Friday, July 30, 2010

Taxing - Excise Law

I have got loads and loads to study and the pace is still not how i want to be. From years, to months, to weeks, now its come down to days. Counting counting counting. But not "eager" :)

Lets have some fun here. I m sure most of you are not aware that the Colgate paste that you use the first thing in the morning, the Society tea that you drink, the Britania biscuits you eat, the Ashirwad atta that goes into making the chappati's and so many other things consumed are loaded with "TAXES" Yeah you are right :P

So i thot may be i will share a little bit of gyaan with you guys. Specially the non finance background people who corelate "CAs" with Taxes.

So lets talk about Indirect taxes today. (Oh, does that mean she is going to bore us everyday with stuff like this???)

The indirect taxes can be broadly categorised into
1) Excise Duty.
2) Customs Duty.
3) Service Tax
4) Value Added Tax.
CST in now redundant and Goods and Service Tax is in the pipe line.

Excise Duty
There are certain items on which this duty is levied. Now which items?
Those items that are
-Manufactured of Produced in INDIA.
-Mentioned in Central Excise Tariff Act, 1985.
So any product which fulfills the above 4 conditions, Excise duty will be levied on it.
For Example - Colgate tooth paste is "manufactured" in a factory in India. It is "mentioned in CETA, 1985". It is movable in nature (but ofcourse) and it is marketable too. So the on Colgate toothpaste excise duty is levied.

Okay. So you understood what the basis is.

Now lets see how the duty is calculated. Duty is a factor of 2 things.
1) Rate of Duty (in terms of percentage)
2) Assessable Value of the product (on which the rate will be applied)

The effective rate prevailing on majority of the goods currently is 8%. This can vary accordingly to the goods.

The Central Excise has scores of RULES. The Act has less number of Sections and humongous number of Rules. You know why? Because in order to amend a law/act you have to pass the bill in both the houses of parliament with majority. Whereas to amend rules the Central Government has the power to do so u/s 5A of the Central Excise Act, 1944 by issuing Exemption Notifications. (Smart na? Not really. Cos this has lead to numerous rules that one has to memorise)

Lets see what these Rules talk about. I m just fairly listing them and not explaining them in detail.
The Central Excise Rules, 2002

Rule 4 - Liability to pay duty at the time of removal of goods from the factory premises.

Rule 5 - Relevant date of determination of rate of duty and assessable value.

Rule 6 - Self Removal System. i.e. Self Assessment by the assessee.

Rule 7 - Provisional Assessment incase the assesse is unable to ascertain either the Rate of Duty or the Assessable Value.

Rule 8 - Manner of payment of the duty. In case of a Non SSI unit payment to be made by 5th of the next month. i.e if goods are removed on say 21st July, the payment of duty should be made latest by 5th August.

Rule 9 - Registration.

Rule 10 - Maintaining Daily Stock Account.

Rule 11 - Goods to be removed under the cover of an Invoice

Rule 12 - Due date of filing of returns.

Rule 17 - Removal of goods by a 100% Export oriented unit into Domestic Tariff Area.

Now this is just a fraction of it. There are loads of other rules. But thank god that you dont have to keep them in mind. But i do. So many be you can use my brain sometime when you are in need. ;)

Thats all for now. See you soon with yet another set of rules!



Suresh Kumar said...

Good for finance students... what about others... why dont u do a separate blog page for this one na...

pooja said...

pakau....feel like murdering u for this blog....i read ur blog and realised i hve forgotten so much of Ex dute....i better go back and revise...!!:(

anand said...


Dhandal said...

What an overwhelming response. I thot people had stopped visiting my page. Sorry folks to have u disappointed.
Suresh - Thanks but this is wat i call a choke - a - bloc writers block :P

pooja - How much ever pakkau u felt it u realised u have to revise. so thank me :)

anand - good night dear :D

abha said...

good you told me abt it before i read saved me so much time :P and patience

Moon said...


Dhandal said...

See M gets the joke :P

Diamond zul said...


Nice article......!