Introduction: The project is about Export Documentation and the process of filing the rebate on the excise duty

charged on the company. Tax is of two types Direct tax and indirect tax. Direct tax is paid directly by the people to the government, while indirect tax is the tax which is paid indirectly by the people to the government. Income tax is directly paid by the people to the government while excise duty is paid by the people to the manufacturer who then pays it to the government therefore it is an indirect tax. The Constitution of India (COI) has given power to levy tax to central and state government under seventh schedule . The taxation in India is either charged by the state governments or by the central government. In the basic scheme of taxation in India, it is conceived that central government will levy and collect tax revenue from Income Tax (except on Agricultural Income),Excise (except on alcoholic drinks) and Customs while state government will get tax revenue from sales tax, excise on liquor and tax on Agricultural Income and the municipalities will get tax revenue from octroi and house property tax. The main aim of the project is to understand the meaning and nature of excise duty and understand the rates of excise. Excise is an indirect tax which is charged while the goods are been exported from one country to the other, such kind of a duty is imposed to keep a check on the goods being exported. The company can file a return on the duty imposed except for liquor and some other items because the export or the import of such goods needs to be discouraged.The purpose behind doing the project is to understand the manner in which Alpha Laval is maintaining all the documents of the export and how the rebate is been claimed on the duty levied upon them. Further on the main reason behind which I opted for doing a project in indirect tax is to get a hands on experience in the taxation procedure because taxes are a vast subject and mere reading from the textbooks is not sufficient .Further working in an office environment is a practice for the future career. Main objective in undertaking this project is to supplement academic knowledge with absolute practical exposure to day to day functions of the organization. Company changing name from Vulcan Laval Ltd, to Alfa Laval Ltd, in 1987, comes a long way since it started as a fabrication factory. Now a day, executing projects in all over the world in countries like South Africa, Middle East, China and so on, the company has diversified its core product lines with changing technological environment. Core product lines of the company are thermal, separation, chemical technologies. The training at Alfa Laval (India) Limited involved the day to day working at tax departments with the senior managers in the

company. This project helped us to get the deeper understanding of the process of export documentation and filing the rebate for returns. In this report I have attached various documents for the filing of claim of rebate under Rule 18 of Central Excise Rules 2002.In this report I have explained the meaning of Indirect taxes and the rates of excise also what Alfa Laval is doing to ensure the safety of their machinery that is been exported , the manner in which the records are been maintained etc. Scope of the study: Understanding the right export documentation is required by many countries. Having a thorough knowledge of export documentation would be helpful in customs clearance and facilitate duty exemptions. India is a booming economy it is expected to become the third largest economy by2025 so there is enormous scope in the field of excise and filing for the rebate. In addition certified export documentation is required by many countries. Excise duty is levied on production or manufacture and not on sale. At the time of sale another tax called Value Added Tax (VAT) or Sales Tax is applicable. In this report various documents required for export clearance and filing the report are also attached and the explanation of the contents are given.

Industry Overview: Industry in the sense of manufacturing became a key sector of production and labour in European and North American countries during the Industrial Revolution, which upset previous mercantile and feudal economies through many successive rapid advances in technology, such as the steel and coal production. It is aided by technological advances, and has continued to develop into new types and sectors to this day. Industrial countries then assumed a capitalist economic policy. Railroads and steam-powered ships began speedily establishing links with previously unreachable world markets, enabling private companies to develop to then-unheard of size and wealth. Following the Industrial Revolution, perhaps a third of the world's economic output is derived from manufacturing industriesmore than agriculture's share. Many developed countries and many developing/semideveloped countries (People's Republic of China, India etc.) depend significantly on industry. Industries, the countries they reside in, and the economies of those countries are interlinked in a complex web of interdependence. The Manufacturing sector comprises establishments engaged in the mechanical, physical, or chemical transformation of materials, substances, or components into new products. Establishments in the Manufacturing sector are often described as plants, factories, or mills and characteristically use power-driven machines and materials-handling equipment. However, establishments that transform materials or substances into new products by hand or in the worker's home and those engaged in selling to the general public products made on the same premises from which they are sold, such as bakeries, candy stores, and custom tailors, may also be included in this sector. Manufacturing establishments may process materials or may contract with other establishments to process their materials for them. Both types of establishments are included in manufacturing. Alfa Laval is involved in the manufacturing of machinery which is a subsector of the manufacturing industry. Overview of the Engineering Sector: Market Overview: The Engineering sector is the largest in the overall industrial sectors in India. It is a diverse industry with a number of segments, and can be broadly categorised into
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two segments, namely, heavy engineering and light engineering. The engineering sector is relatively less fragmented at the top, as the competencies required are high, while it is highly fragmented at the lower end (e.g. unbranded transformers for the retail segment) and is dominated by smaller players. The engineering industry in India manufactures a wide range of products, with heavy engineering goods accounting for bulk of the production. Most of the leading players are engaged in the production of heavy engineering goods and mainly produces high-value products using high-end technology. Requirement of high level of capital investment poses as a major entry barrier. Consequently, the small and unorganised firms have a small market presence. The light engineering goods segment, on the other hand, uses medium to low-end technology. Entry barrier is low on account of the comparatively lower requirement of capital and technology. This segment is characterised by the dominance of small and unorganised players which manufacture low-value added products. However, there are few medium and large scale firms which manufacture high-value added products. This segment is also characterised by small capacities and high level of competition among the players.

