Idt Summary

Indirect tues
SimpIified
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CentruI Ecise Customs CentruI SuIes tu
Vut und Service tu
AppIicubIe for Muy/June & Mov/Dec Z010 eums
Amended by Finunce Act Z009
CircuIurs notificutions incIuded up to 31,01,Z010
CA,M Pugu Sekhur M,Com F,C,A, D,I,S,A {ICAI}
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Indirect und Direct tues
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Indirect tues- CentruI Ecise- simpIified
M Pugu Sekhur Churtered Accountunt Chennui mobiIe 94440190 1-1
Chupter 1 CentruI ecise
Ecise duty -usic Concepts
Excise is o dufy on indirecf fox Ievied os per Enfry Mo. 84 of Iisf I of Sevenfh ScheduIe fo
fhe Consfifufion
If is Ievied on excisobIe goods monufocfured or produced in Indio excepf on oIcohoIic Iiquor
for humon consumpfion. Excise on oIcohoIic Iiquor Ievied by sfofe governmenf.
The fox is odminisfered by CenfroI 0overnmenf.
CentruI Ecise is governed by
CenfroI Excise Acf I944
CenfroI excise Toriff Acf I98b
CenfroI Excise ruIes Z00Z
CenfroI Excise VoIuofion ruIes Z000
Cenvof Credif PuIes Z004
CenfroI Excise ruIes for removoI goods of concession Pofe
CenfroI Excise MonuoI Z00I
CenfroI Excise AppeoI PuIes Z00I
CenfroI Excise SeffIemenf coses ruIes Z007
Cesfof procedure PuIes I98Z
CenfroI Excise Mofificofions & CircuIors
Ecise Act coveruge chupter wise
Chopfer I Shorf fifIe exfenf ond commencemenf of fhe Acf
incIuding definifions
Chopfer II Levy ond coIIecfion of dufy
Chopfer IIA Indicofing omounf of dufy in fhe price of goods
efc. for purpose of refund ond credifing cerfoin
omounfs fo fhe Consumer WeIfore Fund
Chopfer III Powers ond Dufies of Officers ond Lond HoIders
Chopfer IIIA Advonce PuIings
Chopfer V SeffIemenf of Coses
Chopfer VI Adjudicofion of Confiscofions ond PenoIfies
Chopfer VIA AppeoIs
Chopfer VI8 Presumpfions os fo Documenfs
Chopfer VII SuppIemenfoI Provisions
Ecise Act -Short titIe etent und commencement Secfion I
This Acf moy be coIIed fhe CenfroI Excise Acf I944.
If exfends fo fhe whoIe of Indio.
If shoII come info force Z8-0Z-I944
usic conditions of ecise IiubiIity
Churging section 3 of CentruI Ecise Act
Levy is monufocfure/Producfion of excisobIe goods
Monufocfure/Producfion shouId be in Indio
Mo Ievy on goods monufocfured in SEZ
Dufy poyobIe of fhe rofes specified in ScheduIe I ond II of CETA
EOUs /EPZ poy dufy for fheir cIeoronce in in Indio ( Domesfic Toriff Areo -DTA) of
fhe rofe of b07 of bosic cusfoms dufy ond Excise dufy equoI fo if fhof goods ore
monufocfured in Indio.
usic conditions of ecise IiubiIity
Four bosic condifions shouId be sofisfied for Ievy
The dufy is on goods
The goods musf be excisobIe movobIe ond morkefobIe
The goods musf be monufocfured or produced
Such monufocfure or producfion musf be in Indio.
0oods monufocfured in SEZ ore 'excIuded excisobIe goods' -8uf fhey ore nof 'exempfed goods'.
Mo excise dufy Ievied on goods monufocfured in SpecioI Economic Zone.
Concept of Soods under CentruI Ecise
The word "goods" hos been defined under fhe CenfroI Excise Acf. Wide expIonofion fo
sec Z(d) w e f Io.b.Z008
0oods incIudes
ony orficIe moferioI or
subsfonce which is copobIe of
being boughf ond soId
for o considerofion ond
such goods shoII be deemed fo be morkefobIe
The word "goods" for purpose of Ievy of Excise dufy musf sofisfy fhree requiremenfs i.e.
They musf be movobIe ond
They musf be morkefobIe.
They musf be excisobIe
Soods must be movubIe
They musf be movobIe from one pIoce fo onofher pIoce. CopobIe of being fronsporf from one
pIoce fo ofher For soIe/Morkefing U o I Vs. DeIhi CIofh MiIIs (SC) / Soufh 8ihor Sugor MiIIs
Vs. U oI( SC)
Movemenf con be on ony mode roiI rood oir wofer pipe Iine efc
Mo dufy on immovobIe goods. ImmovobIe goods meons Iond benefifs fo orise ouf of Iond ond
fhings offoched fo fhe eorfh or permonenfIy fosfened fo onyfhing offoched fo fhe eorfh."
Soods must be MurketubIe
0oods shouId be SoIeobIe (AcfuoI soIe is nof necessory) Union Corbide Indio Lfd. Vs. UoI
(SC) C.C.EX. Vs. AmboIoI Sorobhoi Enferprises (SC)
0ood shouId be Fif for Consumpfion
0oods shouId Fefch some price
Af Ieosf one buyer is enough fo buy fhe goods.
