Friends,
Here are some Frequentally asked questions regarding Central Excise:-
CENTRAL EXCISE
Q.1
What is Excise Duty? Is it collected by the State Government or the Central Government? How is it different from Sales Tax?
A.1
Excise duty is a tax on manufacture or production of goods. Excise duty on alcohol, alcoholic preparations, and narcotic substances is collected by the State Government and is called "State Excise" duty. The Excise duty on rest of goods is called "Central Excise" duty and is collected in terms of Section 3 of the Central Excise Act, 1944. Sales Tax is different from the Excise duty as former is a tax on the act of sale while the latter is a tax on the act of manufacture or production of goods.
Q.2
Whether a manufacturer or producer of goods is required to obtain a license from the Central Excise department for payment of Central Excise duty?
A.2
No license is required and a simple registration with the Central Excise department would suffice.
Q.3
What categories of persons are required to obtain registration with the Central Excise department?
A.3
Subject to specified conditions, generally the following categories of persons are required to get themselves registered with the Central Excise department: (i) Every manufacturer of dutiable excisable goods; (ii) First and second stage dealers or importers desiring to issue Cenvatable invoices; (iii) Persons holding bonded warehouses for storing non-duty paid goods; (iv) persons who obtain excisable goods for availing end-use based exemption.
Q.4
Is there any category of persons who are exempt from obtaining registration?
A.4
Yes. Subject to specified conditions, the following categories of persons need not obtain Central Excise registration. (i) Manufacturers of goods which are chargeable to nil rate of duty or are fully exempt; (ii) SSI manufacturers having annual turnover of below Rs.90 lakhs. Once their turnover touches Rs.90 lakhs, they should give the prescribed declaration to the Jurisdictional Superintendent of Central Excise; (iii) Job-workers of ready-made garments if the principal manufacturer undertakes to discharge the duty liability; (iv) Approved/licensed units in Export Processing Zones, Special Economic Zones and 100% Export Oriented Units.
Q.5
What is the procedure for obtaining registration?
A.5
Apply to the nearest Central Excise Division Office in Form A.1 along with a self attested copy of the PAN issued by the Income Tax Department. After post verification, a regular Registration certificate in form RC is normally issued immediately, as far as possible
Q.6
What are the items on which Central Excise duty is leviable?
A.6
All goods listed in the Central Excise Tariff Act, 1985 attract Central Excise duty unless specified to the contrary in the Act itself or under any notification issued under the Central Excise Act, 1944 by the appropriate statutory authority.
Q.7
Who is liable to pay Central Excise duty?
A.7
Generally speaking, the manufacturer who actually undertakes manufacturing activity is liable to pay Central Excise duty. A person does not become a manufacturer simply by supplying raw materials to the manufacturer or getting his goods manufactured according to his own specifications, brand name or trade name, etc. However, for the textile sector, the option is with the supplier of raw materials or with the job worker to pay duty.
Q.8
What is the rate of duty on various category of goods?
A.8
The rate of duty on each item is specified in the Central Excise Tariff Act, 1985. In some cases, the statutory rates of duty have been lowered or reduced to Nil by the Central Government in terms of Section 5A of the Central Excise Act, 1944. Anyone interested in knowing the effective rates of duty in respect of any goods must refer to the Tariff or seek guidance from the nearest Central Excise Officer, if necessary.
Q.9
Is there any exemption from payment of duty for Small Scale Industries?
A.9
Generally speaking, the Small Scale Units, who manufacture the goods specified in the relevant exemption notifications and fulfil the conditions specified in such exemption notifications, are exempt from payment of duty till their aggregate clearances do not exceed Rs.1 Crore in a financial year. The Small-Scale units whose clearances in the previous financial year exceeded the limit of Rs.3 Crores, which will also include the value of exempted goods (excluding exports), are not entitled to such exemption. Generally speaking, the Small Scale units who are availing the CENVAT credit are required to pay duty at concessional rate of 60% of the prescribed rate till their clearances reach Rs.1 Crore. For further details, please consult the nearest Central Excise Range Office.
Q.10
What is the period for filing returns by the assessee?
A.10
An SSI unit is required to file returns on quarterly basis within 20 days from the date of completion of the quarter, but non-SSI units are required to file returns on monthly basis within 10 days from the date of completion of month.
