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Central Excise Duty
is an indirect tax imposed on those goods which are fabricated in India and are meant for home consumption. This indirect tax is administered by the Central Government under the authority of Entry 84 of the Union List (List 1) under Seventh Schedule read with Articles 268 to 281 of the Constitution of India.

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Central Excise

 

Applicability of Act

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 I) of the Constitution of India. The Central Excise Duty is levied in terms of Central Excise Act, 1944 and rates of duty, ad valorem or specific, are prescribed under the Schedule I and II of the Central Excise Tariff Act, 1985. 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 goods is called "Central Excise" duty and is collected in terms of Section 3 of the Central Excise Act, 1944. 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.The excise tax can be based on the value of goods or a fixed rate tax. Based on the notifications issued by the Central Government of India, some products are fully exempted from excise duty. Manufacturers must pay excise duty when purchasing raw materials. They must also pay excise duty when they sell the finished goods. Dealers are not required to pay excise duty because they perform only a goods transfer. Manufacturers who are exporters are not required to pay excise duty according to the excise rules. However, they must submit ARE 1 bonds or ARE 3 certificates, which are equivalent to the excise amount or excise quantity, to the excise authorities for a given period.

 

 


Categories of persons are required to obtain registration under Act:

  • Manufacturers’ of excisable goods or any person who deals with excisable goods with some exceptions,
  • First and second stage dealers desiring to issue Cenvatable invoices.
  • warehouse where goods are stored without payment of duty,
  • Exporter-manufacturers under rebate/bond procedure,
  • Export Oriented Units are required to get the registration.

 

 
Category of persons who are exempt from obtaining registration
  • Manufacturers of goods which are chargeable to nil rate of duty or are fully exempt;
  • SSI manufacturers having annual turnover of below Rs.90 lakhs. Once their turnover touches Rs.90 lakhs, they should give the prescribed declaration to the Jurisdictional Superintendent of Central Excise;
  • Job-workers of ready-made garments if the principal manufacturer undertakes to discharge the duty liability;;
  • Approved/licensed units in Export Processing Zones, Special Economic Zones and 100% Export Oriented Units.

               
Procedure for Registration

Fill the Form namely A-1, A-2  online on the departmental website http://www.aces.gov.in take printout of filed form and Enclose photocopy of PAN card, proof of address to be registered and copy of constitution /partner ship deed etc. of the firm, if any.

Documents Required for Central Excise Registration.

  • Copy of PAN card is necessary as a PAN based code is allotted to every assessee.
  • Details of Property Holding Rights of the registrant (if not self owned then Rent Agreement).
  • If Business Premises and Head Office of the company is different then Address Proof of Head Office also.
  • Constituent of the applicant for partnership firm: Copy of Partnership Deed and for Companies copy of Certificate of Incorporation, AOA and Memorandum of Association.
  • Certificates of Customs Registration No.(BIN), Import Export Code, State Sales Tax No.,    CST No., Company CIN No.
  • List of directors/partners.
  • Address Proof of All Directors/partners.
  • Address Proof of Authorised Signatory.
  • List of Item to be manufactured/ traded.
  • Address Proof of Business Premises of the company/firm (Electricity Bill / Phone Bill / Gas Bill).
  • Details of All Bank Accounts.
  • Ground plan of factory (which should also provide description of boundaries of premises to be Registered)
  • Power of attorney in respect of authorized Person and Undertaking on Letter head of Assessee.
  • The form required to be submitted to the jurisdictional Central Excise office along with supporting documents.
An assessee should get the registration certificate (registration number) within 7 days from the date of submission of Application form , under normal circumstances.

 

Registration of different premises of the same registered person: If the person has more than one premises requiring registration, separate registration certificate shall be obtained for each of such premises.

Registration Certificate and Number:  Registration Certificate in the Form specified in Annexure-II containing registration number shall be granted within seven days of the receipt of the duly complete application.

Transfer of Business: Where a registered person transfers his business to another person, the transferee shall get himself registered afresh.

Change in the Constitution:  Where a registered person is a firm or a company or association of persons, any change in the constitution of firm, company or association, shall be intimated to the jurisdictional Central Excise Officer within thirty days of such change.

