In India, excise duty is a form of indirect tax that is levied on the manufacture or production of certain goods within the country. Unlike sales tax, which calls for tax payment on the sale of goods, excise duty is a tax imposed on the act of manufacturing or producing a particular commodity. State Governments control and regulate excise duty related to alcohol, alcoholic preparations and other narcotic substances. Thus, it is also known as ‘State Excise Duty’. Other commodities come under the ‘Central Excise Duty’ and Central Government is liable for the collection of excise duty associated with them.
Central Excise law is directed by the Central Board of Excise and Customs (CBEC) through its field offices, known as Central Excise Commissionerates. The country is divided into 10 Zones, with a Chief Commissioner of Central Excise administering each zone. In addition to that, these zones further have 61 Commissionerates, controlled by Commissioner of Central Excise. There are also various Divisions and Ranges, which in turn are headed by Assistant Commissioners and Superintendents of Central Excise respectively. Three different types of Central Excise Duties exist in India. They are listed below:
Basic Excise Duty
Excise Duty, imposed under section 3 of the ‘Central Excises and Salt Act’ of1944 on all excisable goods other than salt produced or manufactured in India, at the rates set forth in the schedule to the Central Excise tariff Act, 1985, falls under this category.
Additional Duty of Excise
Section 3 of the ‘Additional Duties of Excise Act’ of 1957 permits the charge and collection of excise duty in respect of the goods as listed in the Schedule of this Act. This tax is shared between the Central and State Governments and charged instead of Sales Tax.
Special Excise Duty
According to Section 37 of the Finance Act, 1978, Special Excise Duty is levied on all excisable goods that come under taxation, in line with the Basic Excise Duty under the Central Excises and Salt Act of 1944. Therefore, each year the Finance Act spells out that whether the Special Excise Duty shall or shall not be charged, and eventually collected during the relevant financial year.
Today, central excise revenue is a major contributor to the overall revenue earned by the Indian Government. Central Government unwaveringly regulates the various scheme of Central Excise duty, as it is directly proportional to other factors like price control, supply of major commodities, industrial development, and development of small scale industries.