Q.11
What action department takes for non-filing of returns?
A.11
A penal action is envisaged on failure to file the returns in time. Penalty may extend up to Rs.2000/-.
Q.12
How and when Central Excise duty is to be paid?
A.12
An SSI unit has to pay duty on monthly basis by 15th of the succeeding month. Other units are required to pay duty on monthly basis within 5 days of completion of the month in question.. The assessee is required to deposit the amount of duty payable in the nominated bank along with the prescribed TR-6 challan and on this amount being credited in the government account, he can take credit in the PLA register. Such credited amount can then be utilized for discharging the duty on goods cleared from his factory. However, for the month of March, the duty has to be paid by 31st March, both for SSI and Non SSI units. Further, in case of default in payment of duty, the interest is leviable @ 2% per month or Rs. 1000/- per day, which ever is higher, starting from the date on which the duty was required to be paid till the date of payment (subject to the interest not exceeding the duty amount.
Q.13
What is the facility for mitigating the cascading effect of duty? What is CENVAT?
A.13
Subject to prescribed conditions, the assessee has to obtain a duty paid invoice from the consignor and then he can take credit of such duty amount in the account maintained for this purpose and the same can be utilized by him for the payment of the duty on the goods from his factory. This credit is called CENVAT. Please consult the nearest Central Excise Range Office for further information.
Q.14
What formality of Customs is to be fulfilled at the time of export from the factory or what is the procedure for export of goods?
A.14
The assessee is required to inform to the Superintendent/Inspector in the Range Office 24 hours in advance about the proposed consignment of export. The Central Excise officer remains present while stuffing the goods in the container. After completion of the stuffing, the container is sealed with the Central Excise seal in presence of the said officer. Necessary documents such as ARE-1, invoice, packing list are also signed by the said officer. Self-sealing facility is also available under which the assessee himself stuffs the container and take clearance thereof. For more details, please contact the nearest Central Excise Range Office.
Q.15
Whether Central Excise registration is separately required by 100% EOU?
A.15
No. The licence granted by the jurisdictional Custom Officer under Section 58 of the Customs Act, 1962 is sufficient.
Q.16
What benefit does a 100% Export Oriented Unit get from the Central Excise?
A.16
Subject to prescribed conditions, no Excise duty is payable on the capital goods, raw materials, spares, consumables, etc. procured by the 100% EOU..
Q.17
What is the procedure to be followed for setting up a 100% EOU?
A.17
On obtaining LOP from the Development Commissioner, a manufacturer is required to approach the Commissioner of Central Excise for declaration of the place as a warehousing station under Section 9 of the Customs Act. Thereafter, the manufacturer is required to obtain private bonded warehouse licence under Section 58 of the Customs Act and permission to manufacture goods under Section 65 of the Customs Act from the jurisdictional Deputy/Assistant Commissioner.
Q.18
What is CT-3 certificate and who issues it?
A.18
CT-3 certificate is required to be obtained from the Range Superintendent of Central Excise on the basis of which a 100% EOU can procure duty free indigenous goods.
Q.19
What is the periodical return to be filed by a 100% EOU and when?
A.19
The 100% EOU is required to file monthly return in prescribed form.
Q.20
Is it permissible for 100% EOU to sell the goods in local market?
A.20
Yes. Under certain circumstances, 100% EOUs are permitted by the Development Commissioner to sell the goods in the local market on payment of appropriate duty.
SERVICE TAX
Q.1
What is e filing ?
A.1
E filing is a facility for the electronic filing of Service tax returns by the assesse from his office, residence or any other place of choice, through the Internet, by using a computer. The assesse can go to the e filing site `Home Page' by typing the address http://servicetaxefiling.nic.in in the address bar of the browser.
Q.2
Who can e file their returns ?
A.2
Assesses having a 15 digit STP code and falling under the following categories can avail of the facility of electronic filing their 'Return' for the following services;
a) Telegraph Services (TGH)
b) Telephones (TSU);
c) Life Insurance Services(LIS),;
d) Insurance Auxiliary (IAX),
e) General Insurance Business (GIB);
f) Stockbrokers (STB);
g) Advertising Agencies (ADV) and
h) Courier Services (COU).
i) Banking and Financial (BFN)
j) Custom House Agents (CHA)
This facility will be extended to other services in stages.
