CLASS -1

EXCISE DUTY

DUTY is the old word for TAX. There is essentially no difference between the
two.
Excise duty is levied on manufacture of Excisable Goods in India

EXCISE DUTY

By STATE GOVERNMENT By CENTRAL GOVERNMENT

(State Excise) (Central Excise)

Under Entry 84 of List I of Seventh

Schedule to Constitution
(i). Alcohol for human consumption (i). Tobacco
(ii). Indian hemp
(ii). All other goods (i.e. Excisable
(iii).Opium and other narcotics
Goods)

EXCISABLE GOODS is defined under

S.2(d) of Central Excise Act:

All goods referred under Schedule I &

II of Central Excise Tariff Act, 1985,
including salt.

Schedule I of CETA, 1985 levied Basic Excise Duty.

Schedule II of CETA, 1985 levied Special Excise Duty. Essentially all goods
mentioned in Schedule II were also mentioned in Schedule I. The Special Excise
Duty was levied in addition to Basic Excise Duty.

Now since Special Excise Duty has been abolished, Schedule II is empty.
However while writing definition, the one as written above is to be adhered to.
S.1. Provisions of the Act are applicable throughout India

INDIA Means:

1) Land Mass of India EXCLUDING 100% Export Oriented Units, Software

Technology Parks, Hardware Technology Parks, Special Economic Zones.

2) Extends upto 200 nautical miles from coast line. 1 nautical mile = 1.83 miles.

3) Includes Jammu and Kashmir

S.5A. Central Government is empowered to allow exemptions. Various area wise

exemptions have been allowed, eg. Jammu and Kashmir, North Eastern
States, Kutcch District etc.
 CLASS-2

Excise Duty is levied on Excisable Goods MANUFACTURED in India. Unless

something is manufactured, it cannot be subjected to Excise Duty.

APPLICABLE STATUTORY ENACTMENTS

(1). Central Excise Act

(2). Central Excise Tariff Act, 1985
(3). Central Excise Rules
(4). Valuation Rules
I. Transaction Value.
II. RSP based value
(5). Notifications
Most Important Notification: 8 / 2003 SSI Exemption
(6). CENVAT Credit Rules, 2004

DUTY

EXISTING OTHERS

Basic Excise Duty Special Excise Duty

National Calamity Contingency Duty
Special Excise Duty on Goods of Special
Importance
Special Excise Duty on Textile and Textile
Importance
Education Cess
Secondary and Higher Education Cess

These duties were levied in past but all of

them have been abolished now. Instead the
duty has been flattened to particular rates.
 S.2 of Central Excise Act

S.2(a) Adjudicating Authority:

Adjudication is made of two parts Administration and Jurisdiction.

Administration means ensuring compliance with applicable provisions.

 CLASS 2

EXCISE DUTY

On MANUFACTURE of EXCISABLE GOODS in INDIA

1. Central Excise Act, 1944

2. Central Excise Tariff Act, 1985
3. Central Excise Rules, 2002
4. Valuation Rules

A. Transaction Value B. RSP based value

5. Notifications (8/2003)
6. CENVAT Credit

DUTY

EXISTING OTHERS

Basic Excise Duty Special Excise Duty

National Calamity Contingent Special Excise Duty (Goods of Special
Fund Importance)
Special Excise Duty (Textile and
Textile Articles)
Education Cess
Secondary and Higher Education Cess

IN FORCE NO MORE IN FORCE

 DEFINITIONS (S.2, 4 & 4A)

S.2(a) Adjudicating Authority

S.2(aa) Appellate Tribunal

The one constituted under the Customs Act, 1962.

 CLASS 3

S.2(b) Central Excise Officer

MEANS INCLUDES

Principal Chief Commissioner of Every Offier of Central Government,

Central Excise, State Government, Local Authority
Chief Commissioner of Central whom Central Government has
Excise, delegated powers of Central Excise
Principal commissioner of Central Officer.
Excise,
Commissioner of Central Excise,
Commissioner of Central Excise
(Appeals),
Additional Commissioner of Central
Excise,
Joint Commissioner of Central Excise,
Assistant Commissioner of Central
Excise or
Deputy Commissioner of Central
Excise or
any other officer of the Central Excise
Department

EXCLUDING:

CBEC

Appellate Tribunal
2(c) Curing

- Related to unmanufactured goods

- Includes wilting, cutting, drying eg. Crushing / Washing of ores.
- After the aforesaid process, such goods can be used in manufacture or can be
marketed.
- No excise duty is levied on this.

S.2(e) - Factory:

- Any premises including precincts thereof

- In any part of which
- Either manufacture / activity related to manufacture
- of excisable goods
- is being carried on; or
- generally so carried out.
 CLASS 13

S.11A

S.11C

If duty is not being paid

or
Being paid at a rate less than actual rate applicable

On any article

In any area

Due to any practice prevailing (since a period unknown)

The Central Government may waive off recovery of differential amount by a

notification.

If any assessee has already paid the differential amount before the issue of
waiver notification then the amount so paid becomes refundable.

The refund shall be given to the customer who has last borne the burden.

RULE 4 LIABILITY TO PAY DUTY WHEN

(1) (4)

Unless otherwise provided, goods The Commissioner may authorize deposit of

shall not be removed from factory finished goods in a warehouse outside
without paying applicable duty. factory without payment of duty due to:
Payment of duty is as per Rule 8. (i). Shortage of space; or
(ii). Nature of goods.

Subject to such terms and conditions as may

be necessary for protecting interest of the
revenue.
 RULE 4 LIABILITY TO PAY DUTY BY WHOM
(1A) (2)
Goods covered under Chapter 61, 62 and 63 of Other Excisable Goods
Schedule 1 of CETA (textile and textile articles)

(1A)
Goods covered under Chapter 61, 62 and 63 of Schedule 1 of CETA (textile and textile
articles)
Manufactured by the manufacturer himself Manufactured on Job-Work basis
Manufacturer is liable to pay duty Duty is payable by Principle.

(2)
Other Excisable Goods
Molasses Other Goods
Duty is payable by procurer

Other Goods

If goods lying in factory If goods lying in Warehouse

Manufacturer is liable to pay The Warehouse-keeper is liable to pay.

In reality manufacturer is the warehouse keeper.

RULE 20 During the course of transit between the factory and the warehouse, the
duty liability is of the consignor until the goods are delivered to the
consignee.
 CLASS 14

Rule 5 (Central Excise Rules, 2002) Effective Rate of Duty

Molasses Other Excisable Goods

Payable by Procurer

At the rate prevailing when goods are

received in his premises.