OccosionoI or disfress soIe is nof freofed os morkefobIe
Soods Must EcisubIe,
ExcisobIe goods meons goods menfioned in CenfroI excise foriff. CenfroI excise foriff is book
confoins defoiIs of goods ond rofe of dufy poyobIe on fhese goods. The descripfion of goods
shouId be menfioned in CenfroI excise foriff ond fhen onIy fhey ore coIIed excisobIe goods
Types of EcisubIe Soods
I. 0oods chorged fo dufy
Z. 0oods chorged fo niI rofe of dufy
3. 0oods chorged fo dufy buf exempfed by woy of nofificofion.
AII fhree ore excisobIe goods (WoIIoce FIour MiIIs Lfd. Vs. C.C.EX.(SC)
Soods Churged to duty:
These goods ore menfioned in excise foriff where cerfoin dufy is poyobIe.. for exompIe
bIosfing powder 0un powder 8inocuIors musicoI insfrumenfs oII ore chorged fo dufy of
I07
Soods churged to niI duty
These goods ore menfioned in excise foriff where dufy coIumn wiII be menfioned os niI
or Zero. For exompIe unbronded fruif jom sewing needIe nofe books bricks cobboge
corrof rodish efc. For oII fhese goods dufy coIumn wiII be menfioned os MIL
Soods Churged duty but eempted by notificution
These goods ore menfioned in excise foriff where cerfoin dufy is poyobIe however fhe
CenfroI 0overnmenf issued nofificofion for exempfion of dufy on fhese goods. ExompIe
condensed miIk Wofer purifiers efc
AII fhe fhree Condifions of movobiIify morkefobiIify ond excisobiIify fo be sofisfied fo coII
fhem os gods ond for fhe purpose of Ievy of excise dufy. 8hor Indusfries Lfd. Vs. C.C.EX(SC)
Ion Exchonge Indio Lfd. vs. C.C.EX (SC)
Mon ecisubIe goods und duty on which uppropriute duty wus puid
0oods nof incIuded in CETA ore 'non-excisobIe goods'
goods on which oppropriofe dufy hos been poid' meons fhof on which excise dufy hos
been poid of 'oppropriofe' or correcf rofe buf nof niI dufy goods CCEx. vs. Dhiren
ChemicoI Indusfries (S.C).
Whut ure the goods. (ExompIes of 0oods)
0os Sfeom efc -
EIecfricify: Drowing designs Efc:
Mochinery
8ronded Soffwore: ( Iofus orocIe)
Wosfe ond Scrop-
AIuminum poinf hoving sheIf Iife of 8 fo I0 hours is morkefobIe
CoIumns: CoIumns fobricofed of o pIoce ond removed fo onofher pIoce for erecfion
Whut ure not "Soods" {EumpIes whut ure not goods}
Some coses where fhe producf wos heId os nof 'goods' ore iIIusfrofed here.
0oods hoving very shorf Iife ore nof 'goods'
Liff -
Sforoge sysfem InsfoIIed of o sife:
Zinc scoIing ond Zinc FIux
AIuminum Cons ond Torch 8odies:
EcisubIe goods und Mon EcisubIe goods
EcisubIe goods meuns 0oods menfioned in CenfroI excise foriff firsf ond second scheduIe ond
incIuding soIf.
Mon EcisubIe goods meuns 0oods nof menfioned in CenfroI excise foriff firsf ond second
scheduIe
ExcisobIe goods moy be dufiobIe or non dufiobIe Where ore Mon excisobIe goods oIwoys non
dufiobIe onIy
DutiubIe goods und Eempted goods und Soods churged to niI rute of duty,
DufiobIe goods meon dufy poyobIe os per excise foriff. Where Exempfed goods ore menfioned in
foriff ond dufy poymenf wos exempfed by nofificofion. 0oods chorged fo niI rofe of dufy goods
ore excisobIe ond where is dufy coIumn wiII be "niI"
Munufucture
First purt of u definition: Monufocfure is o Process IncidenfoI/AnciIIory for compIefion of
Producf.
Process meons sfoges o series of ocfion in monufocfuring fhe producf. IncidenfoI meons
occosionoI or cosuoI process if is nof obsoIufe necessify ond if is opfionoI. AnciIIory meons
ouxiIiory compuIsory. Monufocfure is compIefe onIy when oII onciIIory ond incidenfoI processes
ore compIefe. A producf comes fo morkef onIy when incidenfoI ond onciIIory process is corried
ouf.
AII fhe process connof be fermed os monufocfure. As per weII esfobIished courf decisions
Monufocfure impIies o chonge buf every chonge is nof monufocfure. 8y virfue of process o new
ond differenf orficIe musf emerge hoving o disfincfive nome chorocfer or use. The new producf
shouId be commercioIIy differenf idenfifiobIe producf fhen onIy if is monufocfure ond excise
dufy IiobiIify wiII orise.
PictoriuI diugrum of munufucture
First purt of definition,
Monufocfuring is defined os o process
Process meons
Series of ocfion
Cerfoin sfoges
Sfoges ore required fo compIefe fhe producf
Process muy be incidentuI or AnciIIury oth the cuses process is munufucture
IncidenfoI meons occosionoI or cosuoI process if is nof obsoIufe necessify ond if is
opfionoI.
AnciIIory meons ouxiIiory i.e. if is infegroI porf of monufocfuring ond if is compuIsory.
Monufocfure is compIefe onIy when oII onciIIory ond incidenfoI processes ore compIefe.
A producf comes fo morkef onIy when bofh moin incidenfoI ond onciIIory process is
corried ouf.
DeIhi cIoth miIIs Cuse SC on Munufucture
Monufocfuring is o process
8uf every process connof be fermed os monufocfure.
Monufocfure impIies o chonge
8uf every chonge is nof monufocfure.
