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8/8/2019 Final Amar


Excise Duty

Administration

The Central Excise law is administered by the

Central Board of Excise and Customs (CBEC or

Board) through its field offices, the Central ExciseCommissionerates.

For this purpose, the country is divided into 10

Zones and a Chief Commissioner of CentralExcise heads each Zone. There are total 61

Commissionerates in these Zones headed by

Commissioner of Central Excise.

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For enforcing the central excise law and collection

of Central Excise duty the following types of procedures are being followed by the Central Excise

Department:

Physical Control Applicable to cigarettes only.

Here assessment precedes clearance which takesplace under the supervision of Central Excise

officers;

Self-Removal Procedure Applicable to all other

goods produced or manufactured within the country.Under this system, the assessee himself determines

the duty liability on the goods and clears the goods.

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Chairman/Board Membersof Customs & Central

Excise

ChiefCommissioner

Commissioner

Additional

Commissioner

Joint

Commissioner

Deputy

Commissioner

AssistantCommissioner

Superintendent

Inspector

SubInspector

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BASIC CONDITIONS FOR EXCISE LIABILITY

Section 3 of Central Excise Act ( often called the

'Charging Section' ) states that 'There shall be leviedand collected in such manner as may be prescribedduties on all excisable goods other than salt whichare produced or manufactured in India . These words

are same as those used in Entry No 84 to list I. Thisdefinition of Central Excise duty is vital, because itclearly signifies that there are four basic conditionsfor levy of Central Excise duty.(1) The duty is on goods.

(2) The goods must be excisable.(3) The goods must be manufactured or produced(4) Such manufacture or production must be inIndia. Unless all of these conditions are satisfied,Central Excise Duty cannot be levied.

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TYPES OF EXCISE DUTY

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Article 265 of the Constitution lays down that no tax shall be levied or

collected except by the concerned authority. Schedule VII divides this

subject into three categories-

a) Union list (only Central Government has power of legislation)

b) State list (only State Government has power of legislation)

c) Concurrent list (both Central and State Government can pass legislation).

To enable parliament to formulate by law principles for determining Service

Tax by the Central Govt. & collection of the proceeds there of by the CentralGovt. & the State, the amendment vide constitution (95th amendment) Act,

2003

Consequently, new article 268 A has been inserted for Service Tax levy by

Union Govt., collected and appropriated by the Union Govt., and

amendment of seventh schedule to the constitution, in list I-Union list.

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Service tax is payable @ 10% of the 'gross

amount' charged by the service provider

for providing such taxable service. TheEducation Cess is payable @ 2%, and

Secondary and Higher Education Cess

payable @ 1% of the service tax

payable.

Karnataka State:

¾ Service tax collected (2009-10) Rs4891.79Cr

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The provisions relating to Service Tax were brought intoforce with effect from 1st July 1994. It extends to whole ofIndia except the state of Jammu & Kashmir. The services,brought under the tax net in the year 1994-95 ,are as

below: (1) Telephone (2) Stockbroker

(3) General InsuranceThe Finance Act (2) 1996 enlarged the scope of levy of ServiceTax covering three more services, viz.,

(4) Advertising agencies, (5) Courier agencies

(6) Radio pager services.But tax on these services was made applicable from 1st

November, 1996.

Activities covered under Service Tax

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Constitutional validity upheld ² Advertising Services¾ Service tax is not on advertisement but on advertising services provided

in connection with advertisement

¾ Petition challenging of service tax on advertisement services wasdismissed. Levy of service tax on this category of service was held to be

constitutionally valid¾ Addition Advertising Vs Union of India [1998] 98 ELT 14 (Guj.).

Constitutional validity of service tax on advertising agencyupheld¾ Tax is levied on the services provided by the advertising agency in

relation to advertisement and it is not the tax on the advertisement

¾ Service tax levied on advertising agents do not fall under Entry 55 of State List ( List II ) of Constitution

¾ Levy held to be valid and in accordance with the provisions of theConstitution.

¾ Advertising Club Vs Central Board of Excise & Customs [2001] 131 ELT 35(Madras).

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Constitution Validity Upheld ² Photographyservices¾ Constitutional validity of service tax on services

provided by photography studio or agency heldto be valid and within the competence of theGovernment

¾ Also held that the double taxation can not be a

ground for invalidating a fiscal statute¾ No discrimination by not imposing service tax on

free lancers

¾ Kerala Colour Lab Association Vs Union of India[2003] 156 ELT 17 (Ker.) (HC)

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Constitutional Validity upheld ² Tour operator &Rent-a-Cab¾ Held that the stage carriage operators, contract

carriage operators, cab/maxi cab operators and rent a cab scheme operators are liable to pay service tax

¾ Provisions making the above services taxable andwithin the legislative competence of the Government

¾ All writ petitions filed in this regard accordinglydismissed.

¾ Secy. Federation of Bus Operator Association of T.N.Vs Union of India [2001] 134 ELT 618 (Madras-HC)

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Constitutional Validity Upheld ² Outdoor

Caterer

¾ Levy of tax on the said service held to bewithin the legislative competence of theGovernment and otherwise constitutionallyvalid and in order

¾ It does not violates Article 14 of theConstitution.

¾ Tamilnadu Hotels Associations Vs Union of India [2001] 133 ELT 265 (Madras HC)

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Sales Tax and Service Tax cannot belevied on the same item. Once sales taxis levied, there cannot be levied a

service tax. Not applicable to works

contract/composite contract Xerox Modicorp. Ltd. vs. State of

Karnataka 142 STC 209 (S.C.) IDEA mobile communication Ltd. vs. CCE

Trivandrum [2006] 6 STJ 209 (Tri.-Bangalore)

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Dispensing of medicines in the course of

Treatment ² Not sale of goods

x Commissioner of Sales Tax U.P. vs. Dr. Sukh Deo 23STC 385 (S.C.)

