Professional Documents
Culture Documents
Textile Articles)
Additional Duties of Excise - Goods of Special
Importance
National Calamity Contingent Duty
Education cess
Secondary and Higher Education cess
Background
Constitution of India
Article 265
: Taxes not to be imposed save by authority of law. No tax shall be levied
or collected except by authority of law.
Article 246 (1) : gives power to CG to make laws in respect of matters given in List-I in
Seventh Schedule to the constitution. (UNION LIST)
Article 246(3) :
gives power to SG to make law in respect of matters given in List-II
in Seventh Schedule to the constitution. (STATE LIST)
Union List Entry No. 84
Empowers CG to levy excise duty.
Duties of excise on tobacco and other goods manufactured or produced in India
except - Alcoholic liquors for human consumption, opium, narcotics
But including - Medical and toilet preparation containing alcohol, opium or narcotics.
Background
Duty On
Excisable
Goods
Manufactured
1930
Goods must be moveable,
saleable/marketable
Explanation to Section 2(d) of CE Act, 1944
-states goods include 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
EXCISABLE GOODS
Section 2(d) :
excisable goods means goods specified in the First Schedule and the
Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as
being subject to a duty of excise and includes salt;
Explanation - For the purposes 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.
Excisable Goods
Mentioned in CETA
Goods must be mentioned in CETA
Non Excisable goods are those goods which have not been specified
duty is prescribed in the CETA for them or these are made exempt by
virtue of a notification.
Nil rate of duty is also a rate of duty
Even if the rate of duty is nil, the goods can still be excisable, if
they are manufactured and are marketable goods. Nil rate of
duty is also a rate of duty
Associated Cement Co. Ltd Vs. Commissioner of Customs
What is Manufacture?
Process
undertaken
would
amount
to
manufacture as understood under the Central
Excise
The incoming material and the final outgoing
material are to be compared with respect to
their name, character or use.
Ensured that processes not amounting to
manufacture
are
not
described
as
manufacture
Result in attempts to deny credit
What is Removal?
Removal
What is classification?
Ascertaining
the
tariff
heading/subheading under which the product is
categorized
In line with Central Excise Tariff Act -Based
on HSN
See the Interpretative Notes at the
beginning of the Tariff + Notes in the
Section and Chapter
Rules for interpretation
CLASSIFICATION
To impose taxes at different rates.
Need to know the details of trade.
Standardization and methodical system of
classification.
Avoid over-simplicity
Avoid unnecessary differentiation
13
USED BY
Customs authorities
Statisticians
Carriers
Producers
14
EVOLUTION
Brussels Tariff Nomenclature 1949
Customs Co-operation Council Nomenclature
1974
Harmonized System of Nomenclature 1988
15
Harmonised System
Harmonized System of Nomenclature
Used as basis for National Customs Tariff
CTA 1975
Used as basis for Levying excise duty in India
CETA 1985 28-2-1986
VAT 2005 many states
16
areas in the Continental Shelf and Exclusive Economic Zone (EEZ) of India
vide Notifn No.166/87 CE dated 11.6.1987.
Objective:
As per Section 2 of the Central Excise Tariff Act, duties of Excise (Basic
Central Excise Duty & Special Excise Duty) are to be levied on the
goods manufactured in India at the rates specified in the First Schedule and
the Second Schedule to the Central Excise Tariff Act, 1985.
What we commonly refer to as the Tariff is actually Schedules to the Central
Excise Tariff Act, 1985.
The Central Excise Tariff Act, 1985 consists of 96 Chapters describing
almost all the goods.
Prior to 28.02.2005, the goods were classified/described against 6 digits
code.
The Central Excise Tariff was amended on 24.02.2005 and the amended Act
came in to force from 28.02.2005 onwards, vide Notification No.8/2005C.E (N.T), dated 24.02.2005 classifying the goods against 8 digits code.
The amended Tariff Act has given the Government an additional power to
amend the Schedules, by notification. This is subject to the condition that
such amendment shall not alter or affect in any manner, the rates of duty.
