Central Excise

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.

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.

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 officer. Introduction of self – removal procedure was a watershed in the excise procedures. The assessees were allowed to quantify the duty on the basis of approved classification list and the price list and clear the goods on payment of appropriate duty.

In 1994, the gate pass system gave way to the invoice-based system and all the 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 present.

The earlier system of fortnightly payment of duty introduced in 2000 has been replaced by monthly payment of duty w.e.f 1.3.2003. Central Excise Rules, 2002 introduced vide Notification No.4/2002-C.E (N.T) dated 1.3.2002, superseded the earlier Central Excise (No.2) Rules 2001. Subsequently CENVAT Credit Rules, 2004 etc. have been notified. With the introduction of new Rules, procedures have been simplified. Budget day restrictions were also removed w.e.f. 12.2.2003.

Administration of Central Excise

The Central Excise law is administered by the Central Board of Excise and Customs through its field offices, the Central Excise Commissionerates. For this purpose, the country is divided into 23 Zones and each Zone is headed by a Chief Commissioner of Central Excise. There are 101 Commissionerates in these Zones, headed by Commissioners of Central Excise. Divisions and Ranges are the next formations, headed by Deputy/Assistant Commissioner of Central Excise and Superintendents of Central Excise respectively.

For enforcing the Central Excise law and collection of Central Excise duty the following types of procedures are being followed. 1. Physical Control - Applicable to Cigarettes only. In such clearances, assessment precedes clearance which takes place under the supervision of Central Excise Officers. 2. 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.

Service Tax

Service tax, as the name suggests, is a tax on Services. It is a tax levied on the transaction of certain services specified by the Central Government under the Finance Act, 1994. It is an indirect tax (akin to Central Excise Duty or Sales Tax) which means that normally, the service provider pays the tax and recovers the amount from the recipient of taxable service.

The tax is administered by the Central Government under the authority of Entry 97 of Schedule VII of the Constitution of India. The Central Government levies service tax through Chapter V of the Finance Act, 1994. The taxable services are defined in Section 65 of the Finance Act, 1994. Section 66 is the charging section of the said Act.

Service Tax was levied w.e.f 1.7.1994 for the first time on three Services viz Telephones, Stock Brokers & General Insurance. Its scope has since been expanding tremendously. Presently Service Tax is levied on 112 Services.