The regulation of the collection and management of excise duties in India is governed by several laws and regulations, primarily under the Central Excise Act, 1944, the Customs Act, 1962, and the Goods and Services Tax (GST) Act, 2017. These laws ensure that excise duties are collected and managed effectively and that there is compliance with the regulatory framework. 1. Central Excise Act, 1944 Purpose: The Central Excise Act, 1944, governs the levy and collection of excise duty on the manufacture or production of goods in India. It applies to goods produced or manufactured in India and includes provisions related to the assessment, collection, and enforcement of excise duties. Key Provisions: Levy of Duty (Section 3): Excise duty is levied on the goods produced or manufactured in India. The duty is based on the value of the goods or their quantity, as specified by the Act. Assessment (Section 11): The assessment of excise duty is carried out by the excise authorities. Manufacturers must submit returns and other information for the assessment of duties. Collection and Payment (Sections 12 and 13): The duty must be paid to the government within the prescribed time frame. The Act specifies procedures for payment and collection of duties. Control and Enforcement (Sections 12A, 14, 15): The Act grants powers to excise officers to inspect, search, and seize goods and records to ensure compliance. Refunds and Rebate (Sections 11B): Provisions for claiming refunds and rebates on excise duties under certain conditions. 2. Customs Act, 1962 Purpose: The Customs Act, 1962, regulates the collection of customs duties on the import and export of goods. It ensures compliance with the provisions related to customs duties, including excise duties on imported goods. Key Provisions: Levy and Collection (Sections 12, 13): Customs duties are levied on goods imported into or exported from India. The Act specifies the rates and procedures for the assessment and collection of duties. Assessment and Valuation (Sections 14, 15): Customs officers assess the value of goods for duty purposes and ensure proper valuation. Control and Enforcement (Sections 105, 108): The Act grants powers to customs officers for search, seizure, and enforcement of customs duties. Refunds and Drawbacks (Section 26A): Provisions for refunds and drawbacks of customs duties under certain conditions. 3. Goods and Services Tax (GST) Act, 2017 Purpose: The GST Act, 2017, integrates excise duties on goods with the broader GST framework, simplifying the taxation of goods and services. Excise duties on certain goods, like tobacco and alcohol, are now levied under the GST regime. Key Provisions: Levy and Collection (Section 9): GST is levied on the supply of goods and services. Excise duties on goods that fall under the GST regime are replaced by GST. Excise Duties on Specific Goods (Section 2(29A)): The Act continues to levy excise duties on certain specific goods, such as petroleum products, tobacco, and alcoholic beverages. Assessment and Compliance: GST provisions ensure the proper assessment and collection of taxes, including compliance requirements for businesses. Refunds and Adjustments: The Act provides mechanisms for claiming refunds and adjustments related to GST. 4. Regulatory Bodies and Authorities Central Board of Indirect Taxes and Customs (CBIC): The CBIC, under the Ministry of Finance, is responsible for formulating policies and overseeing the administration of excise duties and customs duties. It issues guidelines, notifications, and circulars related to the collection and management of excise duties. State Excise Authorities: State governments also have authority over certain aspects of excise duties, particularly related to alcohol and other state-specific goods. State excise departments handle the collection and regulation of excise duties at the state level. 5. Procedures and Compliance Registration and Licensing: Manufacturers and traders must obtain licenses and registrations as prescribed under the Central Excise Act and other relevant laws. Documentation and Records: Businesses must maintain detailed records of production, sales, and excise duty payments. These records are subject to inspection and audit by excise authorities. Returns and Payment: Excise duty returns must be filed periodically, and duties must be paid within the specified time frames. Non-compliance can result in penalties and interest. 6. Penalties and Enforcement Penalties for Non-Compliance: The Central Excise Act and Customs Act prescribe penalties for violations, including non-payment or underpayment of duties, falsification of records, and evasion of taxes. Enforcement Powers: Excise and customs officers have the authority to inspect, search, and seize goods and documents to enforce compliance with excise duty regulations. Conclusion The regulation of excise duties in India is a multifaceted process involving the Central Excise Act, Customs Act, and the GST Act. These laws provide a comprehensive framework for the assessment, collection, and management of excise duties, ensuring compliance and enforcement through various authorities and procedures. The integration of excise duties into the GST framework represents a significant step towards simplifying and streamlining the taxation of goods and services in India.

