Excise Direct taxes means a tax on property in respect of ownership possession or enjoyment of property.

Direct taxes those which the tax payer pays directly from his income/wealth etc (e.g. income tax/ wealth tax etc) Indirect taxes-it is a tax on goods and services the incidence of which is borne by the consumers who ultimately consume the goods and services. The major source of indirect taxes is excise duty customs duty sales tax service tax etc Difference between Direct tax and Indirect tax. Direct Tax Indirect Tax 1) they are imposed on persons 1) they are imposed on goods and services 2)amt. of tax is determined directly on the 3)thereburden is shifted taxthe subsequent yr 3)tax is no shifting of to burden Hence they are directly borne by the taxpayer 4)Tax collection is difficult 4) Tax collection is relatively easier Basic Concepts: Four conditions needs to be satisfied for levy excise duty Basic conditions for levy of excise duty: Under Sec 3 of the central excise tariff Act. (a) There must be goods. (b) The goods must be excisable. (c) The goods must be manufactured and produced. (d) Such manufacture and Production must take place in India. Goods- Two fundamental characteristics of goods are marketable and movable Immovability: Incase of Delhi cloth and general mills co, Damodar Ropeways and Construction to be a movable an article must be something which can be bought and sold. Immovable goods that are attached to earth and Cannot be removed. No excise duty can be levied as they lack characteristics of movability Marketability- is the capability of goods being bought and sold in market. Actual sale is not necessary. Even a single buyer is sufficient to constitute marketability. The burden to prove marketability of an article is on department. Goods must be excisable- According to Sec (2d) of the Central Excise Tariff. Excisable Goodsmeans goods specified in the first Schedule and second schedule of the Central Excise Tariff Act as being subject to duty.Thus if goods are listed in the schedule to the tariff they are excisable. Non Excisable goods which are not listed in tariff schedule Manufacture- was held that word manufacture when used a verb is generally understood to bring into new substance.Manufacture implies a change but every

change is not manufacture and yet every change of article is result of treatment labor and manipulation. But some more is necessary and there must be some transformation of new and different article must emerge having a distinctive name character or use the following are illustrations of manufacture (1)Gramophone co- Recording of audio cassettes on duplication music system since blank audio cassettes is distinct and different from pre-recorded audio cassettes (2) Process of chemical sand other ingredients to pesticidal chemicals in concentrated form which results in emergence of new and distinct product i.e. insecticide and pesticide. (3) Filtration purification or any other process or any one or more of these process, of water` labeling or relabelling of containers or repacking from bulk packs to retail packs or adoption of any other treatment to render the product marketable to the consumer (4) Pharmaceutical products: Conversion of powder into tablets or capsules labelling or relabelling of containers intended for the consumers and repacking for bulk packs to retail packs or adoption of any other treatment in order to render the product marketable to the consumer. Assembly amounts to manufacture or not Assembly of components resulting in emergence of finished product which has a distinct character in use will amount to manufacture. The basic test is whether the process of assembling the parts or components have resulted in transformation, which has made the product to have a distinct character and use `and have a separate entry in tariff and goods are movable. if this condition is satisfied then the manufacture is said to have taken. For instance in BPL India it was held by the Apex court that the assembly of imported kits into VTR and coloured monitors by using fasteners constituted the process of manufacture since pursuant to such process of manufacture a transformation has taken place in the hands of technical experts which have made the product having distinct character in use