Rate of duty
Eight digit description is referred to as
Tariff item
Rate of duty is indicated against the Tariff
item
If the rate of duty is left blank, then
there is no levy.
If nil is indicated in the rate of duty
column, it denotes that the levy is
attracted but the rate chargeable is NIL.
19
Sub-
New Tariff
(with effect from 28.02.2005)
Description of goods
Tariff Item
2902
Description of goods
Cyclic Hydrocarbons
Unit
Rate of duty
heading No.
-
29.02
2902.00
Cyclic Hydrocarbons
16%
2902 11 00 - - Cyclohexane
Kg
12.5%
2902 19 00 Other
Kg
12.5%
2902 20 00 Benzene
Kg
12.5%
2902 30 00 Toluence
Kg
12.5%
Xylenes:
2902 41 00 - - o-Xylene
Kg
12.5%
2902 42 00 - - m-Xylene
Kg
12.5%
2902 43 00 - - p-Xylene
Kg
12.5%
2902 44 00 - - Mixed xylene isomers
Kg
12.5%
50 00 Styrene
Kg.
12.5%
2902 60 00 Ethybenzene
Kg.
12.5%
2902 70 00 Cumene
Kg.
12.5%
2902 90
Other:
2902 90 10 - - Dipentene
Kg.
12.5%
2902 90 20 - - Diphenyl methane
Kg.
12.5%
2902 90 30 - - Dodecyclic benzenes
(excluding mexed alklarenes)
Kg.
12.5%
2902 90 40 - - Napthalene, Pure
Kg.
12.5%
2902 90 50 - - Isobuty benzene
Kg.
12.5%
2902 90 90 - - Other
Kg.
12.5%
There are 2 Schedules to the Central Excise Tariff Act, 1985, they are:
(1)First Schedule :
The First Schedule is commonly referred to as The Central Excise Tariff.
It is selectively aligned with Harmonized System of Nomenclature (HSN),
I
II
III
IV
V
VI
Chapter No.
1-5
6-14
15
16-24
25-27
28-38
Animal Products
Vegetable Products
Animal or vegetable fats and oils etc.,
Prepared foodstuffs; beverages etc.,
Mineral Products
Products of the Chemicals or allied Industries.
to grant exemption, full or partial, from payment of Excise Duty in public interest either
(i) generally by issue of a notification in official gazette; or
(ii) by means of a special order in a specific case of an exceptional nature.
The rate of duty fixed by way of issued of exemption notification is called effective rate of
duty.
An exemption notification issued under Section 5 A of Central Excise Act, 1944 reads as
follows (for example in general exemption notification No. 50 dated 01.03.2013):
In exercise of the powers conferred by sub-section (1) of Section 5A of the Central Excise
Act, 1944 --------, the Central Government, being satisfied that it is necessary in the public
interest so to do, hereby exempts the excisable goods of the description specified in
column (3) of the table below ---- ,and falling within the chapter, heading or sub-heading or
tariff item of the First Schedule to the Central Excise Tariff Act, 1985, as are given in the
corresponding entry in column (2) of the said table, from so much of duty of excise
specified thereon under the first schedule to the Excise Tariff Act, as is in excess of the
amount calculated at the rate specified in the corresponding entry in column (4) of the
said table ---As an example, in respect of the goods Tobacco, used for smoking through Hookahor
chilam, commonly known as hookha tobacco or gudaku falling under chapter
2403 11 10
The tariff rate is 60%.
The rate specified in the corresponding entry in column (4) of the said table 12.5%
The portion of (excess) duty to be exempted from levy is 47.5%.
The portion of duty actually to be levied is 12.5%, which is an effective rate of duty.
INTERPRETATIVE
RULES
There are six Rules for interpretation of the
Tariff..
Rule 1 takes precedence over all the
following Rules.
Rule 1 classification to be determined by
the terms of the Heading and of the
Section or Chapter Notes.
Only where the terms of the headings or
Section/Chapter Notes do not otherwise
require, other Rules come into play.
28
They explain the scope of each Section and Chapter of the Tariff.