The assessee should take care to ensure that he has been indicating his 15 digit STP code in the challans used by him from September 2002. An assessee who has not done this may also opt for e filing but he will have to submit copies of challans manually to the department after e filing his return, evidencing payment of duties, after indicating his 15 digit STP code on each challan.
Q.3
Can all types of returns be filed electronically ?
A.3
At present only Service Tax return ` ST 3' can be filed electronically.
Q.4
Is e filing compulsory ?
A.4
No. E filing of returns is an assesse facilitation measure of the department in continuation of its modernization and simplification program. It is an alternative to the manual filing of returns.
Q.5
What about assesses who fall under more than one category ?
A.5
Assesses coming under the above categories, have to file separate returns for each of the services provided by them.
Q.6
Do they have to simultaneously also file a manual return or submit manual TR6 challans separately?
A.6
If an assessee files electronic returns for any of the permissible categories of services and receives an electronic acknowledgement of the same, he need not file a manual return for the same service. He need not file the manual TR 6 copies for the said returns if he has taken care to ensure that he has been indicating his 15 digit STP code in the challans used by him from September 2002. If the assessee is a provider of more than one service, it is desirable that he pays his challan service wise, so as to take maximum benefit of the procedure. He should however preserve the manual copies of the TR 6 challan for production before the officer, in the rare occasion it is called for, or as stated above, if the assessee has not been indicating his 15 digit STP code in the challans used by him from September 2002.
Q.7
What is the procedure for e filing ?
A.7
Those assesses coming under the above service categories and who have a 15 digit Service Tax Payer Code allotted to them, should file an application to their jurisdictional AC / DC as laid out in Trade Notice issued in this regard. They should mention a trusted e mail address in their application, so that the department can send them their userword and password to help them file their return. They should log on to the Service Tax E filing Home Page using the Internet. On entering their STP Code, user word and password in the place provided on the Home Page they will be permitted access to the E filing facility. They should then follow the instructions given therein.
Q.8
To whom should I make a request for e filing permission?
A.8
The assesse should file an application to their jurisdictional AC / DC as elucidated in TN mentioned above, for e filing permission.
Q.9
How will the permission for e filing of returns be communicated to the me ?
A.9
The permission for e filing will be communicated to the assesse through the e mail address provided by him. It would also contain the user ID and password required for e filing.
Q.10
Is it necessary for me to have an e mail address ?
A.10
Yes. They should mention a trusted e mail address in their application, so that the department can send them their User Word and Pass word, to help them file their Return. The e mail address will also be required at the time of login.
Q.11
Can I change my user ID and password after I receives the same from the department ?
A.11
While the assesse cannot change the user ID, he can and must change the password immediately after receiving it by e mail from the department. This he can do by logging on to the CBEC website at the address http://www.cbec.gov.in and navigating to the e filing site `Home Page' where he has an option to change his password. He can also directly go to the e filing site Home Page by typing the address http://servicetaxefiling.nic.in in the address bar of the browser. It is the responsibility of the assesse to keep the password confidential and ensure that it is not known to anyone else. This is to prevent misuse. The responsibility for the return filed using the password of the assesse will be his.
Q.12
What should I do when I change my e mail address ?
A.12
When the assesse changes his e mail address he should intimate the department of his new e mail address. This will help him in continuing to receive messages from the department electronically.
Q.13
What is an STP code ?
A.13
The STP code stands for Service Tax Payer Code. It is used by the computer as a unique identifiers for the assesses records. The department is presently allotting 15 digit STP codes to individual assesses, irrespective of the number of services the assesse may be offering.
Q.14
Do I have to have a STP code for e filing ?
A.14
Yes the assesse has to have a 15 digit STP code for e filing.
Q.15
How can I be allotted a 15 digit STP code ?
A.15
The assesse will be allotted a 15 digit STP code by the jurisdictional Central Central Excise Division after he applies for the same as per the procedure set out in Trade Notice issued in this regard.
Q.16
Is PAN a must for issuing a 15 digit STP code ?
A.16
The Board through its circular No. 35/3/2001 CX.4 dt.27.08.2001 has instructed that every Service Tax Payer should be allotted a PAN based code. However since some assesses are still not having PAN numbers, a provision has also been made in the Computer System for issuing a 15 digit temporary STP code. When the assesse gets his PAN number, he should immediately inform .
