Central Excise Duty is a form of Indirect Taxation levied through the Central Excise Act, 1944. The Central Excise Duty is levied on Goods and Products, which are manufactured or produced in India. Excise duty is levied when the goods are manufactured or produced in India and is payable when the goods are removed from the manufacturing premises. Therefore, central excise registration and central excise duty is applicable to all manufactures.
In this article, we cover the basics of Central Excise Duty and Central Excise Registration in India.
Central Excise Applicability
Central Excise Law is levied on manufacturing or production of goods and those into manufacturing in India must pay the Central Excise duty. If a manufacturer meets the following conditions, then Central Excise Law is applicable:
i) The good must be manufactured or produced
ii) the goods manufactured must be excisable (i.e. Central Excise Duty is applicable to the goods manufactured/produced)
iii) the manufacturing or production took place in India.
Manufacturing or Production under the Central Excise Law means when a new and identifiable goods or product has emerged having a different name, character, or use. Therefore, it is important to remember that under the Central Excise Laws, repacking or production of agricultural products, assembling and selling of waste or by-product could be dutiable.
Central Excise Exemption
Central Excise Law applies to all manufacturers and producers. However, the following persons are not required to register for Central Excise or pay Central Excise duty:
- Persons manufacturing good or products that are fully exempt from central excise or have 0% rate of excise duty by way of notification.
- Small Scale Industry whose aggregate turnover in a financial year does not exceed Rs. One Crore and Fifty lakhs.
- A person involved in wholesale trade of excisable goods or products.
- A person using excisable good or products for any other purpose other than for processing or manufacturing of goods.
- Person manufacturing excisable goods under the warehousing procedures of Customs Act, 1962.
Central Excise Registration
Any person or undertaking liable to pay Central Excise must obtain a Central Excise Registration. The Central Excise Registration number is a fifteen digit number in which the 1st ten digits are the PAN Number, the next two digits correspond with the applicant status and the last three digits denote the number of premises. Separate Central Excise Registration is required for each of the manufacturing premises. Once a Central Excise Registration is completed, the registration is valid unless it is is suspended, revoked or surrendered.
In case a manufacturer or producer liable to pay Central Excise does not obtain Central Excise Registration, a penalty of upto Rs.10,000 and/or imprisonment of upto 7 years can be imposed. Therefore, it is important for Entrepreneurs involved in manufacturing or production to know about their Central Excise liability and maintain compliance.