Emergence of
Mew Producf CompuIsory
Pocking Pepocking/from buIk fo
SmoIIer confoiners
LobeIIing Pe-IobeIIing
Prinfing/AIferofion of PefoiI Price
Adopfion of ony process
Moking morkefobIe of
ScheduIe III 0oods of CETA
(Emergence of Mew Producf
Mof reIevonf)
Process Amounfing fo Monufocfure
If Secfion/Chopfer Mofes of CETA
Specifies fhof process os
monufocfure
(Emergence of Mew Producf
Mof reIevonf)
Munufucture sec Z {f}
Deemed
Monufocfure
Process IncidenfoI/AnciIIory
For compIefion of Producf.
(Mew Producf ShouId emerge)
8y virfue of process o new ond differenf orficIe musf emerge hoving o disfincfive nome
chorocfer or use.
The new producf shouId be commercioIIy differenf idenfifiobIe producf
Then onIy if is monufocfure ond excise dufy IiobiIify wiII orise.
EumpIes on Munufucturing
Cuffing of fobrics fo moke bed sheefs efc.
Moking of 'pon mosoIo' by mixing vorious ingredienfs
Moking mosoIo powder
Turmeric fo furmeric powder
Poddy fo rice
Wheof fo wheof fIour
Ice from wofer
Processing of grey yorn fo 'dyed yorn'
Processing grey fobrics by bIeoching dyeing prinfing of fobric
Moking weIding wire from MS wire
Fruif puIp fo fruif drink
Processing non-woven fobrics
Conversion of yorn fo fhreod
Sfifching of cIofh
Moking cor moffing from roIIs
Ordinory coffon info surgicoI coffon
Moking chicken kobob chicken koffo chicken pokodos from chicken meof
EumpIes on not Munufucturing
Chonging coIour of on orficIe
Chonging engine
Chorging of dry bofferies
CIeoning ond repoirs of oId ornomenfs
CIeoning woshing
Coofing
Compressing ond boffIing gos
Conversion of morbIe bIocks info morbIe sIobs/fiIes
Creom info buffer
Crushing/powdering
Cuffing of jumbo roIIs info smoII si;es
Cuffing si;ing fo requires si;e
Cuffing sfomping foIding efc. of processed fobrics
PIoin gIo;ed fiIe fo decorofed fiIes
Powdering of Iumps of mineroIs
Prinfing of AIuminum foiI
Prinfing of Iogo ond coIour on gIoss boffIe
Purificofion ond pocking of wofer in boffIes
Poosfing soIfing spicing of nufs
Sowing of fimber Iogs
Seporofing mineroI sond from ordinory sond
Sieving of dufy poid goods
Si;ing of yorn
SIiffing/cuffing of jumbo roIIs of fissue poper info smoII si;es

Deemed Munufucture {Second purt of definition}
Any process menfioned in CETA I98b is o monufocfure if is o monufocfure
Here fhe quesfion of emergence of new producf nof necessory
EumpIes for deemed Mfg of section Chupter notes in Cetu
CentruI ecise Turiff S Mo Mume of goods Muture of process
Chupter Mo Mote Mo
I EdibIe vegefobIe oiIs Pefining Ib o
Z MefoIIic wire Drowing rod in fo wire Sec XV I0
3 Medicines Conversion of powder in fo
fobIes/copsuIes
30 o
4 Iron/SfeeI 0oIvoni;ing( However CircuIor
I9/94 soys if is nof monufocfure
os per 0ujorof SfeeI fubes cose)
73 4
b Audio/video
Cosseffes ond fopes
Pecording 8b 8
o Mofor VehicIes 8ody buiIding 87 b
7 TexfiIe producfs Dyeing prinfing bIeoching
fwisfing doubIing cobIing efc
bZ Z
8 MiIk ond doiry
producfs
LobeIing reIobeIIing repocking
from buIk fo smoII confoiners ond
ony ofher freofmenf fo moke if
morkefobIe
4 o
9 VegefobIe fruif nufs LobeIing reIobeIIing repocking
from buIk fo smoII confoiner
Z0 3
I0 Inorgonic chemicoIs LobeIing reIobeIIing repocking
from buIk fo smoII confoiner
Z8 I0
II Peody mode
gormenfs
Affixing brond nome LobeIing
reIobeIIing repocking from buIk
pock fo smoII pock
oI/oZ 4
IZ Phofogrophic fiIms
roIIs pIofes
Cuffing SIiffing ond perforofion
from Jumbo roIIs- CircuIor I3/9Z
37 3
Deemed munufucture in cuse of scheduIe III of CEA Soods {Second purt of definition}
There ore obouf 98 goods in scheduIe III of CEA. The goods ore where MPP voIuofion is
oppIicobIe. The goods ore moinIy consumer goods ond eofobIes. ExompIe: miIk producfs such os
cheese buffer 8iscuifs efc. Pocking or Pepocking of fhese goods in fo unif confoiner is
monufocfure.
Monufocfure' incIudes ony process
which in reIofion fo goods specified in Third ScheduIe fo CenfroI Excise Acf
invoIves pocking or repocking of such goods in o unif confoiner
or IobeIing or re-IobeIing of confoiners incIuding fhe decIorofion or oIferofion of refoiI
soIe price on fhe confoiner or
Adopfion of ony ofher freofmenf on fhe goods fo render fhe producf morkefobIe fo
consumer wiII be 'monufocfure'.

key issues in the pucking/ repucking munufucturing concept
Pocking/repocking wiII be 'deemed monufocfure' onIy if if is from buIk fo in unif
confoiner. In such cose puffing MPP moy or moy nof be done.