De-registration: Every registered person, who ceases to carry on the operation for which he is registered, shall de-register himself by making a declaration in the form specified in Annexure-III and depositing his registration certificate with the Superintendent of Central Excise.

Revocation or suspension of registration: A registration certificate granted under this rule may be revoked or suspended by the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, if the holder of such certificate or any person in his employment, is found to have committed breach of any of the provisions of the Act or the rules made thereunder or has been convicted of an offence under section 161, read with section 109 or with section 116 of the Indian Penal Code (45 of 1860).

               
         

 
Payment of Excise Duty

The Excise Duty collected by the All Units shall be paid to the credit of the Central Govt. on a regular basis before the Due date for Payment of Excise Duty and in case of Late Payment of Excise Duty – Interest shall also be payable on the Late Payment as prescribed.

For SSI Units (i.e. Units availing value based exemption ) The Due Date for Payment of Excise Duty in case of SSI Units is 15th of the Following months in which the duty is due. However, in case the SSI Units opts for online payments, he is given a grace period of 1 day and thus the Due Date for Payment of Excise Duty if the Payment is made online is 16th of the following Months.

 

For Others: For Others Units, the Due Date for payment of Excise is 5th of the Following Month in which the Excise duty is collected. However, if the payment is made online – the due date for payment of Excise Duty becomes 6th of the following month.
   

Filing of Central Excise Return:

Following are the Central excise return shall be filed:

  • ER-1: Manufacturer not eligible for SSI Concession,
  • ER-2: EOU Unit;
  • ER-3: Quarterly Return BY ssi;
  • ER-4: Annual Financial Information Statement;
  • ER-5: Information relating to Principal Inputs;
  • ER-6: Monthly return of receipt and consumption of each of principal inputs;
  • ER-7:Annual Installed Capacity Statement
  • ER-8:Simplified form for quarterly returnof excisable goods cleared @ 1% duty

               
Periodic Basic Exemption Limit

Period

limit

   
   
   
   
 
Penalty for late filing of Service Tax Return

Period of Delay

late fees

   
   
   
 
Periodic Rates of Interest

Period

Rate of Tax

   
   
   
   
 
   
   

 

 

             
Due Date for Return Filing
   
   
   
 
Due Date for Return Filing for(ISD)

For the Half Year

To be Filed by

   
   
 
               
Maintenance of Registers and Records under Central Excise.

Records are to be necessarily maintained in the course of any business activity. These records are also used to determine the tax liability of the assessee. Earlier, for this purpose the Government had prescribed the records to be maintained, referred to as ‘Statutory records’. As a measure of simplification of procedures, it was decided in the year 2000 to dispense with all the statutory records under the Central Excise law and rely on records maintained by the assessee. Accordingly, the assessee was no longer required to record the receipt of raw material, production and clearance/sale of finished goods, etc. in register/documents prescribed by the Central Excise Department. As a result, the assessees are now allowed to maintain all their records in whichever form they like, provided the essential information required for calculation of Central Excise duty liability can be obtained from such records. Government has continued with the policy of relying on the private records of the assessee.

The rules which require certain records to be maintained, are self contained and they specify the minimum information that an assessee MUST enter in their own record.There is no format for record–keeping, except in the case of 100% EOU unit or a unit in /FTZ/SEZ.

The assessees are required to maintain records on all important aspects such as receipt, purchase, manufacture, storage, sales or delivery of the goods including inputs and capital goods, Daily Stock Account as per Rule 10 of the Central Excise Rules, 2002 and Cenvat Account as per Rule 9 of the Cenvat Credit Rules, 2004. The records, which are relevant for Central Excise, shall be authenticated by the assessee on the first and last page.

The assessee is free to device his record-keeping, depending upon his accounting requirements but shall ensure that the requirements of particular rules are met.The records can be kept on any electronic media, such as hard disk of computers, floppies, CDs or tapes and preserved. The records, returns and documents should be in electronically readable format. This also means that a person who uses computerized system to generate records/books of accounts, returns etc., must keep the electronic record, even when a hard copy is kept.