Other Excisable Goods

Captive Consumption All Other Cases

At the rate prevailing when Intermediary At the rate prevailing when goods are
Goods are released for captive removed from factory.
consumption.

NOTE: Rule 5 is equally applicable where tariff value for an article has been fixed by
Central Government U/s 3(2).

MANUFACTURE REMOVAL EFFECT

Non Excisable 5% No Duty

0% 6% 6%
Exempt 7% 7%
6% 0% 0%
7% Exempt Nil
4% Non Excisable At the rate prevailing on
the last day when the goods
were excisable
Basic Excise Duty Basic Excise Duty Basic Excise Duty
+
Special Excise Duty
Basic Excise Duty Basic Excise Duty Basic Excise Duty
+ +
Special Excise Duty Special Excise Duty
 CLASS - 15

S.5A POWER OF THE CENTRAL GOVERNMENT TO ALLOW EXEMPTIONS

S.5A POWER OF THE CENTRAL GOVERNMENT TO ALLOW EXEMPTIONS

In Public Interest Under Special Circumstances

By Notification By Order

Every ELIGIBLE person is entitled to Only for the person for whom order
exemption has been given.

Unless otherwise specified, effective since Effective since the date given in the
issue (not date of publication). order.

NOTE: When goods are fully exempt

unconditionally, manufacturer CANNOT
pay any duty.

Expression CANNOT has been used to

prevent availing of CENVAT credit.

NOTE: Any such exemption is not

applicable for goods manufactured in 100%
EOU and brought to DTA

1. Power to grant exemption includes the power to withdraw or modify the

exemption
2. For changing the exemption another notification is required.
3. Within one year since issue of notification or order the Central Government may
add any clarification or explanation which will have effect as if it was a part of
the original notification or order.
 S.3 - CENTRAL EXCISE TARIFF ACT
POWER OF CENTRAL GOVERNMENT TO INCREASE RATE OF DUTY IN
EMERGENCY

By a notification rate can be increased from:

If existing rate = 0% then it may be increased maximum to 50%.

If existing rate is other than 0%, it can at the most be doubled.

The changes so made are effective immediately.

The notification shall however be laid before Parliament within 7 days, if the Parliament
is in session.

If the parliament is not in session, it shall be laid before the Parliament within 7 days
from commencement of the immediately next session.

Upon being laid before Parliament, the following may be the consequences:

1. Approved
2. Rejected
3. Modified

In cases 2 & 3, another notification shall be issued with PROSPECTIVE effect. The
enhanced rates shall be applicable during the intervening period.

The Government is empowered to rescind or withdraw the increase at any time, by

another notification.
 CLASS 16

JOB WORK UNDER CENTRAL EXCISE

Part / Complete manufacture Excise Duty is payable on final No Excise Duty

on behalf of others. product

Service Tax is attracted

EXCISE DUTY IS PAYABLE ON FINAL PRODUCT

Article Under Chapter 61, 62 COMPLETE PART MANUFACTURE

& 63 of Sch.I of CETA MANUFACTURE
Jewellery and other articles (Eg. Nestle Case)
of precious metals.

Only Principle is liable to pay Duty is payable by Job Principle accepts liability Principle does not accept
duty Worker. under Notification 214/86 liability

Duty is payable by Principle Duty payable by Job

Worker
 CLASS 17

CLASSIFICATION OF EXCISABLE GOODS

Determination of Section / Chapter / Heading etc. under which an article is covered is called as CLASSIFICATION.

Classification is primarily the obligation of the Assessee. The classification made by the assessee may not be
accepted by the department is appropriate cases in which case notice shall be issued. If no such notice is issued, the
classification shall be deemed to have been accepted. Previous deemed acceptances do not preclude the
department from disagreeing in future.
Based on HSN provided by GATT.
HSN stands for Harmonized System of Nomenclature.

CLASS 18 & 19

RULE 1

1) Section / Chapter titles are not the part of law.

 RULE 2

1) Explanatory Notes in every Section / Chapter are treated as law.

2) If goods can be classified under this Rule, any other Rule shall not be referred.

RULE 2

(b)
(a)

Incomplete / Unfinished goods. Relevant where an article is a combination of other

articles.
Completely Knocked Down / Semi Knocked Down
goods. Such article can be classified under the heading of
each of its constituents. Eg. Tyre which has rubber,
Completely Knocked Down or fully dismantled. Eg.
sulphur, nylon and steel each having different rate.
Ceiling Fan.
This situation is resolved by Rule 3.
Semi Knocked Down or partially disassembled.

If essential characteristics are same, classification is also the

same.
 RULE 3

RULE 3

(a) (b) (c)

A specific entry always prevails over Based on most essential Applies where more than one
general entry. characteristics. classifications are possible.

SPECIFIC IS TERRIFIC Eg. Calling capacity is the Eg. Mobile with computing

most essential feature of a facilities.

mobile phone. Heading falling later in numeric

order shall be adopted. LATER
IS BETTER.
 CLASS - 20

RULE 4 - CLASSIFICATION BASED ON MOST AKIN GOODS.

Any new article produced during research and development activity is referred as PROTOTYPE, and it is
exempt.
If such article is produced commercially, duty becomes payable on the basis of akin article already covered in
CETA.

RULE 5 CLASSIFICATION OF PACKAGING MATERIAL

PACKAGING MATERIAL

SPECIFIC SHAPE SIZE AND USE GENERAL

Eg. LPG Cylinder Eg. Polythene, carton box.

Classifiable under the Heading of the goods with which it Based on material with which it is made
is going to be used.

- It has been ruled several times that parts and accessories are to be classified under the heading of the goods in
which it is to be used.
 CLASS 21

Trade Parlance Theory

 CLASS 22

VALUATION

TYPES OF DUTY UNDER EXCISE LAW

STANDARD DUTY AD-VALOREM DUTY

Fixed amount for each assessable unit. Eg. Per KG, per piece etc. Rate (%age) is fixed.

It does not depend on value of good. This is dependent upon VALUE of commodity.

VALUE

Tariff Value Transaction Value RSP (MRP) based

S.3(2) Sec.4(1) value
S.4A
Assessable value (a) (b)
fixed by Central Conditions for acceptance of Valuation as per Rules if either
Government. actual transaction value of the conditions in Clause (a) is
not satisfied.
Sec 3(2): Tariff Value

Central Government is authorized to fix Tariff Value of any article.

Tariff Value is having overriding effect
Different Tariff Values can be fixed for different :
Areas
Types of Manufacturers
Customers

Sec 4A: RSP (MRP) Based Value

Value + Taxes = RSP (MRP)

Value = All Expenses + Profit

Applicability:

1) Goods are excisable.