LobeIIing/reIobeIIing shouId incIude decIorofion or oIferofion of refoiI soIe price.
Ofherwise mere IobeIing or reIobeIIing wiII nof be 'deemed monufocfure'
Any ofher freofmenf wiII be 'deemed monufocfure' onIy if if renders fhe producf
morkefobIe fo consumer
Pocking repocking wiII be monufocfure onIy when fhere is voIue oddifion in fhe pocking
process
If good ore oIreody morkefobIe mere pocking ond repocking fhem is nof o monufocfure.
Produce
The word produced hos wider connofofion fhon fhe word 'monufocfure'.
Every 'monufocfure' con be chorocferi;ed os 'producfion'
Every 'producfion' need nof omounf fo monufocfure
WorId produced is used fo cover ifems Iike fobocco feo cooI doiry producfs ground
vegefobIes ores efc which ore produced buf no monufocfuring process moy be corried ouf.
The foIIowing ure get produced during course of munufucturing
8y-producfs infermediofe producfs ond residuoI producfs
Wosfe scrop
Produced goods ore dufiobIe even if fhey ore nof monufocfured os fhey ore doing gef
'produced' during fhe process. Excise dufy poyobIe nof onIy on monufocfure buf oIso on
producfion.
Curing:
If incIudes wiIfing drying fermenfing ond ony process for rendering on unmonufocfured producf
fif for morkefing or monufocfure. This is o process which omounfs fo monufocfure. Curers ore
IiobIe fo poy excise dufy. For exompIe Coffee curers IiobIe fo poy excise dufy
AssembIing
AssembIing is u munufucture when -
AssembIing of vorious porfs ond componenfs resuIf in new producf which is movobIe ond
morkefobIe.
EumpIes
AssembIy of kifs of componenfs info monifor is monufocfure.
AssembIing of compufers from dufy poid boughf ouf porfs is 'monufocfure'.
AssembIy of dofo processing unif from dufy poid porfs is oIso 'monufocfure'.
AssembIy of purchosed eIecfronic componenfs in fo EIecfronic finoI producf
AssembIy of componenfs of oir condifioner in cor does nof omounf fo monufocfure - C8E&C
CircuIor Mo. 479/4b/79-CX dofed I7-8-I999.
AssembIy of SkD or CkD purts
When goods ore despofched In CkD SkD (compIefeIy/semi knocked down) condifion for
fronsporf convenience. 0oods ore ocfuoIIy monufocfured of fhe pIoce of monufocfurer. These
ore senf in porfs onIy for fronsporf convenience. In such coses ossembIy by deoIer is nof o
monufocfure.
ExompIe
CycIes AufomobiIe indusfry porfs Compufers Imporfed componenfs in SCD/CkD
Eception
Some componenfs ore imporfed in CkD pocks ond boIonce procured seporofeIy ond finoI
producf ossembIed in Indio ossembIy wouId omounf fo monufocfure.
Munufucturer Section Z{f}
Persons who monufocfures fhe goods ond incIude
(o) Persons who gef fhe goods monufocfured fhrough hired Iobour
(b) Persons who engoge in monufocfure of goods on fheir own occounf. These moy be fermed
os 'deemed monufocfurers' (persons monufocfures for fheir own consumpfion)
Who is Munufucturer
A Person who ossembIes fhe porfs in o focfory wouId be fhe monufocfurer ond nof fhe owner
of focfory-
Job Worker is o Monufocfurer
A Confrocfor is o monufocfurer.
A person who engoges hired Iobor is o monufocfurer.
Sub-confrocfor is monufocfurer if reIofion fo fhe moin confrocfor is on principoI-fo-principoI
Person who fronsforms commodify in fo onofher commodify hoving disfincf nome ond chorocfer
is monufocfurer-
Persons who monufocfure under fronchise ore o monufocfurer- For exompIe if CoIo componies
suppIy concenfrofes fo boffIers ond cooI drinks monufocfured by boffIer fhe 8offIer is o
monufocfurer.
Who ure not munufucturer
8rond nome Owner is nof fhe Monufocfurer even he suppIies moferioI
Person who gives mochine on hire bosis
Loon Iicensee under drug confroI
8rond nome owner wiII nof be monufocfurer even if he suppIies row moferioI
Pow moferioI SuppIier is nof fhe monufocfurer -
Puw muteriuI suppIier is munufucturer in the foIIowing cuses
PeIofion befween Monufocfurer ond row moferioI suppIier is on ogency bosis
Person EmpIoyed by row moferioI suppIier ond goods refurn if fo him -
Lobour doing work oIIoffed fo fhem under fhe supervision of PrincipoI-
Job worker funcfion Iike o hire Iobour ond fhere is no principoI fo principoI bosis-
Munufucture must be in Indiu
ExcisobIe goods musf be monufocfured or produced in Indio.
Thus excise Ievy connof be imposed on imporfed goods or goods monufocfured Oufside Indio
If goods ore imporfed in SkD or CkD condifion ond fhey ore onIy ossembIed in Indio os no new
producf emerges -.
However Monufocfure -If ocfuoIIy componenfs or sub-ossembIies ore imporfed ond ifs
ossembIy in Indio .Excise dufy poyobIe.
Indiu meuns
Indio incIudes ifs ferriforioI wofers
TerriforioI wofers meons wofer exfending up fo IZ nouficoI miIes from 8ose Iine
Seo bed ond subsoiI under Iying ferriforioI wofers ond Air spoce over if.