DESTINATION OF ENGINEERING EXPORTS (195657)

N. America 0% Australia 0% Others 4%

Europe 0% Africa 23%

Asia 73%

DESTINATION OF ENGINEERING EXPORT (2004-05)

Others 26%

Australia 1%

N. America 16%

Europe 23% Asia 30% Africa 4%

Interpretation: In the first graph we can see that the exports were mainly focused only in the African continent and Asia but in 2005 the scenario has changed rapidly.

List of top ten Engineering and Manufacturing companies of the world: Sr.no Name of company 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) A.Reyrolle & company Aalberts Industries Abengoa Industries Acciona Sector of Operations Engineering Manufacturing, Engineering Engineering Technology Construction Engineering

Aecom Technology Engineering corporation Aker Solution Alfa Laval Allaire Iron Works Alstom AMEC Construction,Engineering,Oil&gasfield exploration Manufacturing,Engineering Engineering,Shipbuilding Manufacturing,Engineering Construction, Engineering

Challenges faced by the Engineering Sector: Below are some of the challenges that would be faced by the industry in the near future Three global mega-trends Three global mega trends are dominating the future development of the industry. First there will be a continued shift to Asia. China has become the number 1 machine building country worldwide, having passed the US in 2010. Germany will be losing its market-leading position to China in most segments of the machine building industry. Also the performance and quality requirements of Chinese are getting closer to European levels. While European operators plan to maintain their technological levels, Chinese operators are planning to increase them significantly. Chinese (original equipment manufacture) will focus on easy-accessible markets: Secondly experts expect a game change in the mid-end: The mid-end performance segment is growing the fastest, becoming a full global battlefield. "Therefore a strong competition between European and Chinese OEMs in most of the accessible growth regions is likely ,Chinese OEMs will focus mainly on easily-accessible markets in South-East Asia, Middle East and Africa. Going green is the third global mega trend in the industry. "There will be an increasing importance of energy efficiency in Europe and Japan driven by cost savings, regulations and the green. Substantial energy savings can be achieved at selected applications. Many operators consider energy efficiency as important purchasing criteria, but not all are willing to pay a price premium. But despite this mega-trend energy efficiency and other "green" concepts are remaining a marketing issue for many applications in the near future.

Special strategies for special markets necessary As a result of all these challenges European OEMs need to develop a tailor-made strategy, depending on the individual product/market position. On top technologyleading high-end OEMs should carefully enhance business into mid-end to participate in this fast growing segment.
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European mid-end OEMs do already have a global footprint, but a further transfer of R&D into emerging markets is still required. Whereas Chinese OEMs tackle the large potential in their home market, mainly by improving their technological offerings. To manage these global challenges it is important for all OEMs to rethink their business models now. Information of the project in brief: The project is about the manner in which the export of machiney at alfa laval is done ,the document requirements of excise clearance, the various ledgers that are prepared and the documentation of rebate filing on the duty charged by the government. Here in this subject of Indirect Tax, I have learned, what is CETA, Cenvat Credit, How the goods is valued in Excise, What is Transaction Value, What is the valuation rules & procedure for calculating the retail price of the manufactured product, What is the rules & procedure of payment the Central Excise duty. What if duty cannot be levied within the given period of time. Lastly I concentrate on the Excise Audit & Powers of Excise Officer so that one can know the broader aspect of this term.