Dear client, What is Excise Duty? Excise duty is a kind of indirect tax charged on the sale of certain products. The customer does not pay excise duty directly to the authorities, but it is added to the cost of the product by the producer or merchant and then passed on to the consumer by way of increased prices. The Excise Duty Act, 1944 governs the regulations related to excise duty in India and the tax is administered by the Central Board of Excise and Customs. Types of Excise Duty Here are the different types of excise duties: a. Basic Excise Duty: Basic Excise Duty is levied under Section 3 of the Central Excises and Salt Act, 1944. Under this section, all excisable products apart from salt, manufactured of produced in India, are subject to Basic Excise Duty. Central Value Added Tax or CENVAT, as it is also called, is charged at the rates mentioned in the Central Excise Tariff Act. b. Special Excise Duty: Central Excise Duty is charged under Section 37 of the Finance Act, 1978. It is levied on all excisable products that are subject to Basic Excise Duty under Section 3 of the Central Excises and Salt Act, 1944. The rate at which Special Excise Duty is charged is mentioned in the Second Schedule to Central Excise Tariff Act, 1985. c. Education Cess on Excise Duty: According to Section 93 of Finance (No. 2) Act, 2004, Education Cess is an excise duty that must be computed on the aggregate of all excise duties including special excise duty or other excise duties, but not including Education Cess of excisable goods. d. Natural Calamity Contingent Duty: Section 136 of the Finance Act, 2001, has imposed the Natural Calamity Contingent Duty under clause 129 of the Finance Bill, 2001. The Natural Calamity Contingent Duty is charged on cigarettes, chewing tobacco, and pan masala. e. Excise Duty in case of clearances by Export Oriented Units: The Export Oriented Units have an obligation to export all the goods produced by them. However, if their final product is cleared in a domestic tariff area, the rate at which excise duty is charged will be the same as customs duty on a similar article if imported in India. f. Duties under other Acts: Certain duties as well as cesses are charged on manufactured goods under other Acts. The taxes, however, are collected under the administrative machinery of central excise. The rules and provisions of the Central Excise Act are responsible for the levy as well as collection of these duties and/or cesses/ g. Additional Duty on Goods of Special Importance: Additional Excise under Additional Duties of Excise (Goods of Special Importance) Act, 1957 is levied on certain goods of special importance. The 'Additional Duty' is charged along with excise duty. The Additional Duty on Goods of Special Importance scheme was implemented due to the suggestions made to the Government by manufacturers. The suggestions were made to avoid multiple taxes and duties at different levels. The levy of all taxes as well as their collection at one stage by one authority was expected to make it convenient to not only pay the tax, but to also administer it. Therefore, the Central and State Governments agreed to charge additional duty on certain items instead of charging sales tax. The additional duty was distributed among different states, and the State Government share the revenue from this duty based on the percentages specified in the second schedule of the Act. h. Additional Customs Duty commonly known as Countervailing Duty (CVD): This duty is charged on imports. i. Additional Duty on Mineral Products: Under the Mineral Products (Additional Duties of Excise and Customs) Act, 1958, additional duty must be paid on mineral products such as motor spirit, furnace oil, diesel and kerosene. j. Duty on Medical and Toilet Preparations: Under the Medical and Toilet Preparations (Excise Duties) Act, 1955, excise duty is charged on medical preparations. k. Special Additional Duty of Customs: Special Additional Duty of Customs is charged on items that are bound under the Information Technology Agreement (apart from information technology software), and also on certain raw materials or inputs for the manufacture of IT or electronic products. Who Should Pay Excise Duty? Considering the fact that excise duty is charged on the manufacture/production of goods, the producer/manufacturer of goods is liable to pay excise duty to the government. The three parties that must pay excise duty include the following: 1. The individual or entity that manufactured or produced the goods 2. The individual or entity that was responsible for the manufacture of goods by way of hiring labour 3. The individual or entity responsible for the manufacture of goods by other parties. When to Pay Excise Duty? Excise duty must be paid at the time of removal of goods. Assessees must pay the excise duty on the manufacture or production of goods. Under Rule no. 8 of the Central Excise (Amendment) Rules, 2002, excise duty should be paid on the fifth day of the following month from the date on which the goods were removed from the warehouse or factory for the purpose of sale. In case excise duty is paid online through netbanking, the due date to make the payment is the sixth day of the following month. However, if the payment is made in March, it must be done before March 31. How to Pay Excise Duty The Central Board of Excise and Customs launched the Electronic Accounting System