2) covered under Legal Metrology Act.
3) notified by Central Government U/s 4A.

Exemptions:

1) Goods supplied in bulk to ultimate consumer.

2) Goods are supplied in bulk pack only.
3) Such goods are offered free along with the goods covered U/s. 4.
4) Weight less than 10 gms.
5) Less than 10 ml.

Assessable Value = RSP (-) Notified Rate of Abatement.

Notified by Central Government Abatement = deduction

Assessable Value Example:

Article X

MRP = Rs.125 Inclusive of VAT @10%

Rate of abatement = 40% (as notified by Central Govt.)

Assessable Value = Rs.75/-

BECAUSE:

For determination of assessable value U/s.4A the only deduction in RSP (MRP) permissible to arrive at the assessable
value is the Abatement and nothing else. See S.4A(3).

Hence 40% of Rs.125 = Rs.50/-

 ALTERATION OF RSP (MRP)

S.4A(4)
(a) (b)
At the time of removal from the place of manufacture After removal from the place of manufacture.
Possible Alterations: Possible Alterations:
No RSP Tampered
Value declared is not the RSP Altered
Obliterated
Consequences:
All such goods are liable to be confiscated.
RSP is determined in prescribed manner [i.e. as per Central Excise (Determination of Retail Sale Price of
Excisable Goods) Rules, 2008].

RULE 4 RULE 5

No RSP / Value declared is not RSP RSP increased after removal (only by assessee i.e. manufacturer
only). Does not apply if it is done by anyone else in the supply
Tampered / Obliterated
chain. Department has to prove increase by assessee.

Option 1 Option 2 Increased RSP will be applied to all the goods removed by assessee
within one month before and after the removal of goods under
valuation.
 Option 2
Option 1
Applicable when Option 1 does not work.

RSP of such goods shall be equal to RSP of same goods Find RSP of similar goods in market at the time of
removed by the assessee within one month before or after removal of the goods to be valued.
removal of the goods. In case of multiple RSPs adopt the highest one.

If the older value was lesser, the higher one would be

adopted.

Apart from valuation as above there will be additional consequences like interest, penalties etc.

SUMMARY OF S.4A

(1) When the provisions are applicable

(2) Right of Government to determine the rate of abatement.
(3) What all factors may be taken into consideration while determining the rate of abatement.
(4) What happens if the conditions are not fulfilled i.e. Alteration of RSP.

ADDITIONAL TOPICS IN S.4A

MULTIPACK
More than one unit contained in a single pack.

RSP declared on multipack is acceptable for assessment if:

a) No Valid RSP on any unit contained in multipack.
b) It shall be clear (i.e. written on the units) that units in multipack are not for retail sale i.e. each unit
separately sold.
Otherwise aggregate RSPs of every unit in multipack shall be adopted as RSP of multipack.
 CLASS - 25

MULTIPLE RSPs

(1).Only one valid RSP - Acceptable

(2).Multiple valid RSP (for any reason) Highest is adopted.

(3).Different RSPs for different unit Every RSP is acceptable Eg. Rs.21 (for sale in Mumbai only), Rs.23 (for sale

outside Mumbai).
 CLASS 26

TRANSACTION VALUE

S.4(3) Definitions:

a) Assessee: Person liable to pay duty and includes his agent + Rule 4(1A), 2 of
Central Excise Rules, 2002.
b) Related:
(a). Inter-connected undertakings (Holding- Subsidiary Company),
(b). They are relatives as per Companies Act,
(c). Buyer is a relative and distributor of the assessee,
(d). Both are having interest in each others business.
c) Place of Removal:
I. Factory or any other place
III. Branch, depot, place of
where goods are manufactured.
consignment agent or any
other place where goods are
transferred for being sold
therefrom.

II. Warehouse (outside factory)

where goods are allowed to be
deposited without payment of
duty.

1. All expenses incurred in relation to the goods upto the place of removal
are includible in the assessable value.
2. All the services in relation to the goods upto the place of removal will be
treated as Input Services and the assessee can avail CENVAT credit for
such Input Services.

cc) Time of Removal: Means the time when goods are removed from the factory.
d) Transaction Value:
 TRANSACTION VALUE
S.4(3)(d)
Means Including but not limited to Excluding

The price paid or Transportation Any tax / cess (any

payable Labour statutory liability)
For the goods Overheads Either already paid
To assessee or to any Packing Or
other person on his Marketing Actually payable (in near
behalf. Selling or distant future)

Distribution
Administration
Advertising
Profit

All expenses incurred by any person (not necessarily only assessee) in relation to the goods
upto the time and place of removal are includible in Assessable Value.
 CLASS 28

S.4(1)
(a) (b)
Conditions for acceptance of actual transaction value as
Valuation as per Central Excise Valuation Rules, 2000
Assessable Value.
5 cumulative conditions. Even if one is not satisfied, Rule 4 No Price / Price not known at the time of removal
valuation shall be as per Valuation Rules. Rule 5 Place of delivery is other than place of removal
i. Goods are sold Rule 6 Price is not the sole consideration
ii. By assessee (includes agents) Rule 7 Goods transferred to branch etc.
iii. For delivery to customer at the place of removal. Rule 8 Captive Consumption
iv. Where parties are not related. Rule 9 Goods are sold to / through Related Party
v. Price is the sole consideration excluding inter-connected undertaking.
Rule 10 Goods are sold to / or through inter-connected
undertaking.
Rule 10A Complete manufacture on job-work basis.

Explanation: Cum-duty price

For the removal of doubts, it is hereby declared that the price-cum-duty of the excisable goods sold by the assessee
shall be:
(i). the price - actually paid to him for the goods sold; and
(ii). the money value of the additional consideration, if any,
 flowing directly or indirectly from the buyer to the assessee in connection with the sale of such goods,

and such price-cum-duty, excluding sales tax and other taxes, if any, actually paid, shall be deemed to include the
duty payable on such goods.
 CLASS 29

CENTRAL EXCISE VALUATION RULES, 2000

RULE 4:

APPLICABILITY: All situations when goods are not sold but given away. It also
applies if there is pure exchange or no price at all i.e. free. Examples:

Samples
Gifts
Exchange Scheme
Approval Basis

CONDITIONS:

Except price all other requirements of S.4(1)(a) are satisfied.

VALUE:

At par with the value of the goods removed under conditions of S.4(1)(a), at or about
the same time.