Company Overview: Mission statement: To optimize the performance and techniques , but most of all it is a matter of human resources. Alfa Laval is a Swedish company founded in 1883 by Gustaf De Laval and Oscar Lamm. The company is a producer of specialized products and solutions used to heat ,cool,separate and transport such products as oil,water ,chemicals beverages,foodstuffs ,starch and pharmaceuticals. The company comes under Manufacturing and Engeneering sector. Alfa Laval India Limited is a leading global provider of specialized products and engineering solutions. Alfa Laval has business links with leading engineering multinational, Alfa Laval AB Sweden. The company offers its core technologies in theareas of Separation, Heat Transfer and Fluid Handling. The company also posse expertise in project engineering and chemical equipment of fabrication. With strong manufacturing base at Pune and Satara, It is engaged in the production of equipment for industries such as breweries, beverages, vegetable oils, food processing,power generation, chemical, marines, oil and gas production, water treatment plants, sugar, mining etc. Alfa Laval s strength lies not only in the supply of individual equipment to these industries but also in the execution of projects from pre project engineering, to manufacture, to supply, to installation, commissioning and after sales services. The company s project management capability has proven in the field of dairies, breweries, food processing and refrigeration. Today Alfa Laval India Ltd is multi location engineering company with strong manufacturing bases at Pune, Satara, and Sarole. It does its business through a nationwide sales and service through a dedicated customer service center located at Thane.

COMPANY S MILESTONES 1937:Alfa Laval India Ltd traces its origin in the year 1937, when it was incorporated asVulcan Trading Company Pvt. Ltd., a wholly owned subsidiary of the Swedish match company mainly engaged in trading activities. 1961:The company set up its manufacturing unit at Pune in 1961, for the production of plant sand equipment for food, chemical and pharmaceutical industries. 1965:In 1965, Vulcan Trading Company acquired the assets and liabilities of Alfa Laval Ltd. By the way of amalgamation and was re christened Vulcan Laval Ltd. Alfa Laval Sweden became a shareholder of the merged company. 1983:In 1983, a manufacturing unit was set up at Satara for the production of Plate Heat Exchangers and subsequently, Spiral Heat Exchangers. 1987:The company s business was by and large based on Alfa Laval technology. Hence the company s name was changed to Alfa Laval (India) Ltd; in 1987. 1991:In 1991, Alfa Laval Sweden merged with Tetra Pak, an international organization that develops manufacturers and, markets complete packaging systems. It has been awarded as a GMU (Group Manufacturing Unit) status by Alfa Laval, Sweden, to manufacture Centrifugal Separators and Decanter Centrifuges for exports to Alfa Laval Sweden, Japan, Spain and Denmark. Lloyds Registered Quality Assurance LRQA (UK) for Thermal and Separation business groups, has conferred it with the ISO 9001 certification.

Products and Services Alfa Laval India Ltd develops products that help to make industry more efficient and contribute to the optimum utilization of energy. The company offers key technologies like Separators, Heat Transfers and Flow Technology that are of vital importance to industry. Separators: Alfa Laval is the world s largest supplier of separation equipment such as high speed Separators, Decanters and Separation Systems. These are widely used in chemical, pharmaceutical and process industries, onboard ships, power plants, water and waste management and engineering industries .

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 Heat Exchangers: Alfa Laval India Ltd supplies an extensive range of compact heat exchangers plate and spiral heat exchangers in a variety of materials for a large range of applications. With its unique manufacturing facilities, experiences and expertise gained over a years, Alfa Laval India Ltd is the undisputed market leader for the supply of Plate and Heat Exchangers. Fabrication: Alfa Laval India Ltd has come a long since the start of its fabrication factory in 1961.From catering the stainless steel fabrication requirements in dairy industries in its early days Alfa Laval India Ltd has built an enviable infrastructure to fabricate exotic metals like Titanium, Hastelloy etc. and also Austenitic Stainless Steel . Alcohol Plants/Distillery: A well-known name in the distillery market, Alfa Laval India Ltd was a pioneer in bringing Single Fermenter continuous fermentation technology to India in the late eighties. Almost all distilleries in India are associated with Alfa Laval. Besides, the company has executed more than 51 complete distillery projects in India as well as in Turkey, Vietnam, Indonesia, Thailand and Australia. Customer Care: For Alfa Laval, service is one of the most important competitive tools. It is the most important competitive tools. It is making sure its customer stay in production. It is enabling them to be different, productive and innovative. It is giving them reliable and relevant information that genuinely relates to their business and getting them started on time at all full capacity and on specification. It is permitting their customers to be spectacularly successful. Industrial Applications: Alfa Laval India Limited has delivered more than: 100 Vegetable oil refining plants. 14 Brewery plants accounting for a sizeable Production of Beer in India. 200 Dairy Plants. 31 Distillery Plants. 300 Spray Drying and Evaporation Plants for applications in Dairy and Food, Dyestuff, Chemicals, Ceramic and Paper. Alfa Laval India is also executing Plants in South Africa, China, Oman, Nigeria, Nepal, Bangladesh and Sri Lanka.
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Organization Chart:

