Ceteris paribus. This maxim implies the salient aspect necessary for an economy to strive, which is equitable collection of Taxes in all sectors whether they are manufacturing, services or primary sector to boost the Piggy Bank of the palatinate. But here the author would be covering the Central Excise Act 1944, which emerged as the building block of Tax and Revenue collection in our realm. Today we are having numerous unified taxation legislation like Goods & Services Tax, Value Added Tax and many more but in those days taxes were charged from the masses through a single sphere like the functions this tax performed.
A noteworthy date in history is February 24, when the contentious Central Excise Salt Act was enacted. The phrase ‘Excise’ derives from the Latin word ‘excisus,’ which means to cut. While this levy was meticulously devised, it carried the weight of innumerable Indians, who exploded in joy upon its eventual removal. The central grievance was the imposition of this tax on one of the most important commodities in the realm, a critical resource for dismantling the empire that had come to symbolize British oppression and tyranny among the Indian population.
Initially, this levy applied to only 67 items, but it has now grown tremendously to include over 1000. This expansion demonstrates the intricate weave of past taxation and its far-reaching impact on our country’s path. The Central Excise Act of 1944, and its successor, the Central Excise Salt Act, provide a glimpse into a significant phase in India’s fiscal history, reflecting the move from a more straightforward taxation scheme to the complex, unified systems that exist today.
EXCISE DUTY
Excise duty is essentially a levy placed on domestically manufactured items. It is generally levied on their manufacture and sale and is sometimes known as CENVAT, or Central Value Added Tax.
Central Excise duty is a type of indirect taxation that is collected from customers by a store or intermediary. It is collected when commodities are transported from a manufacturing unit to a warehouse.
This tax is administered by two acts: the Central Excise Act of 1944 and the Central Excise Tariff Act of 1985. Ideally, the Central Board of Excise and Customs is in charge of collecting excise duty.
With the advent of GST, various indirect taxes, including excise tax, were absorbed. Nonetheless, it still applies to a few products such as petroleum, whiskey, and so on.
INSTANCES THIS TAX IS APPLICABLE
When the articles are removed, excise duty must be paid. Assessees are required to pay excise duty on goods made or produced. According to Rule No. 8 of the Central Excise (Amendment) Rules, 2002, excise tax should be paid on the fifth day of the next month from the date the products were taken from the warehouse or factory for the purpose of sale.
If excise duty is paid online using netbanking, it is payable on the sixth day of the next month. If the payment is to be made in March, it must be received by March 31.
CRITERION OF EXCISE DUTY
In general, there are three categories of excise duty, namely –
- Basic Excise Duty
This excise duty is payable on products listed in Schedule 1 of the Central Excise Tariff Act of 1985. Except for salt, it is levied on all excisable items.
- Additional Excise Duty
It is a tax imposed on all commodities listed in Section 3 of the ‘Additional Duties of Excise Act’ of 1957. This levy is levied in place of sales tax and is split evenly between the state and the federal government.
- Special Excise Duty
This tax is charged on items included in the Second Schedule of the Central Excise Tariff Act of 1985.
It should be noted that people are excluded from paying taxes. However, such a benefit is available based on the –
- Value of turnover in a given fiscal year.
- Raw materials were used.
- Process involved.
Individuals who are unable to take advantage of these exemptions should make it a point to pay the excise duty on time.
PARTIES ENTITLED
These three parties are required to pay excise duty:
- Manufacturers of goods
- Entities that obtained the commodities in question from hired laborers.
- Entities that have things created by third parties.
REPERCUSSIONS OF NON COMPLIANCE
Individuals who fail to pay excise duty face penalties in the form of fines under the Central Excise Act. Typically, the penalty ranges from 25% to 50% of the amount of tax evaded. To prevent it, one must pay this tax on time and guarantee that the tax amount filed is correct.
PROCEDURE
Excise duty can be paid in a few steps via the CBEC’s payment channel, Electronic Accounting System in Excise and Service Tax (EASIEST). These are described further below –
Step 1: Navigate to EASIEST and select the e-payment option.