NOTE:

Reasonable adjustment shall be made for price difference due to time gap.
 RULE 5:

APPLICABILITY:
Where assessee delivers the goods to buyer at a place other than Place of Removal.
CONDITIONS:
Except place of delivery, all other conditions of S.4(1)(a) are satisfied.
PRESUMPTION:
Assessee has charged some extra amount from customer towards cost of transportation,
whether the invoice shows the charge separately or not.
VALUE:
Assessable Value = Deduct actual cost of transportation between Place of Removal and
Place of Delivery.
ILLUSTRATION:
There are several transactions in a day and the assessee has fixed delivery charges area
wise.
Value = 50,000
Delivery Charges:
Goregaon to Andheri = 500
Goregaon to Bandra = 1,000
Goregaon to Town = 2,000

A B T
Number of deliveries in one trip 10 8 5
Collected from Customers 5000 8000 10,000
Expenditure on trip 6000 6400 2,000
Average Value 600 800 400
Collection 50,000 51,000 52,000
Deduction Allowed 600 800 400
Assessable Value 49,900 50,200 51,600

Rule 5 does not apply where goods are supplied to branch / depot or some other place
wherefrom those are sold.
 CLASS 31

RULE 6 WHERE PRICE IS NOT THE SOLE CONSIDERATION

If there is pure exchange or no price at all i.e. free, Rule 4 applies

Rule 6 applies in those cases where a portion of the consideration is price and the other
portion is kind.

DISTINCTION BETWEEN RULE 4 AND RULE 6

RULE 4 RULE 6

No Price Price is not the Sole Consideration

Price Additional Consideration

Money Goods Services

CIRCUMSTANCES WHERE MONEY MAY BECOME ADDITIONAL CONSIDERATION

Advance Payment
And that causes a Reduction in price as it saves some interest to the manufacturer.
Treated as Notional Interest
Assessable Value = Transaction Value + Notional Interest saved

Note: Any cash discount is not added back.

A cash discount is a deduction allowed by the seller of goods or by the provider of services
in order to motivate the customer to pay within a specified time.
 ADDITIONAL CONSIDERATION GOODS

This situation arises where certain parts of the goods being sold is brought in by the
buyer himself. However at the time of raising invoice, the cost of such procurement has
to be added to the invoice.

EXAMPLE:

A computer is sold by the manufacturer but the keyboard is supplied by the customer
himself to the manufacturer. While raising invoice, the value of such keyboard shall be
included in the invoice before charging Excise duty.

See it from another angle. If suppose you provided all the parts, it would hardly qualify
as manufacture, it will be only a service.

Transaction Value required that all inputs be added, whatever be the source of such
input.
 CLASS 32

GOODS TRANSFERRED TO BRANCH, DEPOT ETC.

RULE - 7

There are transactions at the branch etc on No transactions at the branch etc. on the
same day same day.

Find Normal Transaction Value Adopt actual transaction value of the

nearest transaction.
Normal Transaction Value is the value
at which greatest quantity of the goods is
sold in aggregate i.e. in one transaction.

EXAMPLE OF NORMAL TRANSACTION VALUE:

Sl. No. No. of Units Rate

We see that the transaction
1. 20 475
having the largest quantity
2. 30 460 is transaction no.3 @Rs.485.

3. 50 485 Hence Rs.485 will be

Normal Transaction Value.
4. 25 460

5. 15 475

6. 40 475

Goods to be removed from factory will be valued at Normal Transaction Value.

It does not matter whether the goods subsequently sell at a rate higher or lesser than the
Normal Transaction Value.
Situation will be different in the event it is known beforehand that there shall be
difference in price, then outcome shall be different. However such situations arise only
in large transactions.
 CLASS 33

RULE 8 CAPTIVE CONSUMPTION

Rule 8: When goods are captively consumed

Where whole or part of the excisable goods are not sold by the assessee but are used for
consumption by him or on his behalf in the production or manufacture of other articles,
the value of such goods that are consumed shall be one hundred and ten per cent of the
cost of production or manufacture of such goods.
Thus, the assessable value of captively consumed goods will be taken at 110% of the
cost of manufacture of goods even if identical or comparable goods are manufactured
and sold by the same assessee. If the cost of production based upon general principles
of costing of a commodity is Rs. 10,000 per unit, the assessable value of the goods shall
be Rs. 11,000 per unit

It may be recalled from Class 1 that an excisable good produced in a factory and
consumed within the factory for production of another excisable good is called
Intermediary Good. Consumption in the manner indicated is called Captive
Consumption.

If however the final good is non-excisable, the Intermediary Good becomes taxable and
it is in those circumstances that the present Rule is invoked.

According to this rule:

Assessable Value = Cost of Production + 10%

Cost of Production is computed as per Cost Accounting Standard 4.

10% is the deemed profit component.

 COST ACCOUNTING STANDARD - 4

EXPENSES

Upto Completion of Production Post Production

Inputs Packaging
(-) any duty. Marketing
(-) realizable value of scrap Selling
(+) Drawing, Design, R&D Distribution
(+) Administration (factory) Advertisement
Depreciation Repairs and Maintenance

Only these are taken into consideration. These must be ignored while solving
questions as by Rule 10% has been fixed.
 RULE 9
SALE TO / THROUGH RELATED PERSON
(OTHER THAN INTER-CONNECTED UNDERTAKING)

Rule 9: When sale is made to or through related persons not being inter- connected
undertakings (ICUs)
Where whole or part of the excisable goods are sold by the assessee to or through a person who is
related in the manner specified in any of the sub-clauses (ii), (iii) or (iv) of clause (b) of sub-section
(3) of section 4 of the Act, the value of such goods shall be the normal transaction value] at which
these are sold by the related person at the time of removal, to buyers (not being related person); or
where such goods are not sold to such buyers, to buyers (being related person), who sells such
goods in retail;
Provided that in a case where the related person does not sell the goods but uses or consumes such
goods in the production or manufacture of articles, the value shall be determined in the manner
specified in rule 8.

Remember that as per definitions in S.4(3) the only Inter-Connected Undertakings for valuation are
those that have Holding Subsidiary relationship.

Only for the quantity sold to / through Related Party

Previously this Rule applied only in cases where the whole of goods were sold
through Related Party. However as of today this Rule applies along with other
provisions. That is to say, to the portion sold to / through Related Party, this rule
will apply, for the remaining the other provisions will apply.

To Related Party Through Related Party

Related Party is a Consumer Related Party is a Trader.

Treated as Captive Consumption
i.e. Valuation as per Rule 8
The Assessable Value for Assessee shall be the Normal
Transaction Value prevailing at the place of business of
te Related Party on the day when goods are removed
from factory.