Finance & Legal Organization:

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Duties and Reasponsibilities of Finance Department: Accounting standards Statutory and operational consolidation Taxes Legal structures Systems for financial reporting Business analysis connected to our financial reporting Forecast process Sales statistics reporting Production of management accounts Development and implementation of direction for Information Technology and Information System Single source supplier in the Group for IT and IS Overall funding matters for the Group Funding for all group companies Commercial guarantees Financial derivatives Standard terms of sales, mergers and acquisitions Legal matters incl. trademarks Monitoring & evaluation of risks within the company Insurance covers for the Group Investment and disposal of real estate Maintenance and leasing of premises Internal auditing .

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Objectives:
To Study all related aspects & the law relating to Central Excise.

Understanding about the two types of Taxation policies. Detailed studies about indirect taxes especially excise. To understand the meaning of excise tax and why it is imposed. Rates of Excise Duty. The clauses under the Central Excise Act of 1944. To understand the relevance of documents required during export of machinery and clear understanding about the export process. To understand the documents that needs to be attached for the rebate filing on the export duty. To know when and how excise duty is paid. Registration and clearance of goods. Scheme of setoff of the excise duty. Exemptions that come under Central Excise. To understand the various contents of the form and its relevance in clearance of excise and also in the filing of the rebate. Main objective in undertaking this project is to supplement academic knowledge with absolute practical exposure to day to day functions of the organization. How Alfa Laval makes the entry of their excise related transaction in their books of Account & what are the provisions regarding the payment of duty they need to follow. What are the methods of Valuation of a manufactured Goods under CETA. What will be case if there any failure of paying the duty in due time & how much concession a SSI can benefit under the Central Excise.