Step 2: Enter the assigned Assessee number and confirm it online.
Step 3 – Provide information such as your residence, name, and information about the jurisdictional commissionerate, among other things.
Step 4 – Navigate to the tax-type menu and then select the Excise Codes.
Step 5 – After selecting the accounting code, proceed to selecting the banking institution through which payment can be made.
Step 6 – Verify the information provided and then make the necessary payments.
Step 7 – Log in to the net banking gateway using your user ID and password.
Step 8: Enter the tax to be paid and the account to which it will be paid.
Step 9 – Following payment, a Challan Counterfoil will be generated.
A challan of this type contains a CIN, which acts as proof of payment.
Step 10 – On the EASIEST site, use the Challan Status Inquiry tool to check the payment status.
People frequently confuse excise duty with other sorts of taxes, such as customs duty. Taxpayers must become familiar with more than excise duty meaning in order to ensure that the same is charged and processed correctly. For example, they should investigate the underlying distinctions between GST and excise tax, or excise duty and customs duty, among others.
SANCTIONS
If you fail to pay excise tax or commit an infraction regarding an excisable commodity, and the duty levied on that goods exceeds Rs.50 lakh, you face up to 7 years in prison.
A fine will also be imposed on the defaulter. The term might be up to three years in prison, with or without a fine, depending on the circumstances.
CUSTOM DUTY vs. EXCISE DUTY
Governments levy two sorts of taxes on the import and manufacture of goods: customs duty and excise duty. They serve various goals and are imposed at various phases of the manufacturing and distribution processes. Here are the main distinctions between customs duty and excise duty:
NATURE OF TAX
- Customs Duty: A customs duty, also known as an import charge or an import tariff, is a fee levied on products when they are imported into a country. It is levied at the border, and the importer is responsible for payment.
- Excise Duty: Excise duty, often known as central excise duty, is a tax placed on items manufactured within the country. It is levied on the goods’ manufacturer or producer.
APPLICABILITY
- Customs Duty: A tax levied on imported products when they enter the country.
- Excise Duty: Applies to items made in the United States.
TAXABLE EVENT
- Customs Duty: The taxable event happens during the importation process, and the duty is due when the products reach the nation.
- Excise Duty: The taxable event happens when products are manufactured or produced.
COLLECTION
- Customs duty is collected at ports of entry or border crossings by customs officials.
- Excise Duty: A tax levied by the government on the maker or producer of products.
STRUCTURE OF RATES
- Customs Duty: The rate of customs duty varies depending on the type of commodities, their country of origin, and international trade agreements.
- Excise Duty: Typically, the rate of excise duty is uniform for a specific product or category of items.
CONCLUSION
The Central Excise Act of 1944, adopted in India, governs the imposition and collection of excise levies on the production and manufacture of commodities. It establishes the legal foundation for the central government to charge taxes on items manufactured in the country, supervises compliance and record-keeping for manufacturers, and specifies procedures for excisable goods classification, valuation, and assessment. The Act has been amended and changed over time to reflect changing economic and industrial situations, with the goal of generating money for the government and promoting fair trading practices in the country.
FAQ
Who can be Central Excise Officer under Section 2B?
The following parties can be CentralExcise Officer under this section:
- Principal Chief Commissioner of Central Excise
- Chief Commissioner of Central Excise
- Principal Commissioner of Central Excise
- Joint Commissioner of Central Excise
Which two processes delts under manufacturer as per Section 2F?
The following processes coming under manufacture are:
- Incidental to completion of the product manufactured.
- As specified in the Section or Chapter Notes of Schedule IV
- Pertaining to the goods in Schedule III involving packaging, or repackaging.
As per Section 3 Clause IV different tier values fixed by the Central Government falls under which criteria?
The criterias for determination of Tariff values by Central Government are as follows:
- For different classes or criterion for the same excisable commodity
- For Excisable commodities of the same class or criteria produced or manufactured by different types of producers or manufacturers or sold to different types of procurers