For Normal Transaction Value only those transactions

will be considered which are under the circumstances
 under S.4(1)(a).

RULE 10

Rule 10: When the sale is made to or through persons being interconnected
undertakings (ICU)
Where whole or part of the excisable goods are sold by the assessee to or through an
inter-connected undertaking, the value of such goods shall be determined in the
following manner, namely:
(a) If the undertakings are so connected that they are also related in terms of sub-clause
(ii) or (iii) or (iv) of clause (b) of sub-section (3) of Section 4 of the Act or the buyer is a
holding company or subsidiary company of the assessee, then the value shall be
detemined in the manner prescribed in rule 9.
Explanation- In this clause "holding company" and "subsidiary company" shall have
the samemeanings as in the Companies Act, 1956 (1 of 1956).
(b) in any other case, the value shall be detemined as if they are not related persons for
the purpose of sub-section (1) of section 4.

RELATION AS HOLDING AND RELATION OTHERWISE

SUBSIDIARY

Valuation as per Rule 9 No effect.

 RULE 10A

Rule 10A Valuation in case of goods manufactured by job worker

Where the excisable goods are produced or manufactured by a job worker, on behalf of
a person (hereinafter referred to as principal manufacturer), then,
(i) in a case where the goods are sold by the principal manufacturer for delivery at the
time of removal of goods from the factory of job worker, where the principal
manufacturer and the buyer of the goods are not related and the price is the sole
consideration for the sale, the value of the excisable goods shall be the transaction
value of the said goods sold by the principal manufacturer;
(ii) in a case where the goods are not sold by the principal manufacturer at the time of
removal of goods from the factory of the job worker, but are transferred to some
other place from where the said goods are to be sold after their clearance from the
factory of job worker and where the principal manufacturer and buyer of the
goods are not related and the price is the sole consideration for the sale, the value
of the excisable goods shall be the normal transaction value of such goods sold
from such other place at or about the same time and, where such goods are not
sold at or about the same time, at the time nearest to the time of removal of said
goods from the factory of job-worker;
(iii) in a case not covered under clause (i) or (ii), the provisions of foregoing rules,
wherever applicable, shall mutatis mutandis apply for determination of the value of
the excisable goods:
Provided that the cost of transportation, if any, from the premises, wherefrom the goods
are sold, to the place of delivery shall not be included in the value of excisable goods.

Explanation - For the purposes of this rule, job-worker means a person engaged in the
manufactureor production of goods on behalf of a principal manufacturer, from any
inputs or goods supplied by the said principal manufacturer or by any other person
authorised by him.

APPLICABILITY:
Complete manufacture on job work basis.

Two Parties

Job Worker Principle (Manufacturer)

Manufacturer Customer (Trader)

Manufacturer is liable to pay Excise Duty

 Fundamental assumption of the present rule is that the Job Worker is doing the entire
manufacturing.
For the purpose of Valuation it is presumed that the Job Worker is the principle
manufacturer who is selling its production through its agent whom normally we were
considering as principle.
Therefore, the price at which the agent (i.e. the principle) is selling shall be taken into
consideration.
Three situations arise:

Goods are sold by Principle to Goods are sold by principle Goods are sold by principle
his customers from the from his place of business under other conditions
premises of the Job Worker U/s.4(1)(a)
satisfying all the conditions of
S.4(1)(a)

Normal Transaction Value

Assessable Value as per
prevailing at the place of
Actual transaction value other applicable provisions
business of the principle on the
between principle and his will be calculated in the
day goods are removed from
customer is the Assessable hands of principle and it
the premises of Job Worker
Value for assessee i.e. the Job will be adopted as
shall be the Assessable Value
Worker assessable value for
for the assessee i.e. the Job
assessee i.e. the Job
Worker.
Worker.
 CLASS 35

ADDITIONS

Only when not included by assessee in assessable value but charged separately.
Accessories: A part is something without which the final good would not work. An accessory is something which
only adds to quality of the final good.
Includible only if already fitted at the time of removal.
Transportation Cost:
TRANSPORTATION

OUTWARDS
INWARDS

Capital Goods Others Upto Place of Removal After Place of Removal

Includible in both cases Not includible

Not includible

Handling:

HANDLING / WAREHOUSING

Upto Place of Removal After Place of Removal

Added Not Added

 Testing / Quality Control
TESTING / QUALITY

Essential for Completion of Manufacture Not Essential for Completion of Manufacture

Before Removal After Removal

INCLUDIBLE Not Includible

Advertisement:
ADVERTISEMENT

BY ASSESSEE BY ANY OTHER PERSON

On behalf of assessee For Himself

INCLUDIBLE Not Includible

 CLASS - 36

EXCLUSIONS / DEDUCTIONS

If Charged Separately If already added in Transaction Value

Both mean the same thing but words are different

EXAMPLE:

PRICE SUPPORT INCENTIVE

Special discount given by the Seller to a Buyer.

This is given as a kind of incentive to a loyal customer. Since the motive of giving away
such incentive in the form of cash back etc is to support the cost for the manufacturer
buyer, it is called Price Support Incentive. This need not be added back by the buyer
who is a manufacturer, since, it does not increase the Transaction Value. The discount
received by such manufacturer buyer causes increase in his income but not the
transaction value.

ADVERTISEMENT EXPENSES

Advertisement Expenses incurred by someone else, other than the manufacturer is not
includible in the Transaction Value if the manufacturer is not responsible for the
expenses of advertisement.

BOUGHT OUT GOODS

Goods bought from others. It may be dealt with in two ways

1. Bought and supplied with other items free of cost. It will be assumed that the
value of bought out goods is included in the value of the final product and hence
not added. Eg. Surf provided along with washing machine.
2. Eg. Discount on washing powder if bought along with the washing machine.
This kind of cases become instances of trading activity and not chargeable to
excise duty.
 INSURANCE

INTEREST (Paid / Payable)

Capital Expenditure Working

Capital

Upto Commencement of After Commencement of

Commercial Production Commercial Production

Includible

Capitalised and Depreciated Included to derive

Assessable Value
(Hence not Included)

INTEREST (Received / Receivable)

Received due to delayed payments

(In the nature of Finance Charges)

Separately Shown in Invoice Included in Transaction Value

EXAMPLE:
Not Includible
Value = Rs.1,000/-
Cash Payment = Rs.950/-
1 month credit = Rs.975/-
2 month credit = Rs.1,000
The price above Rs.950/- is towards interest.
Therefore, Assessable Value is Rs.950/-.
 CLASS 37

LIQUIDATED DAMAGES PAID BY THE BUYER

Never added to Assessable Value.