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Introduction to Taxes: Government needs funds for various purposes like maintenance of law & other order, defense, social/ health services etc. Government obtains funds from various sources, out of which one main source is Taxation. Justice Holmes of US Supreme Court has long ago rightly said that Tax is the price, which we pay for a civilized Society. Taxes are conventionally broadly classified as Direct Taxes &Indirect taxes. Direct taxes are those, which the taxpayer pays directly from his Income/ Wealth/Estate etc. Indirect taxes that the taxpayer pays indirectly while purchasing goods & commodities, paying for the services etc. In case of indirect taxes one person pays them but he recovers the same from another person. Thus the person who actually bears the tax burden (the ultimate consumer) pays it indirectly through some other person, who practically, merely acts as collecting agent. Broadly speaking, direct taxes are those, which paid after the income reaches in the hands of tax payer. Important Direct taxes are Income Tax, Gift Tax &Wealth Tax. Import Indirect taxes are Central Excise (Duty on manufacture), Customs (Duty on Imports & Exports), Central Sales Tax (CST) & Service Tax. As tax payers does not feel a direct pinch while paying indirect taxes, resistance to indirect taxes is much less compared to resistance of direct taxes. Manufacturers/ Dealer psychology also favors indirect taxes because they feel that they only collect the tax & not pay the tax. Indirect taxes are easier to collect & tax evasion is comparatively less in Indirect taxes. The manufacturer/ trader who collects the taxes in his invoice and pays it to the govt., has a psychological feeling that he is only collecting the taxes and is not paying out of his own pocket (though this feeling may not be always correct). It has been observed that top management takes very keen interest in direct tax matters, while matters relating to Indirect taxes are usually handled by lower management, though revenue implications are much higher in Indirect Taxes. Great care is taken in making any payment and sanctioning any expenditure, while decision in respect of debits & Credits in Cenvat Credit Account Government can judiciously use the Indirect taxes to support development in desirable areas, while discouraging it in others e.g. reducing tax on goods manufactured in tiny or small scale units, lowering taxes in backward areas etc. In the basic scheme of taxation in India, it is envisaged that: a) Central Government will get tax revenue from Income Tax (except on Agricultural Income), Excise (except on alcoholic drinks) & Customs. b) State Government will get tax revenue from sales tax excise on liquor & tax on
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Agricultural Income. c) Municipalities will get tax revenue from Octroi & House Property Tax. Income Tax, Central Excise & Customs are administered by Central Government. As regards Sales Tax, Central Sales Tax is levied by Central Government while State Sales Tax is levied by Individual State Governments. Though Central Government levied the central Sales Tax, it is administered by State Governments & tax collected in each state is retained by that state Government itself. Income Tax, Central Excise & Customs are administered by Central Government. As regards Sales Tax, Central Sales Tax is levied by Central Government while State Sales Tax is levied by Individual State Governments. Though Central Government levied the central Sales Tax, it is administered by State Governments & tax collected in each state is retained by that state Government itself. Here in this subject of Indirect Tax, I have learned, what is CETA, Cenvat Credit, How the goods is valued in Excise, What is Transaction Value, What is the valuation rules & procedure for calculating the retail price of the manufactured product, What is the rules & procedure of payment the Central Excise duty. What if duty cannot be levied within the given period of time. Lastly I concentrate on the Excise Audit & Powers of Excise Officer so that one can know the broader aspect of this term. Meaning Of Excise duty: An excise tax (sometimes called a duty of excise special tax) is commonly referred to as an inland tax on the sale, or production for sale of specific goods. Excises are distinguished from customs duties, which are taxes on importation. Excises are inland taxes, whereas customs duties are broader taxes. In India , almost all manufactured products are included for excise tax, Government of India has made automation of central excise and service tax with this, manufacturer can easily pay their tax online on every 10th of the following month through ER-1. Excise duty should be considered as a manufacturing expense and should be considered as an element of cost for inventory valuation, like other manufacturing expenses. Excise duty cannot be treated as a period Cost. Calculation Of Excise: MRP or Cost of goods x 12%excise x 2% Cess (charged on the 12%excise duty) x 1 % educational cess.

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Explanation: Chargeable value of MRP is decided by the govt basis the kind of product category the good belongs to. This is easily available in published excise circular. In some categories there is a modvat %, which essentially a %discount on the end value of the product which can be waived off. Chargeability of Excise: Excise duty is levied on production of goods but the liability of excise duty arise only on removal of goods from the place of storage, i.e., factory or warehouse. Excise duty is levied even if the duty was paid on the raw material used production. Excise duty is levied on government undertakings also, e.g., Railways is liable to duty on the goods manufactured by it. Excise duty is an expense while calculating the profits in accounting. Excise duty is levied if goods are marketable. Actual sale is not relevant. Therefore, goods, which are given for free replacement during warranty period, are also liable for excise duty

Central Excise Rules- As per usual scheme of any Act, Section 37 of the Central Excise Act grants power to Govt. to frame rules for prescribing procedures, forms etc. Accordingly, Central Excise Rules have been notified by Central Government(and amended from time to time). These rules provide for various procedures, Cenvat provisions, refund procedures have to be followed. In case of Central Excise, the rules are more important because excise is a procedure oriented Act. Many time substantive benefits are lost or penalties are imposed merely because proper procedures were not followed. Moreover, rules often provide for granting concessions & relief s & hence they must be studied thoroughly. The main rules are- (a) Central Excise Rules-2002, (b) Cenvat Credit Rules-2004, (c) Central Excise (Appeal) Rules- 2001, (d) Central Excise (settlement of Cases) Rules, 2001. Central Excise Tariff Act, 1985(CETA) - Since it is essential to prescribe different duties for different types of productions, it is necessary to classify the items under various heads. Central Excise Tariff Act, 1985 classifies all the goods under 96 chapters & specific code is assigned to each item. This classification forms basis for classifying the goods under particular chapter head & subhead to prescribe duty to be charged on that particular product. Nature of Excise Duty
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Indian Constitution has given powers to Central Govt. and State Govt. to levy various taxes & duties. Powers of Central & State Govt. are enlisted in 7th Schedule to our constitution. Entry No. 84 of list I of 7th Schedule to the Constitution read as follows: Duties of excise on tobacco & other goods manufactured or produced in India, except alcoholic liquors for human consumption, opium, narcotics, but including medical & toilet preparations containing alcohol, opium or narcotics . Basis Conditions of Excise Liability Section3 of Central Excise Act (often called the Charging Section ) states that There shall be levied and collected in such manner as may be prescribed duties on all excisable goods (excluding goods produced or manufactured in Special Economic Zones), which are produced or manufactured in India. The word goods, which are manufactured or produced in India, are same as those used in Entry No 84 to list I. Thus, the power to levy Central Excise duty is derived from the constitution. Central Excise Duty: Initially, Separate Act used to be introduced for each commodity. Thus by 1944, there were 16 such enactments. All these were consolidated & a consolidating Act was passed in 1944 (which is still in force). The consolidated Act included various items called Tariff Items (TI) like Sugar (TI-1), Coffee (TI2), and Tea (TI-3) etc. More &more items were added each year, usually at the time of Budget. Finally a residual item called TI68 (Not elsewhere specified) was introduced w.e.f 1-3-1975.

