CENTRAL EXCISE ACT,1944

• Excise duty is a duty on production or

manufacture of goods.
• In India excise duty is levied in accordance with
the provisions of The Central Excise Act,1944.
• Indian constitution has given power to central
govt. and state govt. to levy various taxes and
to collect excise duty on the goods
manufactured in India.
 CENTRAL EXCISE ACT,1944

• This duty is based on the value of the goods

manufactured, which determine by applying the
RATES specified in the First Schedule and the
Second Schedule to the Central Excise Tariff
Act,1985.
• The First Schedule gives the Basic Excise Duty
(BED) rate and the Second Schedule gives the
Special Excise Duty (SED) rate.
Basic Conditions of Excise Liability
• There are four basic conditions for levy of
central excise duty.
i)The duty is on goods.
ii)The goods must be excisable.
iii)The goods must be manufactured or
produced.
iv)Such manufacture or production must be in
India.
 Classification of Goods
• The central excise tariff act,1985 (CETA)
classifies all the goods under 96 chapters and
specific code is assigned to each item.
• There are over 1000 tariff headings and 2000
sub-headings.
• This classification forms basis for classifying
the goods under particular chapter head and
sub-head to prescribe duty.
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• CETA contains two schedules:-
i)The first schedule gives basic excise duties
leviable on various products.
ii)The second schedule gives list of items on
which special excise duty is payable.
• Sections and chapters of CETA:-
i)CETA is divided in 20 sections.
ii)A ‘section’ is a grouping of no.of chapters.
 Scheme of classification
• Each section has various chapters.
• A section related to a class of goods,
e.g.,section-I is ‘Animal products’, section-XI
is ‘Textile products’.
• A chapter contains goods of one class,
e.g.,section-XI of Textile products has chapter
50 relating to silk, chapter 51 relating to wool
and chapter 52 relating to cotton.
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• Each chapter is further divided into headings
and sub-headings,e.g.,chapter 50 of silk has 5
headings:
i)50.01 silk and cocoons,
ii)50.02 raw silk,
iii)50.03 silk waste,
iv)50.04 silk yarn.
 MANUFACTURE
• The term ‘manufacture’ refers to a process involving
the conversion of an input into a completely different
output.
• As per sec.2(f) of the Central Excise Act, Manufacture
includes any process:-
i) incidental or ancillary to the completion of
a manufactured product and
ii)which is specified in relation to any goods in the
section or chapter notes of the schedule
 MANUFACTURE
to the Central Excise Tariff Act,1985 as amounting
to manufacture or
• Which in relation to the goods specified in the
Third Schedule involves packing or repacking of
such goods in a unit container or labeling or re-
labeling of containers including the declaration
or alteration of retail sale price on it or adoption
of any other treatment on the goods to render
the product marketable to the consumers.
 MANUFACTURE
• Deemed manufacture:- Although a process
does not amounting to manufacture but if any
activity is specified in the Section or Chapter
Notes of the First Schedule to the Central Excise
Tariff Act,1985 it will be deemed to be a
manufacture.
• Packing, Re-packing and putting stickers on
goods.
• Brand name owner is not the manufacturer.