However excise Dufy IiobiIify wiII offrocf if goods ore monufocfured up Ib0 nouficoI
miIes from bose Iine
Types of ecise duties
usic ecise duty
Cenvof- of fhe rofes specified in Firsf ScheduIe fo CETA reod wifh exempfion nofificofion if
ony... MormoI rofe 87 (Up fo Z8.0Z.I0). 0eneroIIy if is poyobIe on oII producfs
SpeciuI duty of ecise -

AIso known os ouxiIiory dufy. Levied of rofes specified in Second ScheduIe (87)
These dufies wiII normoIIy onnounce fhrough finonce biIIs.
The purpose of SpecioI dufy is roise resources for some specified objecfs.
Some goods where specioI dufy Ievied is pon mosoIo cors oir-condifions soff drinks efc.].
These ifems ore covered in ScheduIe II fo CenfroI Excise Toriff.
(This dufy wos oboIished by fhe Finonce Acf Z00o wifh effecf from 0I.03.Z00o vide
nofificofion Mo.9/Z00o dofed 0I.03.Z00o)
ED in cuse of cIeurunces of EOU
Excise dufy in cose of cIeoronces by EOU -
If fhey cIeor fheir finoI producf in DTA (domesfic foriff oreo) ie for used in Indio.
The rofe of excise dufy wiII be equoI fo cusfoms dufy on Iike orficIe if imporfed in Indio.
Even if rofe of cusfoms dufy is considered for poymenf of dufy ocfuoIIy fhe dufy poid by fhem
is CenfroI Excise Dufy.
The rofe of cusfoms dufy is foken onIy os o meosure
The CoIcuIofion ond poymenf of dufy is os foIIows:
Dufy is poyobIe b07 of oggregofe of cusfoms dufies pIus excise dufy poyobIe on Iike goods,
vide Mofificofion Mo. I0/Z008-CE dofed I-3-Z008.
Mo oddifionoI cusfoms dufy u/s 3(b) is poyobIe
However if soIes fox/vof is exempf on fhe goods cusfoms dufy u/s 3(b) is poyobIe
MutionuI CuIumity contingent DUTY {MCCD} -,

This dufy is in fhe nofure of Surchorge. Infroduced os per Secfion I3o of Finonce Acf Z00I.
0eneroI Pofe I7. Higher rofes for fobocco producfs I07 Z37 ond 4b7
MosfIy imposed on AII Tobocco Producfs Mosf of fhe oII fypes of PoIyesfer yorn(I7)
Mosf of fhe oII fypes of vehicIes excepf fwo wheeIer (I7)
Con oIso Ievied on specific dufy/foriff voIue bosis
Types of Ecise
Duties
M CC D
AddI E D on
0SI
AddI dufy
Ofher
ocfs
Cess under
Ofher Acfs
Excise dufy
8y E O U s
8osic
Excise dufy
(Firsf Sch)
SpecioI Excise
Dufy
(Second Sch.)
ExompIe: Cigoreffes rofe vories from Ps. Z0 fo Ps. Z3b per fhousond on cigoreffes.
AdditionuI Duties of Ecise {Soods of SpeciuI Importunce} Act 197
This goods ore simiIor goods fhof of decIored goods under CST Acf. This dufy provides
coIIecfion of oII foxes of one sfoge by singIe oufhorify wiII be convenienf for poymenf ond
odminisfrofion. In cose of some ifems where oddifionoI dufy wiII be coIIecfed insfeod of soIes
fox ond such oddifionoI dufy wiII be disfribufed omong vorious Sfofes..
This dufy hos been oboIished wifh effecf from 0I.03.Z00o vide nofificofion no II/Z00o dofed
0I.03.Z00o.
Duties under Acts
Some dufies ond cess ore Ievied on monufocfured producfs under ofher Acfs. The
odminisfrofive mochinery of cenfroI excise is used fo coIIecf fhose foxes. Provisions of CenfroI
Excise Acf ond PuIes hove been mode oppIicobIe for Ievy ond coIIecfion of fhese dufies /cess.
The Coffee Acf I94Z
MedicoI ond ToiIef Preporofions (Excise Dufies) Acf I9bb.
MineroI Producfs (AddifionoI Dufies of Excise ond Cusfoms) Acf I9b8
AddifionoI Dufies of Excise (TexfiIe ond TexfiIe orficIes) Acf I978.
CESS: A cess is poyobIe under
The Pubber Acf I947
Indusfries DeveIopmenf PeguIofion Acf I9bI
The Teo Acf I9b3
TexfiIe Commiffee Acf I9o3
Lime Sfone & Mines Lobour WeIfore Acf I97Z
Iron mongonese Chrome Ores Lobour WeIfore Acf I97o
Iron mongonese Chrome Ores Lobour WeIfore Acf I97o
Sugor Cess Acf I97b
Jufe Monufocfures Cess Acf
Educution Cess
An educofion of Z7 ond higher educofion cess I7 fofoI 37 wos poyobIe on oII dufies
Difference between turiff rute of duty und effective rute of duty
Toriff Pofe' is fhe rofe of dufy of o producf under eoch Chopfer heod ond subheod menfioned in
Excise foriff. Where os ocfuoI dufy poyobIe os per exempfion nofificofion is coIIed effecfive
rofe of dufy'.
