Excise duty basically means the tax levied on goods which are made and consumed in the same country itself.
Excise duty in India is defined as an indirect tax levied by the government of India on the items that are manufactured within the territory of India itself. The manufacturer is required to pay this tax to the Government of India when the product is manufactured and sent to the market.
It is also called as manufacturing or production tax, as it is levied upon an item’s production and the manufacturer is liable to pay the tax. The end customer isn’t liable to pay the tax.
One should note that excise duty is distinct from custom duty as excise duty is levied on goods manufactured within India whereas the latter is levied on goods manufactured outside India.
Types of Excise Duty:
There are three types of Central Excise Duties collected by the Government of India namely:
- Basic Excise Duty
- Additional Duty of Excise
- Special Excise Duty
- Basic Excise Duty
This type of Excise duty is mentioned under section 3 of the ‘Central Excises and Salt Act’ of 1944.
It is levied on all goods other than salt produced or manufactured in India.
The rates of the Basic Excise Duty are mentioned under the schedule of the Central Excise Tariff Act, 1985.
2. Additional Excise Duty
This type of Excise duty is mentioned under section 3 of the ‘Additional Duties of Excise Act’ of 1957.
It is levied on all goods mentioned in the schedule of the act of 1957.
The tax is distributed between the Central and State Governments and levied in place of sales Tax.
3. Special Excise Duty
This type of Excise duty is mentioned under section 37 of the Finance Act, 1978.
It is levied on all goods that come under the ambit of taxation in line with the Basic Excise Duty under the Central Excise and Salt Act of 1944.
The Finance Act mentions whether the Special Excise Duty shall be levied or not yearly.
All goods mentioned under the first and second schedule of the Central Excise Tariff Act, 1985 are knows as Excisable goods. Duty of excise shall be levied on these goods. It includes Salt as well.
Liability of Excise Duty
The manufacturer of goods is liable to pay the excise duty always.
Manufacturers can be classified into three types of classes:
- Ones who personally manufacture the goods.
- Ones who manufacture goods through hired labour.
- Ones who get the goods manufactured through other parties.
It is compulsory for a manufacturer to pay excise duty on all goods manufactured by him, unless exempted through a government notification. However, manufacturers producing goods to be exported out of India need not pay excise duty.
Exemption from payment of excise duty is also available to manufacturers depending upon type of raw materials used for production of goods, value of turnover, processes involved etc.
Returns under Central Excise Duty
Following returns are to be submitted to the Excise Department by the manufacturer of goods:
- Monthly returns by large units.
- Return by export oriented units.
- Quarterly return by SSI.
- Statement of Annual financial information.
- Principal unit Information.
- Monthly return of receipt and consumption of each principal input.
- Statement of Annual installed capacity.
Distinction between Excise duty and Sales Tax
- Excise duty is levied on manufacture of goods whereas Sales Tax is levied on sale of goods.
- The burden of excise duty is upon the manufacturer, whereas the burden of sales tax is upon the Consumer.
- Excise duty is payable upon production of goods, whereas Sales Tax is payable only when sale has taken place.
- Excise duty is based on accessible value whereas sales tax is based on sale price.
Penalty for non-payment of Excise duty
The Central excise act specifies various fines levied upon manufacturers for non-payment of excise duty in India. Fine amount depends from circumstance to circumstance and can range from twenty-five to fifty percent of the amount of the excise duty evaded by the manufacturer.
Excise Duty is basically an indirect tax paid by the manufacturer for the production of goods before it reaches the market to the Government. This tax can be levied only to those goods which are manufactured and are to be sold within India.
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