These Notes provide immense assistance in determining the classification of
The GIR is a set of 6 Rules for classification of goods and these have to be
applied sequentially.
Classification of goods in the First Schedule to the Central Excise Tariff
Act,1985 shall be governed by the following principles, which are known as
Rules of Interpretation.
These are statutory Rules.
Classification-Rules
Rule 2(a)-classification of an article
railway coaches
A car without seat will still be classified as a car
Photocopier components in SKD / CKD conditions.
Classification-Rules
Rule 2(b)-This rule on mixture or
Classification Rules
Rule 3: classifying goods prima facie classifiable
SPECIFIC vs GENERAL
Description by name is more specific
34
-Mixtures
-composite goods consisting of
different materials,
-composite goods consisting of
different components;
-goods put up in sets for retail sales
-To be classified in the heading
appropriate to the material or
component which gives them their
essential character
35
Test of essential
character??
Vary between different kind of goods.
Nature of the material
the goods.
36
Interpretative Rule
3(c)
Applicable for goods not classifiable in terms of Rule
3(a) or 3(b).
Goods should be classified in the heading which
occurs last in numerical order amongst those which
equally merit consideration.
37
Interpretative Rule 4
Goods which are not specifically covered by any
38
39
Interpretative Rule
5(b)
Governs classification more generally to packing
40
Interpretative Rule 6
Sub-headings of a Heading
According to the terms of the subheadings.
Tariff
Item
2403
Description of Goods
Rate of Duty
Unit
&
Manufactured
Smoking
Tobacco,
whether
containing
substitutes in any proportion:
or
not
tobacco
2403 11
2403 11 10
Kg
60%
2403 11 90
- - - Other
Kg
60%
2403 19
- - Other
2403 19 10
Kg
360%
- - - Biris
2403 19 21
Tu
2403 19 29
- - - - Other
Tu
2403 19 90
- - - Other
Kg
40%
Description of Goods
Unit
Rate of Duty
- Other:
2403 91 00
Kg
60%
2403 99
- - Other:
2403 99 10
- - - Chewing Tobacco
Kg
70%
2403 99 20
Kg
60%
2403 99 30
Kg
70%
2403 99 40
- - - Snuff
Kg
60%
2403 99 50
Kg
60%
2403 99 60
Kg
60%
2403 99 70
- - - Cut-Tobacco
Kg
Rs.70 per Kg
2403 99 90
- - - Other
Kg
70%
SIGNIFICANCE/PURPOSES OF DASHES
In Column 1 of the first scheduleHeading, in respect of goods, means a description in the list of tariff provisions
accompanied by a four-digit number and includes all sub-headings of tariff items, the
first four-digits of which correspond to that number.
Sub-heading, in respect of goods, means a description in the list of tariff provisions
accompanied by a six digit number and includes all tariff items, the first six-digits of
which correspond to that number.
Tariff item means a description of goods in the list of tariff provisions accompanying
either eight digit number and the rate of duty of excise or eight digit number with
blank in the column of the rate of duty.
In column 2 of the first schedule, there are dashes like single dash( - ), double dashes
(- -), triple dashes ( - - - ) and quadruplicate dashes ( - - - - ) which precede an article or
group of articles.
After the single dash ( - ), an articles or group of articles are classified under a
heading of a particular Chapter.
After the double dashes ( - - ), the description of an article or group of articles shall be
taken as sub classification (under a sub-heading) of the preceding description of the
article or group of articles which has single dash ( - ) against a heading.
Where the description of an article or group of articles is preceded by triple dashes ( - - ) or quadruplicate dashes (- - - - ), the said article or group of articles shall be taken
to be a sub classification (under a further sub heading) of the immediately preceding
description of the article or group of articles which has single dash ( - ) or double
dashes ( - - ) under a heading / sub headings.
Division of Headings
Heading further sub-divided into
-One
the
-One
the
-One
the
-One
the
Exercises
Hyundai Verna
Leaf springs
Radiators
Deodarant
Coke/ Pepsi
Bullet enfield
Petrol / Diesel
Gear box
Pressure cooker
Coffee instant