Laws relating to central excise: Central Excise Act, 1944 (CEA)- This is the basic Act providing for charging of duty, valuation, powers of officers, provisions of arrests, penalty etc. It has been amended from time to time. The name of Act was Central Excise & Salt Act, 1944 The word Salt was dropped in 1996. The definition of charging section i.e. section 3 of Central Excise is vital, because it clearly signifies that there are four basic conditions for levy of Central Excise duty. 1. The duty is on Goods. 2. The goods must be excisable.
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3. The goods must be manufactured or produced. 4. Such manufacture or production must be in India. Unless all of these conditions are satisfied, Central Excise Duty cannot be levied. Goods manufactured in SEZ are Excluded Excisable Goods- As per section 3(1) of CE Act goods manufactured or produced in SEZ are excisable goods, but no duty is chargeable. They are termed as excluded excisable goods. Assessee and Assessment Assessment means determining the tax liability. Duty is paid by the manufacturer on his own while clearing goods from the factory/warehouse, on self assessment . The assessee himself has to determine classification and valuation of goods and pay duty accordingly.

Duty Liability in case of Manufactured Goods Rules 4(1) of Central Excise Rules makes it clear that excise duty is payable by the manufacture or producer of excisable goods. In case where goods are allowed to be stores the goods. Rule 4(1) makes it clear that duty is payable by person who produces or manufactures excisable goods. Duty liability in case of Goods stored in Warehouse Rule 20 of CE Rules permit warehousing of certain goods in warehouses without payment of duty. In such cases, the duty liability is on the person who stores the goods. Duty liability even when goods not sold or free replacement given during warranty period. Duty is payable even when : (a) Goods are used within the factory (b)Goods are captively consumed within factory for further manufacture. (c) Goods are given as free replacement.

Types of Excise Duty: Basic Excise Duty Excise duty , imposed under section 32 of the Central Excise and Salt Act of 1944 on all excisable goods other than salt produced or manufactured in India, at the rates set forth in the schedule to the central
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Excise Tariff Act ,1985,falls under the cateogary of basic Excise Duty in India. Special Duty of Excise: According to Sec 37 of the Finance Act ,1978, special excise Duty is levied on all excisable goods that come under taxation , in line with the Basic Excise Duty under the Central Excise and salt Act of 1944.Therefore each year the finance act spells out that whether the special Excise Duty shall or shall not be charged and eventually collected during the relevant financial year. Some commodities like pan masala, cars etc. are leviable with special duty [section 3(1)(b) of CEA]. These items are covered in Schedule II to Central Excise Tariff. Initially the special excise duty rates were 8%, 16% and 24%. The rate was made uniform @ 16% from 1-3-2001. Education Cess: A new levy education Cess has been imposed w.e.f 9-72004 on all goods on which excise duty is payable. Additional Duty of excise: Section 3 of the Additional Duties of excise Act of 1957 permits the charge and collection of Excise duty in respect of the goods as listed in the Schedule of this Act. This tax is shared between the central and State Governments and charged instead of Sales Tax.