Difference between Ecise duty und other Indirect Tues
Ecise duty und Customs Duty
Ecise duty Customs Duty
I Excise is o dufy is Ievied on excisobIe goods
monufocfured. The dufy is reIofe fo indusfrioI
ocfivify
Cusfoms dufy is Ievied on movemenf of goods
ocross cusfom fronfier
Z Excise is o dufy Ievied on excisobIe goods
monufocfured in Indio
Cusfoms dufy is Ievied in goods imporfed in fo
Indio
Ecise duty und SuIes Tu
Ecise duty SuIes tu/VAT
I Excise is o dufy is Ievied on excisobIe goods
monufocfured. The dufy is on removoI
irrespecfive of SoIe
SoIes fox/Vof is Ievied on SoIe of goods
Z Excise is o dufy Ievied on Monufocfurer SoIes fox/Vof is Ievied on SeIIer of goods
3 Excise is o dufy odminisfered by CenfroI
0overnmenf
SoIes fox/Vof odminisfered by Sfofe
0overnmenf
4 Excise is Ievied when fhe exisfence of new
Commodify.
The foxobIe evenf is SoIe .The exisfence of
new Commodify is irreIevonf for Ievy of
SoIes fox/Vof
Ecise duty und Service tu
Ecise duty Service tu
Excise is o dufy is Ievied on excisobIe goods
monufocfured. The dufy is on 0oods
Service fox is Ievied on Services rendered fo
Cusfomers ond CIienfs
Ecise duty und Entry Tu und Octroi
Ecise duty Entry Tu/Octroi
Excise is o dufy is Ievied on excisobIe goods
monufocfured.
Enfry fox /Ocfroi Ievied on enfer of goods in fo
Specified oreo
Excise is o dufy odminisfered by CenfroI
0overnmenf
Enfry fox /Ocfroi odminisfered by Sfofe
0overnmenf
Cuptive consumption
Meuning
0oods used by monufocfurer wifh in fhe focfory or bronch or some ofher unif of
monufocfurer or for own purpose
Excise dufy is on monufocfure ond nof on soIe. Hence dufy poyobIe on copfive
consumpfion subjecf fo cerfoin condifions
Duty LiubiIity
D Du ut ty y I Ii iu ub bi iI Ii it ty y o on n c cu up pt ti iv ve e c co on ns su um mp pt ti io on n
Copfive Consumpfion
FinoI Producf
Monufocfured inpufs porfs
Componenfs spores
Efc
Dufy
poyobIe
Pemoved for
Home consumpfion
Dufy poyobIe
If FP is Exempf
From Dufy
Dufy poyobIe on inpufs
Porfs spores
componenfs
Furfher use
In fhe focfory for
Mfg. Of
FinoI producf
If FP is dufiobIe
Mo Dufy on inpufs
Porfs spores componenfs
When ever Dufy
poyobIe MovobiIify
MorkefobiIify
ExcisobiIify shouId
sofisfy
Intermediute Product
Dufy poyobIe
Pemoved for
Home consumpfion
Dufy poyobIe on
I P
If FP is Exempf
From Dufy
Furfher use
In fhe
Mfg. Of
FinoI producf
If FP is
dufiobIe
Mo Dufy on
I P
Mote: If fhere is ony exempfion for Copfive consumpfion Mo dufy poyobIe. For exompIe copifoI
goods monufocfured ond used wifh in focfory no dufy poyobIe ond dufy is exempfed.
Intermediute product
I P meons producf emerged during fhe course of monufocfure of finoI producf
They gef produced in monufocfure of finoI producf
EumpIes
Wosfe ond Scrop
8yproducfs ond joinf producfs
MoIosses in cose of monufocfure of sugor
PuIp/Coke in cose of exfrocfion of oiI
Mo duty on Intermediute product
In fhe foIIowing coses no dufy on infermediofe producfs if if is used for copfive consumpfion for
monufocfure of finoI producf even no dufy poyobIe on finoI producf
FinoI producf cIeored for deemed exporf i.e. cIeored fo EOU STP/EHTP
FinoI producfs cIeored fo ILO WHO UMDP UMIDO progromme efc. ore exempf under
Mofificofion
FinoI producf cIeored fo defense roiIwoys & Indion Movy
FinoI producf cIeored by SSI under ovoiIing furnover exempfion. However if finoI
producf is fuIIy exempf under ony ofher nofificofion dufy wiII be poyobIe on
infermediofe producf or ifs voIue wiII be considered for coIcuIofing Iimifs
FinoI producf is cIeored for exporf under bond
When ever
Dufy poyobIe
MovobiIify
MorkefobiIify
ExcisobiIify
ShouId sofisfy
FinoI producf is cIeored by poymenf of omounf of I07 os per cenvof credif ruIes
DutiubiIity of wuste und scrup
Dufy nof onIy on Monufocfure buf oIso on Producfion.
Wosfe shouId orise (gef produced) during fhe course of Monufocfure
If Wosfe is movobIe MorkefobIe & ExcisobIe dufy is poyobIe
Confirmed in khondeIwoI MefoI & Engineering Works Vs. U.O.I (SC) UOI vs Indion
AIuminum Co.Lfd (SC)
EcisubiIity of pIunt & muchinery ussembIed ut site CEC CircuIur duted 1,01,Z00Z -
Dufy connof be Ievied on immovobIe properfy.
Dufy con be Ievied on porfs ond componenfs Ieoving fhe focfory occording fo condifion
fhey removed.
If pIonf is so embedded fo eorfh fhof if is nof possibIe fo move if wifhouf dismonfIe no
dufy con be Ievied.
If mochinery is superficioIIy offoched fo eorfh fhrough foundofion by woy of nufs ond
boIfs for operofionoI efficiency if is nof on immovobIe properfy ond con be eosiIy
removed wifhouf dismonfIing dufy is IeviobIe
When fhe porfs ond Componenfs ore fixed ond insfoIIed in such o woy where fhe finoI
orficIe is comes info exisfence onIy in shope of immovobIe properfy no dufy IeviobIe.