Q.1
What is Excise Duty? Is it collected by the State Government or the Central Government? How is it different from Sales Tax?
A.1
Excise duty is a tax on manufacture or production of goods. Excise duty on alcohol, alcoholic preparations, and narcotic substances is collected by the State Government and is called "State Excise" duty. The Excise duty on rest of goods is called "Central Excise" duty and is collected in terms of Section 3 of the Central Excise Act, 1944. Sales Tax is different from the Excise duty as former is a tax on the act of sale while the latter is a tax on the act of manufacture or production of goods.
Q.2
Whether a manufacturer or producer of goods is required to obtain a license from the Central Excise department for payment of Central Excise duty?
A.2
No license is required and a simple registration with the Central Excise department would suffice.
Q.3
What categories of persons are required to obtain registration with the Central Excise department?
A.3
Subject to specified conditions, generally the following categories of persons are required to get themselves registered with the Central Excise department: (i) Every manufacturer of dutiable excisable goods; (ii) First and second stage dealers or importers desiring to issue Cenvatable invoices; (iii) Persons holding bonded warehouses for storing non-duty paid goods; (iv) persons who obtain excisable goods for availing end-use based exemption.
Q.4
Is there any category of persons who are exempt from obtaining registration?
A.4
Yes. Subject to specified conditions, the following categories of persons need not obtain Central Excise registration. (i) Manufacturers of goods which are chargeable to nil rate of duty or are fully exempt; (ii) SSI manufacturers having annual turnover of below Rs.90 lakhs. Once their turnover touches Rs.90 lakhs, they should give the prescribed declaration to the Jurisdictional Superintendent of Central Excise; (iii) Job-workers of ready-made garments if the principal manufacturer undertakes to discharge the duty liability; (iv) Approved/licensed units in Export Processing Zones, Special Economic Zones and 100% Export Oriented Units.
Q.5
What is the procedure for obtaining registration?
A.5
Apply to the nearest Central Excise Division Office in Form A.1 along with a self attested copy of the PAN issued by the Income Tax Department. After post verification, a regular Registration certificate in form RC is normally issued immediately, as far as possible
Q.6
What are the items on which Central Excise duty is leviable?
A.6
All goods listed in the Central Excise Tariff Act, 1985 attract Central Excise duty unless specified to the contrary in the Act itself or under any notification issued under the Central Excise Act, 1944 by the appropriate statutory authority.
Q.7
Who is liable to pay Central Excise duty?
A.7
Generally speaking, the manufacturer who actually undertakes manufacturing activity is liable to pay Central Excise duty. A person does not become a manufacturer simply by supplying raw materials to the manufacturer or getting his goods manufactured according to his own specifications, brand name or trade name, etc. However, for the textile sector, the option is with the supplier of raw materials or with the job worker to pay duty.
Q.8
What is the rate of duty on various category of goods?
A.8
The rate of duty on each item is specified in the Central Excise Tariff Act, 1985. In some cases, the statutory rates of duty have been lowered or reduced to Nil by the Central Government in terms of Section 5A of the Central Excise Act, 1944. Anyone interested in knowing the effective rates of duty in respect of any goods must refer to the Tariff or seek guidance from the nearest Central Excise Officer, if necessary.
Q.9
Is there any exemption from payment of duty for Small Scale Industries?
A.9
Generally speaking, the Small Scale Units, who manufacture the goods specified in the relevant exemption notifications and fulfil the conditions specified in such exemption notifications, are exempt from payment of duty till their aggregate clearances do not exceed Rs.1 Crore in a financial year. The Small-Scale units whose clearances in the previous financial year exceeded the limit of Rs.3 Crores, which will also include the value of exempted goods (excluding exports), are not entitled to such exemption. Generally speaking, the Small Scale units who are availing the CENVAT credit are required to pay duty at concessional rate of 60% of the prescribed rate till their clearances reach Rs.1 Crore. For further details, please consult the nearest Central Excise Range Office.
Q.10
What is the period for filing returns by the assessee?
A.10
An SSI unit is required to file returns on quarterly basis within 20 days from the date of completion of the quarter, but non-SSI units are required to file returns on monthly basis within 10 days from the date of completion of month.
Q.11
What action department takes for non-filing of returns?
