Hand Book of Indirect Taxes

Central excise law covers the following
Central Excise Act, 1944;
Central Excise Rules, 2002;
CENVAT Credit Rules, 2004;
Central Excise (Appeal) Rules, 2001;
Central Excise (Advance Rulings) Rules, 2002;
Central Excise (Settlement of Cases) Rules, 2007;
Central Excise (Removal of goods at concessional rate of duty for manufacture of excisable
goods) Rules, 2001;
Central Excise valuation (Determination of price of Excisable Goods) Rules, 2000;
Central Excise (Compounding of Offences) Rules, 2005;
Central Excise (Determination of Retail Sale price of Excisable goods) Rules, 2008;
Central Excise Tariff Act, 1985 CETA.
1.4 Important Definitions
Adjudicating Authority: It means any authority competent to pass any order or decision under this
act, but does not include the Central Board of Excise or Customs constituted under Central Boards of

Revenue Act, 1963. (Sec 2(a))
Broker or Commission agent: It means a person who in the ordinary course of business makes
contracts for sale or purchase of excisable goods for others. (Sec 2(aaa))
Central Excise Officer: It means the Principal chief commissioner, Chief Commissioner, Principal
commissioner, Commissioner, Joint Commissioner, Assistant Commissioner or Deputy Commissioner
of Central Excise or any person (including an officer of the State Government) invested by the Central
board of Excise and Customs constituted under the Central Board of Revenue Act, 1963 with any of
the powers of a Central Excise Officer under this act. (Sec 2(b))
Curing: It includes wilting, drying, fermenting and any process for rendering an unmanufactured
product fit for marketing or manufacture. (Sec 2(c))
Excisable goods: It means goods specified in First Schedule and the Second Schedule to Central
Excise Tariff Act, 1985 as being subject to a duty of excise and includes salt. (Sec 2(d))
Explanation to Sec 2(d): For the purpose of this clause goods includes any article, material or
substance which is capable of being bought and sold for a consideration and such goods shall be
deemed to be marketable.

Factory: It means any premises, including the precincts thereof, wherein or in any part of which
excisable goods other than salt are manufactured, or wherein or in any part of which any manufacturing
process. (Sec 2(e))
Fund: It means the Consumer Welfare Fund established under section 12C. (Sec 2(ee))
Manufacture: It 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 First Schedule to
the CETA, 1985 as amounting to manufacture; or
(iii) 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
Self Study Guide to Indirect Taxes CA Ravi Kumar Somani
 [Asia Law House]
www.cabooksonline.com/ www.amazon.in Amended upto April 2015
alteration of retail sale price on it or adoption of any other treatment on the goods to render the product
marketable to the consumer. (Sec 2(f))
Note: The word “Manufacturer” shall also be construed accordingly and shall also include not only a
person who employs hired labour in the production or manufacture of excisable goods, but also any
person who engages in their production or manufacture on his own account. For example: A
Prescribed: It means prescribed by rules made under this act. (Sec 2(g))
Sale and Purchase: With their grammatical variations and cognate expressions, mean any transfer of
the possession of goods by one person to another in the ordinary course of trade or business for cash
or deferred payment or other valuable consideration. (Sec 2(h))
Wholesale dealer: It means a person who buys or sells excisable goods wholesale for the purpose of
trade or manufacture, and includes a broker or commission agent who, in addition to making contracts
for sale or purchase of excisable goods for others, stocks such goods belonging to others as an agent
for the purpose of sale. (Sec 2(K))
1.5 Various duties under Central excise act, 1944
Basic excise duty: It is levied u/s 3(1)(a) of the Central Excise Act and is levied at the rates specified
in First Schedule to CETA (Central Excise Tariff Act, 1985).
Special excise duty: It is levied u/s 3(1)(b) of Central Excise Act on some commodities like Pan
masala, Cars etc. These items are covered in Second Schedule to CETA. However, w.e.f 01.03.2006,
all goods are exempted from special excise duty.
Additional excise duty: It is levied as surcharge on pan masala and on certain tobacco products
except biris to finance the National Rural Health Mission. It is charged at the prescribed specific rates
on cigarettes and at the rate of 10% on other products.
National Calamity Contingent Duty (NCCD): It is imposed vide sec 136 of finance act, 2001 on pan
masala, chewing tobacco and cigarettes.
Duty on 100% EOU & FTZ: Generally, 100% Export Oriented Undertakings and units in Free Trade
Zone export all their production. However, if they clear their final products in Domestic Tarriff Area
(DTA) then excise duty has to be paid. The duty amount in this case is equal to the aggregate of
customs duty that would have been payable on the like article as if it is been imported in India. Even
though the rate of customs duty is considered for payment of duty, actually the duty paid by them is
central excise duty. The rate of customs duty is taken only as a measure.


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