Consequance of evading Tax: Under the different sections of the central Excise act, the fines for evading tax can range from 25% to 50% of the amount duty evaded. When you look at the amount of excise you may have to pay , this is a rather large amount and along with the financial repercussions you also have to encounter a tarnished image. How important it is to pay the duty? : It is mandatory to pay duty on all goods manufactured , unless exempted. For eg , duty is not payable on the goods exported out of India. Similarly exemption from payment of duty is available based on conditions such as kind of raw materials used , value of turnover (clearance) in a financial year, type of process employed etc. Two options of export of excisable goods: 1. Under rebate (rule 18 of central Excise Rules). 2. Without payment of duty (rule 19). Under Rule 18 one can claim rebate if excise duty had been levied on final product while it was being removed from the factory gate after providing all the proof of export.
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Under Rule 19:Finished goods can be removed without payment of duty. Formula for calculation of refund on excise duty: (Export turnover of goods +Export turnover of services)/Total turnover* Net CENVAT Credit. Were refund amount means the maximum refund that is admissible. NET CENVAT Credit: It means total CENVAT. Valuation of excise duty: Excise duty is payable on the basis of: 1. Specific duty based on measurement like weight, volume, length etc. 2. Percentage of Tariff value. 3. Maximum Retail Price. 4. Compounded levy Scheme. 5. Percentage of Assessable Value (Ad-valour duty) 1. Specific Excise Duty: Specified excise duty is the duty on units like weight, length, volume etc. Items Cigarettes Matches Sugar Cement Basis of specific excise duty Length of cigarette Per 100 boxes Per quintal Per tonne

2.Excise Duty on Tariff Value: Tariff Value is the value fixed by government from time to time. Government can fix different tariff value for different classes. Tariff Value is fixed for Pan Masala, Ready Made Garments. 3. Excise Duty on MRP: Government can specify the goods on which excise duty will be based on MRP. Excise duty on MRP is applicable on products on which quoting of MRP is necessary under the Weights and Measurements Act, e.g., Chocolates, Biscuits, Wafers, Ice Creams, Camera, Refrigerators, Fans, Footwear, Toothpaste etc.

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4.Compounded Levy Scheme: In case of small manufacturer, government allow small manufacturer to pay excise duty on the basis of specified factors like size of equipment employed, at the specified rates. 5. Excise Duty on Assessable Value: Assessable Value is the value of transaction i.e., the value at which transaction takes place, in other words it is the price actually paid or payable for the goods on sales. It is also called transaction value. It includes freight and transportation charges, commissions to dealer etc Excise duty is paid on transaction value or assessable value if: 1. Goods are sold at the time and place of removal. 2. Buyer and assessee (Manufacturer/seller) are not related. 3. Price is the only consideration for sale, i.e., money or some valuable item is received on sale.

Assessable Value = (Sales Price less Deductions) (1+rate of duty)

Registration of Goods: According to section 6 of Central Excise Act, every manufacturer or producer, who produces excisable goods, must get two types of registration: 1. Registration for manufacturer. 2. Registration for warehouse, where goods are stored. Rules of Registration Following are the rules of registration: 1. Separate registration is required for each premise. 2. Registration is not transferable.
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3. Registration certificate shall be given within 7 days of application for registration. 4. If manufacturer cease to produce i.e., stops the production permanently then he should apply for de-registration. 5. Registration can be revoked or suspended by AC/DC if any condition of the Act or Rules is breached. Procedure for Registration Following are the steps for registration under central excise act. 1. Application for registration is given in prescribed format to the Assistant Commissioner or Deputy Commissioner in duplicate. 2. Application should be accompanied be a self-attested copy of Permanent Account number (PAN) allotted by income tax department. 3. In case of company and partnership firms name of company or partnership should be mentioned as name of business and not the name of owner who sign the application. 4. On receipt of application of registration the excise department allots the registration certificate within 7 days. 5. The registration certificate mentions the Excise Control Code (ECC), the ECC is a 15 digit number which has first 10 digits of PAN, next two digits are either XM for manufacturer or XD for dealer and the last three digits are number like 001,002 etc. The registration certificate includes: 1. Name of assessee 2. Constitution of the business 3. Types of business (Manufacturer, Dealer or warehouse or depot or
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Export Oriented Unit (EOU). 4. Address of the business 5. The Excise Control Code (ECC).