A.11
A penal action is envisaged on failure to file the returns in time. Penalty may extend up to Rs.2000/-.
Q.12
How and when Central Excise duty is to be paid?
A.12
An SSI unit has to pay duty on monthly basis by 15th of the succeeding month. Other units are required to pay duty on monthly basis within 5 days of completion of the month in question.. The assessee is required to deposit the amount of duty payable in the nominated bank along with the prescribed TR-6 challan and on this amount being credited in the government account, he can take credit in the PLA register. Such credited amount can then be utilized for discharging the duty on goods cleared from his factory. However, for the month of March, the duty has to be paid by 31st March, both for SSI and Non SSI units. Further, in case of default in payment of duty, the interest is leviable @ 2% per month or Rs. 1000/- per day, which ever is higher, starting from the date on which the duty was required to be paid till the date of payment (subject to the interest not exceeding the duty amount.
Q.13
What is the facility for mitigating the cascading effect of duty? What is CENVAT?
A.13
Subject to prescribed conditions, the assessee has to obtain a duty paid invoice from the consignor and then he can take credit of such duty amount in the account maintained for this purpose and the same can be utilized by him for the payment of the duty on the goods from his factory. This credit is called CENVAT. Please consult the nearest Central Excise Range Office for further information.
Q.14
What formality of Customs is to be fulfilled at the time of export from the factory or what is the procedure for export of goods?
A.14
The assessee is required to inform to the Superintendent/Inspector in the Range Office 24 hours in advance about the proposed consignment of export. The Central Excise officer remains present while stuffing the goods in the container. After completion of the stuffing, the container is sealed with the Central Excise seal in presence of the said officer. Necessary documents such as ARE-1, invoice, packing list are also signed by the said officer. Self-sealing facility is also available under which the assessee himself stuffs the container and take clearance thereof. For more details, please contact the nearest Central Excise Range Office.
Q.15
Whether Central Excise registration is separately required by 100% EOU?
A.15
No. The licence granted by the jurisdictional Custom Officer under Section 58 of the Customs Act, 1962 is sufficient.
Q.16
What benefit does a 100% Export Oriented Unit get from the Central Excise?
A.16
Subject to prescribed conditions, no Excise duty is payable on the capital goods, raw materials, spares, consumables, etc. procured by the 100% EOU..
Q.17
What is the procedure to be followed for setting up a 100% EOU?
A.17
On obtaining LOP from the Development Commissioner, a manufacturer is required to approach the Commissioner of Central Excise for declaration of the place as a warehousing station under Section 9 of the Customs Act. Thereafter, the manufacturer is required to obtain private bonded warehouse licence under Section 58 of the Customs Act and permission to manufacture goods under Section 65 of the Customs Act from the jurisdictional Deputy/Assistant Commissioner.
Q.18
What is CT-3 certificate and who issues it?
A.18
CT-3 certificate is required to be obtained from the Range Superintendent of Central Excise on the basis of which a 100% EOU can procure duty free indigenous goods.
Q.19
What is the periodical return to be filed by a 100% EOU and when?
A.19
The 100% EOU is required to file monthly return in prescribed form.
Q.20
Is it permissible for 100% EOU to sell the goods in local market?
A.20
Yes. Under certain circumstances, 100% EOUs are permitted by the Development Commissioner to sell the goods in the local market on payment of appropriate duty.
SERVICE TAX
Q.1
What is e filing ?
A.1
E filing is a facility for the electronic filing of Service tax returns by the assesse from his office, residence or any other place of choice, through the Internet, by using a computer. The assesse can go to the e filing site `Home Page' by typing the address http://servicetaxefiling.nic.in in the address bar of the browser.
Q.2
Who can e file their returns ?
A.2
Assesses having a 15 digit STP code and falling under the following categories can avail of the facility of electronic filing their 'Return' for the following services;
a) Telegraph Services (TGH)
b) Telephones (TSU);
c) Life Insurance Services(LIS),;
d) Insurance Auxiliary (IAX),
e) General Insurance Business (GIB);
f) Stockbrokers (STB);
g) Advertising Agencies (ADV) and
h) Courier Services (COU).
i) Banking and Financial (BFN)
j) Custom House Agents (CHA)
This facility will be extended to other services in stages.