in Excise and Service Tax (EASIEST) in 20017 as a web-based payment gateway so that assessees could pay service tax and Central excise duties online. The Central Board of Excise and Customs, from 1 October 2014, has made it compulsory to pay service tax and excise duties online via netbanking for all Service Tax and Central Excise assessees. Step-by-step Process to pay Excise Duty online In order to pay your Central Excise Duty online, you will have to visit the NSDL-EASIEST website and choose E-Payment (Excise & Service Tax). Here are the steps you will then have to follow to pay your Central Excise Duty online: Step 1: Key in the 1-digit Assessee Code provided by the jurisdictional Commissionerate in order to start the process to pay your Excise Duty online. Step 2: A simple online check will take place to validate your Assessee Code. Step 3: In case your code is valid, the screen will display the corresponding assessee details such as name, address, Commissionerate code, etc. Step 4: The Excise Duty to be paid will be chosen automatically based on your Assessee Code. Step 5: You will then have to choose the kind of duty or tax to be paid. To do so, click on 'Select Accounting Codes for Excise'. Step 6: You can choose up to 6 Accounting Codes at any given time. Once you choose your code/s, the central system will validate the date, after which you will see a drop-down menu showing the names of different banks that provide the online payment facility. Choose the bank you prefer to make the payment. Step 7: Once you choose the bank and move on to the next step in the payment process, you will see a confirmation screen where you will have to confirm the information you have entered. You will then be redirected to the netbanking site of the bank you have chosen. Step 8: The challan details you have entered will be transmitted to the bank with your location code. You will then have to log in to your netbanking account to make the payment. Step 9: Once you have successfully paid the Excise Duty, you will see a challan counterfoil which contains the payment details, the Challan Identification Number and the name of the bank through which you have made the payment. This counterfoil can be used as a receipt or proof of payment. You can download the same from the bank website. Step 10: Once you have made the payment online, you can view the 'Challan Status Enquiry'and confirm that you have found/uploaded the e-payment challan in the NSDL website. In case you do not find the challan on the NSDL website, you can lodge a complaint with [email protected]. How has GST affected Excise Duty? After the implementation of the Goods and Services Tax, the taxes that have been replaced by the new tax regime are as follows: At the State Level: 1. State VAT/Sales Tax 2. Octroi and Entry Tax 3. Entertainment Tax 4. Luxury Tax 5. Purchase Tax 6. Fat Tax (in Kerala) 7. Taxes on gambling, lottery and betting At the Central Level: 1. Central Excise Duty 2. Service Tax 3. Additional Excise Duty 4. Special Additional Duty of Customs 5. Additional Customs Duty commonly known as Countervailing Duty Excise duty is charged on the production of goods and charged at the time of removal of products. GST, on the other hand, is charged on the supply of products and services. Central GST has replaced excise duty as excise is charged by the Central Government and it also collects the revenue from Central GST. Penalty for not Paying Excise Duty In case you fail to pay excise duty or commit an offence related to any excisable product, the duty chargeable thereon exceeds Rs.50 lakh and the defaulter may face imprisonment for a term that may extend up to 7 years. Fine will also be charged to the defaulter. Sometimes, the imprisonment term could extend up to 3 years, with or without fine, depending on the case. Under Section 11A(4), the reasons for punishment for not paying or underpaying excise duty could be fraud, wilful misstatement, collusion, or suppression of facts. Here are the penalties for the various offences related to Excise Duty: a. In case excise duty was not levied, or not paid, or was short-levied, or was short-paid, or incorrectly refunded due to collusion, fraud, suppression of facts, or wilful misstatement, the assessee will be subject to a penalty equal to 50% of the duty so determined. b. In case the details pertaining to a transaction in the records reveal that any excise duty was not levied, or not paid, or was short-levied, or was short-paid, or was incorrectly refunded, the assessee will be subject to a penalty equal to 50% of the duty so determined. c. In case the interest payable in addition to an excise duty is paid within 30 days from the date on which the same was communicated with the assessee, the penalty will be 25 of the duty so determined. d. In case a person who is associated with the transporting, depositing, concealing, removing, selling, purchasing or keeping of any excisable products that he/she knows are liable to confiscation as per the law, will be liable to a penalty equal to the duty applicable to the goods or Rs.20,000, whichever is more. e. In case a person makes/issues an excise duty invoice or another document claiming the removal of goods when said goods have not been delivered will be liable to a penalty equal to the amount of such benefit or Rs.5,000, whichever is more. Should you have any queries, please feel free to contact us!