DISCOUNTS

Allowed at the time of removal Allowed Later

(Cash, quality, quantity)

All are acceptable Non-deductible

(Read MRF case.)

SPECIAL AUDIT
(S.14A)

In excise there are two types of audit:

A. Excise Audit: In this type of audit covers all aspects of Excise Law.
B. Special Audit: In Special Audit only specific aspects of Excise Law are looked
into, for example only valuation, only CENVAT credit (S.14AA).

Special Audit is done U/s.14A of the Excise Act.

Whenever subject matter related to assessment is pending before AC / DC

And he is having reason to believe that the value declared by assessee is not
correct.
With prior approval of Commissioner / Principal Commissioner, he can make an
order for Special Audit.
By CMA / CA. The auditor must be empanelled with the Chief Commissioner.
Period to be covered in audit and period for submission of report shall be
specified in the order.
Maximum period to be covered cannot exceed 5 years, since the assessee is
mandated to maintain the records only for a maximum period of 5 years.
Report within maximum 180 days.
Based on this report no action can be taken against the assessee unless he has
been given an opportunity of making representation.
 CLASS 38

PROBLEMS AND SOLUTIONS ON VALUATION

 CLASS 40

SSI EXEMPTION

(Small Scale Industry Exemption)

Not defined in Excise Act.

The definition of Small Scale Industry under other laws i.e. Industries (Development and Regulation) Act, 1951 is
for a different purpose and therefore is of no use in Excise.
Under Excise Law this is called as Exemption Based on Value of Goods Removed by the Assessee.

Assessable Value In Domestic Value of Goods removed from

Tariff Area Only all the units will be considered.
i.e. Home
Consumption
Where a unit has been used by
assessee for part of the year,
value of all removals from that
Unit for the whole year will be
counted.

EXPORT
For Deemed Exports see
To Nepal and Bhutan To Other Countries + Deemed Exports Rule 6 & 7 of CENVAT
Credit Rules.

Not Considered as Export. Only this is regarded as Export

 This exemption is not to Unit or Goods rather this is an exemption to Assessee.
This Exemption is granted U/s 5A of the Central Excise Act, 1944.
Notification No.8 / 2003

Notification No.8 / 2003

Eligibility Exemption Limits

Includes Dutiable, Exempted and Zero Rated Goods During current financial year, no duty upto value
Value of Excisable Goods removed in DTA (Domestic Tariff of Dutiable Goods removed in DTA, does not
Area) did not exceed 4 Crores during preceding financial year exceeding 1.5 Crore,

Take note that basis of calculation is EXCISABLE GOODS and Take note that basis of calculation is
not Dutiable Goods. DUTIABLE GOODS and not Excisable Goods.

Going by this every undertaking is eligible for exemption in

the first year of its operation.
SSI Exemption is not available for the following items:
(a) Pan Masala
(b) Matches
(c) Watches. However, exemption extended to watches not having RSP exceeding Rs. 500/-
(d) Tobacco Products
(e) Power driven pumps for water
Following industries are also not eligible for SSI exemption
(a) Automobiles
(b) Primary iron and steel
 CLASS 41

To arrive at the figures of Excisable and Dutiable Goods, the following shall be subtracted from the Turnover:
- Taxes
- Trading (not manufactured by the assessee)
- Exports (other than Nepal and Bhutan)
- Captive Consumption
- Any Job Work (done for others)
- Manufacture under Notification No.214 / 1986 (See Class 1) (Where the Principal undertakes to discharge the
obligation of payment of duty).

Manufacture Under Brand Name

OWN BRAND ANOTHERS BRAND

(Includes a brand obtained
(OEM)
from others on assignment)

Exemption is available Manufacture in Rural Area Manufacture in Other Area

i.e. Value is to be taken into

account for 150 / 400 Lacs

Exemption is available - Irrespective of value duty is

i.e. Value is to be taken into account for 150 /
400 Lacs payable.
- Not Counted for 150 / 400 Lacs.

No CENVAT credit except on Capital Goods CENVAT credit available

Note: Manufacture under certain brands notified by the Central Government, such as Khadi
and Village Industries Commission or State Small Industries Corporation are always
excludible.

Registration

A manufacturer availing SSI exemption need not be registered at the time of

commencement of manufacturing activity.
When value of dutiable goods removed by manufacturer for home consumption
during the financial year becomes Rs. 90 lacs, he is required to intimate the
Superintendent of Central Excise having jurisdiction over the place manufacturing unit
is registered and
when such value exceeds Rs. 140.00 lacs, an application shall be made for registration.

Also read Bonanzo Engineering and Chemical Pvt. Ltd. Vs. Commissioner of Central Excise
[(2012) 4 SCC 771]
 CLASS 42

Only questions and answers.

CLASS 43
 CLASS 44

CENTRAL EXCISE RULES, 2002

(GENERAL PROCEDURES)

Central Excise Officers

RULE 3
Appointment Jurisdiction

Assistant Commissioner / Below Assistant By CBEC for

Deputy Commissioner Commissioner / Deputy Commissioner and
and Senior Officers Commissioner other senior officers.

Only by CBEC CBEC

CBEC may authorize senior

officers to make appointment

S.12E:Powers of Central Excise Officer

Every Officer is authorized to exercise the powers given to him
under the Act / Rules.
Every Officer is also authorized to exercise powers of his
subordinate officers.
However Commissioner (Appeals) cannot exercise the powers of
Adjudicating Authority.
S.14 Common Power Power to Summon
Record / Documents
Evidence / Information
Presence

S.9:Penalty for Failure to Comply With Summons

RULE 4- LIABILITY TO PAY DUTY WHEN BY WHOM

See Class 13

1) Removal of Goods on Payment of Duty.

2) Goods under Chapter 61, 62 and 63 of Schedule I of CETA manufactured
on Job Work basis.
3) Duty Liability on Molasses.
4) Duty Liability on Other Goods.
5) Warehousing of Finished Goods outside factory without payment of
duty.
 CLASS - 45

RULE 5 - EFFECTIVE RATE OF DUTY

See Class 14

1) Effective Rate of Duty

2) Effective Date for Tariff Value

ASSESSMENT
(Determination of the Amount of Duty)

Provisional Assessment
Actual Assessment
(RULE 7)

Removal Based (Rule 6) Capacity Based

REMOVAL BASED
(Rule 6)
Under Physical Control Under Self Declaration

Only one item Cigarettes All Other Goods

Goods cannot be removed without Inspection not required

inspection by officer.

Every Invoice is required to be signed Signature of Officer not required

by the officer.