The assessee should take care to ensure that he has been indicating his 15 digit STP code in the challans used by him from September 2002. An assessee who has not done this may also opt for e filing but he will have to submit copies of challans manually to the department after e filing his return, evidencing payment of duties, after indicating his 15 digit STP code on each challan.
Q.3
Can all types of returns be filed electronically ?
A.3
At present only Service Tax return ` ST 3' can be filed electronically.
Q.4
Is e filing compulsory ?
A.4
No. E filing of returns is an assesse facilitation measure of the department in continuation of its modernization and simplification program. It is an alternative to the manual filing of returns.
Q.5
What about assesses who fall under more than one category ?
A.5
Assesses coming under the above categories, have to file separate returns for each of the services provided by them.
Q.6
Do they have to simultaneously also file a manual return or submit manual TR6 challans separately?
A.6
If an assessee files electronic returns for any of the permissible categories of services and receives an electronic acknowledgement of the same, he need not file a manual return for the same service. He need not file the manual TR 6 copies for the said returns if he has taken care to ensure that he has been indicating his 15 digit STP code in the challans used by him from September 2002. If the assessee is a provider of more than one service, it is desirable that he pays his challan service wise, so as to take maximum benefit of the procedure. He should however preserve the manual copies of the TR 6 challan for production before the officer, in the rare occasion it is called for, or as stated above, if the assessee has not been indicating his 15 digit STP code in the challans used by him from September 2002.
Q.7
What is the procedure for e filing ?
A.7
Those assesses coming under the above service categories and who have a 15 digit Service Tax Payer Code allotted to them, should file an application to their jurisdictional AC / DC as laid out in Trade Notice issued in this regard. They should mention a trusted e mail address in their application, so that the department can send them their userword and password to help them file their return. They should log on to the Service Tax E filing Home Page using the Internet. On entering their STP Code, user word and password in the place provided on the Home Page they will be permitted access to the E filing facility. They should then follow the instructions given therein.
Q.8
To whom should I make a request for e filing permission?
A.8
The assesse should file an application to their jurisdictional AC / DC as elucidated in TN mentioned above, for e filing permission.
Q.9
How will the permission for e filing of returns be communicated to the me ?
A.9
The permission for e filing will be communicated to the assesse through the e mail address provided by him. It would also contain the user ID and password required for e filing.
Q.10
Is it necessary for me to have an e mail address ?
A.10
Yes. They should mention a trusted e mail address in their application, so that the department can send them their User Word and Pass word, to help them file their Return. The e mail address will also be required at the time of login.
Q.11
Can I change my user ID and password after I receives the same from the department ?
A.11
While the assesse cannot change the user ID, he can and must change the password immediately after receiving it by e mail from the department. This he can do by logging on to the CBEC website at the address http://www.cbec.gov.in and navigating to the e filing site `Home Page' where he has an option to change his password. He can also directly go to the e filing site Home Page by typing the address http://servicetaxefiling.nic.in in the address bar of the browser. It is the responsibility of the assesse to keep the password confidential and ensure that it is not known to anyone else. This is to prevent misuse. The responsibility for the return filed using the password of the assesse will be his.
Q.12
What should I do when I change my e mail address ?
A.12
When the assesse changes his e mail address he should intimate the department of his new e mail address. This will help him in continuing to receive messages from the department electronically.
Q.13
What is an STP code ?
A.13
The STP code stands for Service Tax Payer Code. It is used by the computer as a unique identifiers for the assesses records. The department is presently allotting 15 digit STP codes to individual assesses, irrespective of the number of services the assesse may be offering.
Q.14
Do I have to have a STP code for e filing ?
A.14
Yes the assesse has to have a 15 digit STP code for e filing.
Q.15
How can I be allotted a 15 digit STP code ?
A.15
The assesse will be allotted a 15 digit STP code by the jurisdictional Central Central Excise Division after he applies for the same as per the procedure set out in Trade Notice issued in this regard.
Q.16
Is PAN a must for issuing a 15 digit STP code ?
A.16
The Board through its circular No. 35/3/2001 CX.4 dt.27.08.2001 has instructed that every Service Tax Payer should be allotted a PAN based code. However since some assesses are still not having PAN numbers, a provision has also been made in the Computer System for issuing a 15 digit temporary STP code. When the assesse gets his PAN number, he should immediately inform .