Material Consumed In the Course of the

Execution of the Contract ² Cannot be

said to be sold¾ Pest Control India Ltd., vs. UOI & Others 75

STC 188 (Patna)

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It is a type of indirect tax which is realized on goodsof international trade.

In economic sense, it is a kind of consumption tax.

Tariff which is actually a list of commodities alongwith the leviable rate of tax is popularly understood

as Customs duty.

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The Acts under Customs Duty in India:

Foreign Trade (Exemption from applicationof Rules in certain cases) Order, 1993

Customs Act, 1962

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The Central Government may issue notifications inthe Official Gazette for the purpose of the act.

Emergency powers are granted to the Central

government to increase import or export duties.

The increase in these duties should be notified in

the session of Parliament or should be placedwithin seven days before the next session of theParliament.

The notification is not considered to be valid if itis not approved within a span time of fifteen days.

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To carry out the purpose of the act several rules aremade by the Central Government. The few among

these rules are:

Custom Valuation Rules, 1988 for valuation ofimported goods that calculates the custom duty

payable.

Customs and Central Excise Duties Drawback Rule,1971 for calculating rates of duties as drawbackson exports.

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Specific Duties: Specific custom duty is a duty imposed on

each and every unit of a commodity imported or exported.

Advalorem Duties: Advalorem custom duty is a dutyimposed on the total value of a commodity imported or

exported. In case of Advalorem custom duty, the physicalunits of commodity are not taken into consideration.

Compound Duties: Compound custom duty is thecombination of specific and advalorem custom duties. In

this case, the quantities as well as the value of thecommodity are taken into consideration.

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Basic Duty

Additional Duty

Anti-dumping Duty

Protective Duty

Export Duty

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Basic Duty:

This is the basic duty levied under the Customs Act.The rate varies for different items from 5% to 40%.

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Additional Duty (Countervailing Duty) (CVD):

This is levied under section 3 (1) of the Custom TariffAct and is equal to excise duty levied on a likeproduct manufactured or produced in India.

If the product is leviable at different rates, thehighest rate among those rates is the rateapplicable. Such duty is leviable on the value ofgoods plus basic custom duty payable.

Additional Duty is levied under section 3(3) of the Customs

Act by central Govt. to compensate duty on inputs usedby Indian manufacturers

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Anti-dumping Duty:

Central Government may levy additional duty equal tothe margin of dumping on some imported articles, if thegoods have been sold at less than normal value. Pending

determination of margin of dumping, such duty may beprovisionally imposed.

Dumping duty can be imposed even when goods areimported indirectly or after changing the condition of

goods.

There are certain restrictions on imposing dumping duties

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Protective Duty:

Central Government may levy protective anti-dumping duties at the rate recommended onspecified goods.

The notification for levy of such duties must beintroduced in the Parliament in the next session byway of a bill or in the same session if Parliament is insession.

If the bill is not passed within six months ofintroduction in Parliament, the notification ceases tohave force but the action already undertaken under the notification remains valid.

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Duty on Bounty Fed Articles:

In case a foreign country subsidises its exporters for exporting goods to India, the Central Governmentmay impose additional import duty equal to the

amount of such subsidy or bounty.

If the amount of subsidy or bounty cannot beclearly determined immediately, additional dutymay be collected on a provisional basis.

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Export Duty:

Such duty is levied on export of goods. At presentvery few articles are subject to export duty. The mainpurpose of this duty is to restrict exports of certaingoods.

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Controversy over Ferrari customs waiver:

In commemorating Tendulkar's feat of equalling Don Bradman's 29centuries in Test Cricket, automotive giant Ferrari invited Tendulkar

to its paddock in Silverstone on the eve of the British Grand Prix(23rd July 2002) to receive a Ferrari 360 Modena from the F1 worldchampion Michael Schumacher.

On 4 September 2002 India's then finance minister Jaswant Singhwrote to Tendulkar telling him that the government will waive

customs duty imposed on the car as a measure to applaud hisfeat.

It is claimed that the proposals to change the law (Customs Act)was put forth in Financial Bill in February 2003 and amendment waspassed as a law in May 2003. Subsequently the Ferrari was allowedto be brought to India without payment of the customs duty. Whenthe move to waive customs duty became public in July 2003,political and social activists protested the waiver and filed PIL in the

Delhi High Court.

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The rules at the time stated that the customs duty canbe waived only when receiving an automobile as a

prize and not as a gift.

Under normal circumstances (like importing for

personal use), the total Customs duty incidence on

cars comes to around 180%. The car can only beimported, if the person is transferring residence intoIndia and the engine capacity is less than 1600 cc (for new cars), there is no cc limit for old and used cars (in

possession for more than 1 year).

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Mr. X has a digital photo camera which he bought inSouth America. He is working there on an assignmentand will return to India after two months. He doesn·thave the receipt of digital photo camera which hebought for USD 400, almost four months ago. How canhe prove the actual cost and the usage time of it, atairport for customs duty? What will be the extent oftax exemption?

The Indian Customs will have the approximate valueof digital camera of popular make/brands. Mr. X canalso get a copy of the manufacturers

brochure/printed pricelist of the digital camera, fromany dealer and that can be shown to Customs.Besides, he is entitled to have a free allowance of upto Rs 12000/-.

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Thank You !

Amar

AnishAnubhav

Gaurav Jain

SanjeebSrinath

final amar

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