Rule 11 applies:

Every invoice shall be signed by

Assessee or his Authorised
Representative.

CAPACITY BASED
S.3A RULE 15

Called Capacity Based Only Called as COMPOUNDED LEVY

SCHEME

For: For:

Pan Masala Aluminum Circles

Gutkha Steel Pattis
Tobacco

This scheme is mandatory / compulsory This scheme is optional

 PROVISIONAL ASSESSMENT
(RULE 7)
Where Assessee cannot (finds himself unable)decide amount of duty due to
confusion about value or rate.

This situation arises only where value and rate are decided by the assessee.
Since in Capacity Based Assessment, the Assessee has little leeway, the only
possibility of provisional Assessment arises in Removal Based Assessments.

Assessee shall apply to AC / DC to pay duty provisionally.

Value / Rate is fixed by Officer provisionally.
Bond is required.
Assessment is by Officer based on information provided by Assessee.
Time limit for finalization:
6 months from permission given for provisional assessment.
If required extension of 6 months by Commissioner.
If more time required, further 6 months extension by Chief Commissioner
Upon finalization of assessment, the amount deposited provisionally shall be
adjusted any shortfall shall be demanded from Assessee with interest any extra
shall be refunded to Assessee, subject to doctrine of unjust enrichment OR to the
customer.

RULE 8:TIME AND MANNER OF PAYMENT OF DUTY

Except where special permission is given by the

Commissioner, only online payment is permitted.

Payment made by 8:00 PM is taken for the date. After

8:00 PM for the next day.

Monthly Basis : Non-SSI Assessee

Quarterly Basis: SSI Assessee (upon exceeding the exemption limit during the year), till
the end of the financial year.

In both cases, payment should be made within 6 days from the end of month / quarter
except where month / quarter is ending 31st March.

DELAY IN PAYMENT:

1) Interest @ 18% per annum on tax as per S.11AA

2) Penalty:Sub-rule (3A) provides that If the assessee fails to pay the duty declared as
payable by him in the return within a period of one month from the due date, then
the assessee is liable to pay the penalty at the rate of one per cent. on such amount
of the duty not paid, for each month or part thereof calculated from the due date,
for the period during which such failure continues.
 CLASS 47

REGISTRATION

Every manufacturer, producer, warehouse keeper, trader, importer, consumer

requires registration.
CBEC is authorized to prescribe the persons not requiring registration.

REQUIRED NOT REQUIRED

Manufacturer of excisable Goods Manufacturer of non-excisable goods.

liable to pay duty
Manufacturer of excisable goods
availing SSI exemption.

Manufacture in Custom Warehouse

First Stage Dealer Any other trader

Second Stage Dealer

Willing to issue CENVATable invoice

Warehouse outside factory where Any other warehouse
goods are authorized to be deposited
without payment of duty.

Importer willing to issue Any other importer

CENVATable invoice.

Any person willing to avail CENVAT Ultimate Consumer

credit

Any person getting following goods Person manufacturing following

manufactured on Job-Work basis articles on Job-Work basis:
a) U/s.61, 62, 63 of Sch.I of CETA. a)
b) Jewellery and other articles of
precious metals.
 RULE 10 DAILY STOCK ACCOUNT OF FINISHED GOODS (DSA)

Opening Stock

+ Additions

(-) Removals

= Closing Stock

This record is required to be maintained by each and every manufacturer on day to day
basis at a fixed time.
 CLASS 48

RULE 11- REMOVAL OF EXCISABLE GOODS UNDER COVER OF INVOICE

Removal: Means Sale or Disposal

Therefore if capital goods or inputs are to be sent to the job worker, this rule
is not applicable.

However if any excisable goods (capital goods, inputs, waste & scrap) are
sold or disposed off, this rule becomes applicable.

In all cases of removal, there must be invoice.

Based on this invoice CENVAT credit is admissible.

The invoices are by Manufacturer, First / Second Stage Dealer or their Agent.

CONTENTS OF INVOICE:

I. Name of Assessee & Address of Premises

II. Registration Number and Jurisdiction of Superintendent.
III. Name and Address of the customer or his consignee (as for example when
capital goods / inputs are being sent straight to the job worker).
IV. Sl. No. and Date
V. Description of Goods / Classification / Quantity / Value / Duty.
VI. Reference of any exemption notification.
VII. Signature of the Assessee or his Authorised Signatory, and in case of Cigarettes,
also by the Excise Officer.
VIII. Minimum three sets required 1. Customer, 2. Transporter, 3. Assessee

Earlier the invoices required the registration number of the transport vehicle also.
 CLASS - 49

RETURNS BY MANUFACTURERS
RULE 12
Periodical Annual Financial Statement
returns
Only if the Assessee has paid
duty of Rs.100 lacs or more
during the financial year.
TO be filed on or before 30th
November.
Installed Capacity
Only when manufacturer is
U/s.3A or he has opted for
Rule 15 (Compounded Levy
Scheme).
Every year on or before 30th
November.

Periodical returns

Quarterly Monthly

SSI Exemption Cases Other Cases

Within 10 days after end of month / quarter

Manufacturers of Pan Masala, Gutkha and Chewing Tobacco are required to file monthly
returns for their procurements, production and sales (i.e. all S.3A cases).

In each of the above cases:

Electronic Filing is compulsory.

Delayed filing fine upto Rs.100/- per day subject to maximum Rs.20,000/-.
Previously this was covered U/r.20 that was about general penalty that laid down a
maximum penalty of Rs.5000/-.
Returns may be scrutinized Information may be demanded
If Information demanded Assessee shall provide.
 RULE 12AA JEWELLERY AND OTHER ARTICLES OF PRECIOUS METAL
MANUFACTURED ON JOB WORK BASIS.

Comes into picture only where the manufacture is on Job Work basis. It is also
important to bear in mind that if the Principle is the ultimate consumer, this
rule will not apply.
Covered under heading 7113 & 7114
Covers two people:

Job Worker Principle

Job Worker is manufacturer The Principle is Customer / Trader

Although general principle of
Excise is that the manufacturer is
Assessee, this rule creates an
Exception by making the trader the
Assessee.
Consequences
Registration
Prepare and issue Invoice Pay
Duty
Returns
Entitled to CENVAT credit.

The Principle has been authorized to remove goods from the premises of the Job
Worker also.
In case goods are removed from the premises of Job Worker, the obligation to
prepare three copies of the invoice is on the Principle in which case two particulars
date and time of removal shall be blank place of removal shall be that of Job
Worker. The Job Worker shall return Assessees copy to him after removal.
 RULE 12BB LARGE TAX PAYER

Already covered in Class 29 CENVAT credit.