All such records, returns, invoices and other documents (both electronic and hard copy, including back-ups) shall be preserved for a period of five years (counted from the first day of the financial year following the financial year to which a record, return, invoice or document pertain).

               
Valuation

Specific duty:

It is a duty payable on the basis of certain unit like weight, length, volume, thickness, etc. Calculation of duty payable is comparatively easy. In view of simplicity, many goods were covered under “specific duty”. However, the disadvantage is that even if selling price of the product increases, the revenue earned by Govt. does not increase correspondingly. Hence, most goods are covered under “Ad valorem” duty.Presently, specific rates have been announced for:

  • Cigarettes (length basis)
  • Matches (per 100 boxes / packs)
  • Sugar (per quintal basis)
  • Marble slabs and tiles (square meter basis)
  • Color TV when MRP is not marked on package or when MRP is not the sole consideration (based on screen size in cm)
  • Cement clinkers (per ton basis)
  • Molasses resulting from extraction of sugar (per ton basis)

 

Production capacity based duty

Rule 15: Special procedure for payment of duty/Compounded levy scheme:The CG may specify goods in which assesse have option to pay duty on basis of factors relevant to production & at fixed rates. The CG may specify abatement that may be allowed on a/c of closure of a factory. Notified Commodities: Stainless steel Pattis = Rs.40000 per cold rolling machine, Aluminium Circles: Rs.120000 per CR machine. Educational cess over and above these amounts is to be included.This scheme is optional.
Sec 3A: Duty bases on production capacity – IF CG thinks in order to safeguard interest of revenue, it can provide for determination of duty based on ANNUAL PRODUCTION CAPACITY by an officer not below AC. Example on Pan Masala/ Gutka etc. Chewing tobacco & branded unmanufactured tobacco packed in pouches with packing machines is liable to pay duty on basis of production capacity.
No educational cess as it is already included in the amount notified in case of masala and Gutka.

 

Value based duty:

Duty based on tariff valuation u/s 3(2); Duty based on valuation u/s 4(1); Duty based on MRP – sec 4A.

Excise duty is payable on the basis of value called “ad valorem duty”. This “assessable value” is arrived at on the basis of Section 4 of the CEA. The basic provisions of new Section 4(1)(a) state that “assessable value” when duty of excise is chargeable on excisable goods with reference to value will be “transaction value” on each removal of goods if following conditions are satisfied:

  • The goods should be sold at the time and 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.

 

 

               
Due Date for Return Filing
Type of Return Periodicity Due Date For Filing Who Can File
ER-1 Monthly 10th Manufacturers of Central Excise, other than those who are required or entitled to file ER-2 or ER-3 returns
ER-2 Monthly 10th Manufacturers who are 100% EOUs(Export Oriented Units) and are removing goods into the domestic tariff area
ER-3 Quarterly 20th of completed quarter Manufacturers availing exemption on the basis of value of their annual clearance, manufacturer of processed yarn, unprocessed fabrics falling under chapters 50 through 55,58 or 60 of the Central Excise Tariff or manufacturers of readymade garments.
ER-4 Yearly 30th November Annual Financial information statement to be submitted by manufacturers who paid duty of excise more than Rs.One crore in the preceding financial year.
ER-5 Yearly 30th April Annual return of information relating to principal inputs used in the manufacture of finished goods. Filed by manufacturers who paid duty of excise more than Rs. One crore in the preceding financial year
ER-6 Monthly 10th Monthly return of information relating to principal inputs on which cenvat credit was availed. Filed by manufacturers who paid duty of excise in excess of Rs.One crore in the preceding financial year.
ER-7 Yearly 30th of April of Previous Year Annual return of information relating to Annual Installed Capacity.
Dealer Quarterly 15th of month succeeding completed quarter Filed by registered first stage and second stage dealers giving details of the invoices issued by them and documents based on which credit passed on.

 

Central Excise Compliance Services

 

Getting yourself registered with Central Excise Authorities.

E-Filing of Excise Returns and Payment of Service Tax

Consultancy on Central Excise Matters.

Liaison with Central Excise Authorities.

Maintenance of Central Excise Records.

Compilation of Central Excise details for

audit and

support to the auditors.

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