Clearance of Goods: Clearance means taking goods out of factory. Thus, finished goods can be stored not removed in the place of manufacture (factory) without payment of duty. There is not time limit for removal of gods from place of manufacture i.e., factory. The records have to be maintained by manufacturer indicating particulars regarding: 1. Description of goods manufactured or produced 2. Opening Balance of goods manufactured or produced. 3. Quantity produced or manufactured. 4. Stock of goods. 5. Quantity of goods removed 6. Assessable Value 7. Amount of duty payable; and 8. Amount of duty actually paid. The record should be preserved for 5 years. If the records are not maintained then penalty up to duty payable can be imposed and goods can be confiscated. If goods are stored at any other place other than factory, then goods can be cleared from factory without payment of duty, if commissioner permits. Goods can be cleared out of factory without payment of duty for carrying out tests and omission per unit.

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Duty payment Provisions: Goods cleared from factory are cleared under an invoice. Duty is payable on monthly basis by 5th of the next month in which duty payment becomes due, i.e., the month in which goods are cleared from the factory. Duty is paid through current account called PLA and /or Central Value Added Tax Credit, i.e., CENVAT Credit. If the due date is Sunday or holiday, the duty can be paid on next working day. If duty is not paid then assessee is liable to pay the interest also on outstanding amount. If duty and interest is not paid for 30 days after due date, then the facility to pay duty on monthly basis will be withdrawn till the time interest and duty is paid or 2 months, whichever later. Thus, the facility of monthly payment of excise duty is withdrawn at least for 2 months. During this period duty will be paid on removal basis. Duty is paid by assessee through current account known as PLA (Personal Ledger Account). The PLA is credited when duty is paid i.e., deposited in the bank by filling a challan called TR-6 on monthly basis. Only excise duty paid comes in PLA the items like fine, penalty, interest does not appear in PLA. A PLA contains: 1. Serial number and date 2. Details of TR-6 challan number 3. Balance duty etc. The PLA is maintained in triplicate using both sided carbon. Excise Return: Excise return is submitted to the excise department with the two copies of PLA and TR-6 challan. The excise return is prepared in form ER-1 and ER-3. Meaning of CENVAT: CENVAT: CENVAT has its origin from the system of VAT, which is very common in European countries. VAT means Value added Tax; it is a system of taxation in which tax is paid only on the value addition. Value addition is the difference between the sale price and the purchase price.

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Eg: If a person buys a good for Rs. 40 and sells it for Rs. 100 after doing some works on it. Then he has added value of Rs. 60 on these goods. If the rate of taxation is 10% then the tax will be Rs. 6, i.e., 10% of Rs. 60. This system of VAT was introduced in Central Excise Act in 1986 and it was named as MODVAT (Modified VAT) later in 2000 the name was changed to CENVAT. The system of Vat was brought in Service Tax in 2002 and now it is brought even in Sales Tax Law too. EXCISE DUTY SET OFF PROVISIONS: As discussed above, tax on value addition of Rs. 60 is Rs. 6. Thus tax of Rs. 6 can also be calculated using the concept of set off of tax. Tax on sale of Rs. 100 is Rs. 10; tax on purchase of Rs. 40 is Rs. 4. Thus, if a manufacturer pay tax on the total value of goods manufactured by him of Rs.100, i.e., Rs. 10 he can claim back Rs. 4 as his tax liability on value addition of Rs. 60 is only Rs. 6. This claiming back of tax is called tax credit or set off of duty scheme. CENVAT System: CENVAT is applicable on central excise duty. In Central Excise the manufacturer has to pay tax on the value of goods manufactured but taking the VAT system he can claim the tax credit i.e., CENVAT credit of the tax paid on: 1. Input goods used in manufacture. 2. Input services used in manufacture. It should be noted that no CENVAT credit is available if: 1. Final production is exempt from excise duty. 2. The document showing proof of payment of duty on input is not available. CENVAT credit on Capital Goods: Any duty paid on machinery and plant, spare parts of machine, tools, dies etc. used in manufacture can also be adjusted against duty payable on production. However, up to 50% credit is available in current year and balance in subsequent financial year.

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Motorcar is not a capital asset and for the purpose of CENVAT Credit for all manufacture. However it may be taken as capital good for service tax in case of service provider uses motor car for service providing purpose e.g., Courier, tour operator, rent-a-cab, cargo, outdoor caterer, pandal and shamiana operator, and goods transport agency.

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