CLASS 50

RULE 12CCC POWER TO IMPOSE RESTRICTIONS.

RULE 12D GOODS UNDER CHAPTER 61, 62, 63 OF SCHEDULE I OF CETA MANUFACTURED ON JOB WORK
BASIS

RULE 15 COMPOUNDED LEVY SCHEME

Refer Rule 6

RULE 16 BRINGING BACK GOODS IN FACTORY REMOVED EARLIER ON PAYMENT OF DUTY (UNSOLD)

Assessee is authorized to avail CENVAT credit for the duty paid

Any process carried out before subsequent removal No Process

Amounts to Manufacture Eg. Repricing Does not amount to manufacture On subsequent removal,
Eg. Repairs make reversal of CENVAT
credit availed when goods
Pay duty as if goods are being removed for
Same Consequences were received in factory.
first time.
 CLASS 51

REMOVAL OF GOODS FOR VARIOUS PURPOSES

RULE 16A RULE 16B RULE 16C

Inputs / Semi-Finished Goods for For part of manufacturing process For any activity / purpose which does
Job Work in another premises of Assessee. not amount to manufacture
Eg. Testing

In all the three cases, prior approval of Commissioner / Principle Commissioner is required.
Usually this power is delegated to some field officer.
Goods should be brought back within prescribed time limit. (180 Subject to such terms and conditions as
days).
If not brought back make reversal of CENVAT credit. may be considered necessary by the
Received later avail CENVAT credit again. officer.
Special permission required
RULE 17 100% EOU
1) Obtain registration (Rule 9).
2) Removal of goods only under the cover of invoice. (Rule 11)
3) Payment of duty monthly. (Rule 8)
4) File monthly returns. (Rule 12)
Delay fine Rs.100/- per day - maximum Rs.20,000/-
5) Scrutiny provisions applicable.
 CLASS 52

EXPORT

To be read with Rule 6 & 7 CENVAT credit Rules

ACTUAL DEEMED

Sending goods out of India Goods remain in India but considered

export.
To Bhutan Other Countries

(Now Nepal is out of list - (including Nepal)

only for this Rule)
Not an export Export

In both these cases goods can be exported without paying duty.

Or
Duty paid goods can be exported.

RULE - 18

If Duty paid goods are exported If Goods are exported without payment of duty

Rebate (Refund in cash) is allowed
for the duty already paid, provided:
(i) Export is within 6 months since
removal.
(ii) Goods shall be identifiable.
(iii) Duty drawback is not claimed.
Rebate is allowed for duty paid on Inputs
provided:
(i) CENVAT credit not availed under Rule 5 of
CENVAT Credit Rules..
&
(ii) Duty drawback is not claimed.

Government has already provided a list of articles that are not identifiable. Unless the assessee
readies the export consignment before removal, that is inspected and sealed by the Excise
Officer, benefit of Rule 18 cannot be taken.
 RULE 19 creates an exception to RULE 4 and permits removal of Finished Goods without
paying duty:
For Export
For manufacture of export goods. (In these cases the manufacture does not need to
avail Rule 18. He would buy Inputs without payment of duty and export without
paying any duty and issuing Form No. CT-1 to the manufacturer of the Input).

Export may be either direct or through Merchant Exporter, whose business is to buy goods solely
for export. The assessee may either export directly or may avail the services of the Merchant
Exporter and it makes no difference.
 CLASS 53

RULE 20 WAREHOUSING OF FINISHED GOODS

Outside the Factory

In the Factory

After Paying Duty Without Paying Duty

Rule 4(4) Rule 20

The Commissioner may authorize The Central Government may authorize.
Due to Shortage of Space For reasons mentioned in Rule 4(4) or any other
Government has Government has got no
Or relevant factor.
got no concern concern
Nature of goods Terms and conditions for protecting revenue.
Terms and conditions for protecting During transit, duty liability shall be of the consignor
revenue. until goods are delivered to the Consignee.

Read along with Rule 8 of CENVAT Credit Rules.

RULE 21 REMISSION (WAIVER) OF DUTY ON FINISHED GOODS

Applicable when:

1) Goods are destroyed due to any accident / Natural Calamity before removal.
2) Goods become non marketable.
How Availed:

On an application by the Assessee to the Officer:

DUTY OFFICER

Upto Rs.10,000/- Superintendent

Rs.10,000/- to Rs.1,00,000/- Assistant Commissioner / Deputy

Commissioner

Exceeding Rs.1,00,000/- to Joint Commissioner

Rs.5,00,000/-

Above Rs.5,00,000/- Commissioner / Principal Commissioner

Read along with Rule 3(5C) of CENVAT Credit Rules (Class 19).

Note:

As per Rule 3(5C) of CENVAT Credit Rules, if any remission of duty is allowed
under Rule 21 of the Central Excise Rules, then the CENVAT credit availed by the
Assessee on the Inputs and Input Services used in manufacture of such goods shall
be reversed / paid back.

RULE 22 to RULE 26 INSPECTION OF RECORDS

CLASS 54
VERIFICATION OF STOCK
 CLASS 55

CENTRAL EXCISE ACT, 1944

S.1 to S.23 S.23A onwards

Section-wise Advance Rulings

Settlement
Appeals

S.1 Applicability

S.2 Definitions

S.3 Levy and Collection of duty

S.3A Duty Payable on the Basis of Installed Capacity of Production

S.4 Transaction Value

S.4A RSP Based Value

S.5 Remission of Duty

Every industry has Normal Handling Loss

Natural Loss Variation in quantity due to nature of goods, Eg. Weight
loss due to loss of moisture. Government has right to determine Normal
Loss.
In this provision there is no reversal of credit. Why?
 CLASS 56

S.5A POWER OF CENTRAL GOVERNMENT TO ALLOW EXEMPTIONS

Already done (SSI Exemption)

S.5B

SITUATION:

A Manufacturer avails CENVAT Credit

Removes goods on payment of duty
Court declares that the process carried out does not amount to
manufacture.

Demand Refund Do Not Demand Refund

Reversal of CENVAT Credit is needed No reversal of CENVAT credit is

needed

S.6 - REGISTRATION

Refer Rule 9.

S.7 OMITTED SINCE 1992

S.8 PROVISIONS RELATED TO TOBACCO

Every person willing to store tobacco for commercial purpose in commercial quantity is
required to be registered under the Act and he shall be bound to comply with the relevant
provisions of the Act and Rules made in that regard.

(This is the only provision in the entire Act related to tobacco)