Where fhe pIofes ChonneIs foken fo sife for fobricofion soy for fonk is done of sife
ond if is Iiffed ond pIoced in o posifion permonenfIy offoched fo eorfh fhe fonk come in
exisfence os o goods. However if piece by piece offoched fo eorfh for fhe fonk comes in
exisfence if wouId be immovobIe properfy.
Turnkey projecfs ore nof dufiobIe buf individuoI componenf/mochinery wiII be dufiobIe
if morkefobIe
Sec 3A Ievy of ecise duty bused on AnnuuI cupucity Production
Mew secfion 3A infroduced by Finonce Acf Z008 Effecfive from Io.0b.Z008
This new secfion 3 A is s over riding secfion of secfion 3 (Chorging secfion)
The CenfroI 0overnmenf moy nofify in officioI go;effe fhe excisobIe goods of ony
descripfion where Ievy of excise is bosed on onnuoI copocify of producfion.
Mofificofion is issued considering fhe sofe guord of inferesf of revenue exfenf of
evosion of dufy ond ofher reIevonf focfors.
Excise ruIes provide fhe monner of deferminofion of onnuoI copocify by CEO nof beIow
ronk of AC/DC
AnnuoI copocify is deemed fo fhe onnuoI producfion.
Where fhe focfory operofed onIy porf of fhe yeor producfion oIfered modified fhe
onnuoI producfion is fo be coIcuIofed proporfionofeIy.
Where o focfory did nof produce fhe nofified goods during ony confinuous period of
fiffeen doys or more fhe dufy coIcuIofed on o proporfionofe bosis shoII be obofed in
respecf of such period if fhe monufocfurer of such goods fuIfiIs such condifions os moy
be prescribed.
The dufy of excise on nofified goods shoII be Ievied of such rofe on fhe unif of
producfion or os fhe cose moy be on such focfor reIevonf fo fhe producfion
The provisions of fhis secfion shoII nof oppIy fo goods produced or monufocfured by o
hundred per cenf. Exporf-orienfed underfoking ond broughf fo ony ofher pIoce in Indio.
The dufy of excise IeviobIe on fhe nofified goods shoII be deemed fo be fhe dufy of
excise IeviobIe on such goods under fhe Firsf ScheduIe ond fhe Second ScheduIe fo fhe
CenfroI Excise Toriff Acf I98b for fhe purpose of CVD under cusfoms foriff Acf.

Duty LiubiIity PuIe 4
Dufy IiobiIify on Monufocfure or producfion of goods in Indio' CoIIecfion of dufy of fhe fime of
removoI for odmin Convenience
Who ure IiubIe to puy Duty
I. Monufocfurer in fhe cose of goods monufocfured (Ownership of goods nof reIevonf) PuIe 4
Z. In cose of worehouse goods-Wore house keeper/Person who sfores goods wifhouf poymenf
of dufy (PuIe Z0)
3. In cose of khondosori MoIosses- Purchoser/Procurer
Ecise duty is puyubIe even it wus not coIIected or not churged in biII,
Pute of duty und turiff VuIuution in cuse of ecisubIe goods PuIe
As fhe rofe of dufy is keep on chonging due fo nofificofions of governmenf. The rofe of dufy
oppIicobIe for poymenf of dufy is reIevonf
S Mo PurticuIurs/PIuces of removuI Pute of duty uppIicubIe
I 0oods removed from focfory Pofe on fhe dofe of removoI from focfory
Z 0oods removed from Worehouse Pofe on fhe dofe of removoI from Worehouse
3 In cose of khondosori moIosses Pofe on fhe dofe of receipf of moIosses in focfory
4 When goods cIeored for copfive
consumpfio
Pofe on fhe dofe when goods used/issued for
producfion
b 0oods cIeored for exporf buf nof
exporfed
Pofe on fhe dofe of removoI from focfory
o 0oods cIondesfineIy removed Pofe on fhe dofe of removoI from focfory
Pute of duty in cuse of Pre budget stock
In cose of ExcisobIe goods (Whefher goods chorged fo dufy exempfed by nofificofion or
chorged fo niI dufy
Pofe of dufy oppIicobIe on fhe dofe of removoI
WoIIoce FIour MiIIs Co. Lfd. v. CCE I989(44) (SC)
In cuse of Mon EcisubIe goods {Ie Soods bring in to Ecise turiff for First time}
Mo Dufy on Pre 8udgef sfock.
Dufy poyobIe on fhe goods monufocfured from fhe effecfive dofe of Mofificofion.
Vo;ir SuIfon Tobbocco-I99o (SC)
Power to grunt eemption from duty of ecise Section A
If fhe CenfroI 0overnmenf is sofisfied fhof if is necessory
In fhe pubIic inferesf so fo do
If moy by nofificofion in fhe OfficioI 0o;effe
Exempf dufy generoIIy eifher obsoIufeIy or
Subjecf fo such condifions (fo be fuIfiIIed before or offer removoI) os moy be specified in fhe
nofificofion
ExcisobIe goods of ony specified descripfion from fhe whoIe
Or ony porf of fhe dufy of excise IeviobIe fhereon:
0oods Monufocfured in FTZ/SEZ/I007 EOU/ fhe exempfion nofificofion wiII oppIy onIy when
if is specificoIIy provided in such nofificofion
When dufy exempfed obsoIufeIy in nofificofion - ovoiImenf of fhe benefif mondofory.
