An excise or excise tax (sometimes called a duty of excise or a special tax) is commonly understood to refer to an inland tax on the

sale, or production for sale, of specific goods; or, more narrowly, as a tax on a good produced for sale, or sold, within a country.

In India, an excise is described as an indirect tax levied and collected on the goods manufactured in India.

In many countries, excise duty is applied by the affixation of revenue stamps to the products being sold. In the case of tobacco or alcohol, for example, the producer buys a certain bulk amount of excise stamps from the government and is then obliged to affix one to every packet of cigarettes.

Critics of excise tax have interpreted and described excise duty as simply a government's way of levying further and unnecessary taxation on the population. The presence of "refunds of duty" under the UK's list of excisable activities has been used to support this argument, as it results in taxation being implemented on persons even where they would normally be exempt from paying other types of taxes

Specific duty-This Duty is payable on the basis of certain unit like volume, weight, length etc.

Eg. Duty on cigarette is paid on the basis of length of cigarette

Tariff Value-tariff value is fixed by the government. Government can fix different tariff values for different classes of goods or goods manufactured by different classes or sold to different classes of buyer Value based on maximum retail price-Central Excise Act empowers the Central Government to specify goods on which duty will be payable based on retail sale price

Following types of control have been proscribed for the levy and collection of Central Excise duties: -

PHYSICAL CONTROL

Under the physical control system the manufactured goods are removed form the place of manufacture under the supervision of the Central Excise officers on after the assessment and payment of appropriate Central Excise duty

Under the Self-Removal Procedure (SRP) the goods are removed on payment of duty and against invoices signed by the assess.

Packaging charges-Cost of packaging will be covered in connection with or in respect of sales.

Design and Engineering charges-Essential for the purpose of manufacture.

Consultancy Charges relating to manufacturing Pre-delivery inspection charges for vehicles-The vehicles sold to the dealers, conduct pre-delivery inspection

Loading and handling charges within the factoryRoyalty charged in franchise agreement. eg: Pepsi and Coca-Cola.

Price escalation clause-Additional price is payable if there is an escalation in prices.

Additional consideration should be added to the price

Deduction of Taxes from Assessable Value: Taxes payable on finished product are to be excluded for the purpose of evaluation.

Trade Discount: Trade discount are allowed as deduction for valuation purposes. Trade discount given to the buyer is not commission.

The Goods are not sold at the time of Removal:

This rule applies in case of removal of free samples or supply under warranty claims.

In Case of Goods Sold at Different Places:

Actual cost of transportation from place of removal up to place of delivery of the excisable goods will be allowable as deduction.

Valuation in Case of job Work:

Valuation can be done on the basis of job charges plus material cost without considering traders profit.

Sale at Depot/Consignment Agent:

Price prevailing at depot shall be the basis of Assessable Value.

Goods Sold Solely through Related Person

Best Judgment Assessment If assessment is not possible under any of the foregoing rules, assesment will be done by best judgement

Every person who produces or manufactures excisable goods, it requires to get registered, unless exempted [Rule 9 of central excise(No. 2) Rules, 2001]

Manufactures is required to maintain daily stock accounts of goods manufactured, cleared and stock [Rule 10 of central excise(No. 2) Rules, 2001]

Goods must be cleared under Invoice of assessee, duly authenticating by the owner or his authorized agent. In case of cigarettes, invoice should be countersigned by Excise officer, [Rule 11 of central excise(No. 2) Rules, 2001]

Duty is payable on fortnightly basis through challan / cenvat credit. [quarterly in case of SSI].

Manufactures of matches have to pay duty by affixing central excise stamps. [[Rule 13 & 14 of central excise(No. 2) Rules, 2001].

Cenvat records and return to be submitted by 5th of the following month [Cenvat credit rules,2001]

Monthly returns in form ER-1 should be filled by 10th of following month (SSI unit to file quarterly return) [Rule 17(3) of central excise(No. 2) Rules, 2001]

Every assessee is required to submit a list in duplicate of records maintained in respect of transactions of receipt, purchase, sales or delivery of goods including inputs and capital goods [Rule 22(2)]

If products of manufacturer are completely and unconditionally exempt from duty is required to file declaration in prescribed form to central excise authorities

Some goods are exempted on basis of value of clearances.

If duty on ready made garments is paid by raw material supplier.

If whole production is exported

Goods in store room are liable for duty Remission of duty can be given by the Commissioner if the goods are destroyed by natural causes.

Proof has to be provided

If goods are not entered in Daily Stock Account question of remission of duty does not arise.