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The article gives an understanding of excise duty in India, the three types of excise duty and the excise duty in budget 2008

Excise Duty

Central excise duty is an indirect tax which is charged on such goods that are manufactured in India and are meant for domestic consumption. The taxable fact is "manufacture" and the liability of central excise duty arises as soon as the goods are manufactured. The tax is on manufacturing, it is paid by a manufacturer, which is then passed on to the customer.

The term "excisable goods" means the goods which are specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act 1985.

The term "manufacture" refers to any process
  • Related or supplementary to the combination of a manufactured product.
  • Which is specified in relation to any goods in the Section or Chapter Notes of the First Schedule to the Central Excise Tariff Act 1985 as amounting to manufacture or
  • 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 alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer.
Three different types of Central Excise Duties exist in India. They are listed below:

Basic Excise Duty In India
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 the category of Basic Excise Duty In India.

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.

India Budget 2008

Excise Duty
  • The general rate of CENVAT has been brought down from 16 per cent to 14 per cent.
  • The CENVAT on many goods like cars, writing paper, printing paper and packing paper, drugs and pharmaceuticals, water filtration and purification devices, pan masala not containing tobacco etc have been decreased.
  • For goods like anti AIDS drugs and bulk drugs, packaged tender coconut water, tea and coffee mixes, specified refrigeration equipment, etc have been exempt from excise duty.
  • For packaged software the duty has been increased from 8 per cent to 12 per cent.
  • The duty of 1 per cent on National Calamity and Contingent Duty has been imposed on mobile phones.

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