Special Importance) Act, Additional Duties (Textiles and textiles Articles) Act, and Cess etc. 1.3 Till 1969, there was physical control system wherein each clearance of manufactured goods from the factory was done under the supervision of the Central Excise Officers. Introduction of Self-Removal procedure was a watershed in the excise procedures. Now, the assessees were allowed to quantify the duty on the basis of approved classification list and the price list and clear the goods dear on payment of appropriate duty. 1.4 In 1994, the gate pass system gave way to the invoice-based system ,and all clearances are now effected on manufacturer's own invoice another major change was brought about in 1996, when the Self-Assessment system was introduced. This system is continuing at the present time. The assesses himself assesses his Tax Return and the Department scrutinizes it or conduct selective audit to ascertain correctness of the duty payment. Even the classification and value of the goods have to be merely declared by the assessee instead of obtaining approval of the same from the Department. 1.5 The earlier system of fortnightly payment of duty introduced in 2000 has been replaced by monthly payment of duty with effect from 1.3.2003 vide Notification No. 12/2003-.E. N.T.), dated 1.3.2003 (for details refer to Chapter 3 of this Manual). 1.6 Central Excise Rules, 2002 introduced vide Notification No 4/2002-.C.E. (N.T.), dated 1-3-2002; superseded the earlier Central Excise (No .2) Rules, 2001. Other rules have also been notified namely, CENVAT Credit Rules ,2004, Central Excise (Appeal) Rules, 2001 etc. With the introduction of the new rules several changes have been effected in the procedures. The new procedure are simplified. There are less numbers of rules, only 37, in all, as compared to 234 earlier. Classification declaration and Price declarations have a1so been dispensed with, the CENVAT Declaration having been earlier dispensed with in the year 2000 itself. 1.7 Budget day restrictions were removed with effect from 12.2.2003 vide Notification No. 6/2003-C.E. (N.T.), dated 11-2-2003, which omitted Rule 32of Central Excise Rule, 2002. (Circular No. 691 /7/2003-CX dated 11-2-2003) 1.8 In 2003, special procedure was introduced for textile and textile articles including independent weavers of unprocessed fabrics. For details, Chapter 12 of Central Excise Manual may be referred to. However, these provisions are no longer applicable. 2. Administration of Central Excise 2.1 The Central Excise law is administered by the Central 'Excise and Customs (CBEC or Board) through its field offices, the Central excise Comrnissionerates. For this purpose, the country is divided into 23 Zones and a Chief Commissioner of Central Excise heads each Zone. There are total 93 Commissionerates in these Zones headed by Commissioner of Central Excise. Divisions and Ranges are the subsequent formations, headed by Deputy/ Assistant Commissioners of Central Excise and Superintendents of Central excise, respectively. 2.2 For enforcing the Central Excise law and collection of Central Excise duty the following types of procedures are being followed by the Central Excise' Department: (a) Physical Control-Applicable to cigarettes only. In such clearances, assessment precedes clearance which takes place under the supervision of Central Excise Officers; (b) Self-Removal Procedure - Applicable to all other goods produced or manufactured within the country. Under the system, the assessee himself determines the duty liability on the goods and clears the goods. 3. Tax payers' assistance and responsiveness 3.1 The CBEC has issued instructions from time to time for rendering assistance to the taxpayers in the Commissionerates of Central Excise and Divisional Offices. These offices are duty bound to provide necessary guidance to the public in all matters concerning Central Excise Law, procedure, tariff and exemptions etc. 3.2 The Commissioners of Central Excise are required to depute knowledgeable officers of appropriate rank, senior Inspector or Superintendent to be in-charge of Tax-payers' Assistance Unit in each Commissionerate and Divisional headquarter. The officer will have easy access to the Deputy! Assistant Commissioners, Additional/Joint Commissioner and Commissioner to seek their advice and guidance on the spot in case of genuine doubts. 3.3 The Tax-payers' Assistance Unit in addition to rendering advice to the assessees, should also help them in meeting the officer concerned for necessary guidance, and clarification, where required. 3.4 In order to have a responsive tax administration, the Board has decided that all intimations, declarations and queries received from the Members of trade and industry should be replied to in a time bound manner and with a sense of responsibility and accountability. In order to achieve this, the following directions have been issued to the Central Excise field formations: (1) All declarations, intimations, etc. when sent by FAX, e-mail, by post or by Courier shall be accepted by the field formations. (2) Appointments should be given on e-mail on request from the trade; (3) All queries by e-mail should be accepted and the replies sent by e mail; (4) Any query received from the trade must be answered within a maximum of four weeks from the date of receipt; (5) To make e-mail an effective mode of communication between the Department and the public, e-mail connectivity should be provided to all offices in the field formations and properly maintained and wide publicity of the e-mail address should also be given. 3.5 For Small Scale Industry the concept of Tax Clinics has been introduced w.e.f. 1-9-2003 with a view to provide assistance and guidance to small manufacturers in complying with the law. Each Central Excise Division will have one tax clinic for small-scale manufacturers. The said clinic is a step towards educating the small scale manufacturers about their legal responsibilities, guiding them in their conduct of tax administration and breaking the communication wall if any, between the small scale manufacturers and tax administrators. (Circular No. 735/51/2003-CX, dated 7-8-2003).