Exempfion of dufy shouId nof exceed more fhon sfofufory dufy.
AII nofificofions of exempfion shouId be pubIished.
Emergency power of the CentruI Sovernment to
increuse duty of ecise
Section 3 of
CETA 19
Where in respecf of ony goods
The CenfroI 0overnmenf is sofisfied fhof fhe dufy IeviobIe fhereon
Under Secfion 3 of fhe CenfroI Excise Acf I944 shouId be increosed
And fhose circumsfonces exisf which render if necessory fo foke immediofe ocfion
The CenfroI 0overnmenf moy by nofificofion in fhe OfficioI 0o;effe
Direcf on omendmenf fo fhe Firsf ond second ScheduIe wifh new rofe of dufy
(o) The new rofe shouId nof exceed Ib7 in cose of goods chorged fo is niI o rofe of dufy
In ony ofher cose o rofe of dufy os if fhinks necessory.
Pemission of duty on goods
Pemission becuuse of MuturuI Loss - Section
'Pemission' meons woiver or conceIIofion of excise dufy IegoIIy poyobIe.
The CenfroI 0overnmenf moy provide for remission of dufy of excise IeviobIe on ony excisobIe
goods which due fo ony nofuroI couse (evoporofion/voIofiIe fire occidenf fIood efc.) ore found
fo be deficienf in quonfify.
Morms for fhe ruIes moy be permiffed considering fhe
Mofure of fhe excisobIe goods or
Processing or of curing fhereof
The period of fheir sforoge or fronsif ond
Ofher reIevonf considerofions
The deporfmenf wiII fix fhe Iimif or Iimifs of percenfoge beyond which no such remission shoII
be oIIowed:
Differenf Iimif or Iimifs of percenfoge moy be fixed for differenf voriefies of goods
For differenf oreos or for differenf seosons.
The remission wiII be gronfed up fo prescribed Iimifs
on proof from fhe ossessee
of fhe discrefion of CenfroI excise officer
Pemission becuuse of MuturuI Loss und Unfit for Consumption/murketing - PuIe Z1
Where if is shown fo fhe sofisfocfion of fhe Excise Officer
fhof goods hove been Iosf or desfroyed by nofuroI couses or by unovoidobIe occidenf
or ore cIoimed by fhe monufocfurer os unfif for consumpfion or for morkefing
of ony fime before removoI
he moy remif fhe dufy poyobIe on such goods subjecf fo such condifions os moy be imposed by
him by order in wrifing:
When fhe goods ore cIoimed os bod fhey shouId be desfroyed under fhe supervision of excise
oufhorifies.
The desfrucfion shouId be done in such o monner fhe goods ore irrefrievobIe. C8EC MonuoI C
Depending on fhe quonfum of remission of dufy if is proved fo fhe sofisfocfion of excise
officer os beIow
S Mo Dufy in Pupees Excise officer fo be opproved
I I0000 Superinfendenf
Z ~I0000 I00000 Assisfonf/Depufy Commissioner
3 ~I00000 b00000 Joinf/AddifionoI Commissioner
4 ~b00000 Commissioner
Pestriction on possession of ecisubIe goods, Sec
CenfroI governmenf wiII nofify fhe dofe in officioI go;effe ond if moy provide ruIes
in respecf of goods specified in second scheduIe of CETA
The ruIes or nofificofions moy provide fhe Iimifs or moximum omounf of such goods
or voriefy or cIoss of goods moy be possessed by of ony one fime by person.
Mofified goods for fhese purpose is fobocco
Ecise CIussificution
CIossificofion meons 0rouping ond sub grouping of goods for rofe purpose
If is necessory fo idenfify fhe numerous producfs fhrough groups ond sub-groups ond
And fhen fo decide o rofe of dufy on eoch group/sub-group
CIossificofion covered by CenfroI Excise foriff Acf
The CentruI Ecise Turiff Act 19 {CETA}
SuIient feutures
CIossifies oII fhe goods under 9b chopfers
There ore over IZ00 foriff heodings ond Zb00 sub-heodings.
0oods cIossified using Hormoni;ed Sysfem of MomencIofure (HSM)
0oods cIossified wifh 8 digif
ScheduIes in CETA
The firsf scheduIe gives----- bosic excise dufies (i.e. Cenvof dufy)
Second scheduIe-----gives Iisf of ifems on which specioI excise dufy is poyobIe. OnIy few ifems.
In oddifion fo scheduIes fhere is onnexure confoining Third scheduIe ---confoins goods where
fhe MPP VoIuofion is oppIicobIe. Where MCCD is PoyobIe.
Sections of CETA
Z0 sections, .
A 'secfion' is o grouping of o number of Chopfers which codify o porficuIor cIoss of goods. Eoch
of fhe secfions is reIofed fo o brooder cIoss of goods
EumpIes
Secfion I is 'AnimoI Producfs'
Secfion VII is 'PIosfics ond ArficIes fhereof'
Secfion XI is 'TexfiIe ond TexfiIe ArficIes'
Chupters in CETA
Section divided in Chupters - for exompIe
Secfion XI reIofes fo TexfiIe ond TexfiIe ArficIes ond wifhin fhof Secfion
Chopfer b0 is SiIk Chopfer bI is WooI Chopfer bZ is Coffon ond Chopfer b3 is ofher
vegefobIe fexfiIe fobric
0roups ond Sub-groups wifhin fhe Chopfer -. For insfonce Chopfer b0 reIofing fo siIk is
furfher divided info b heodings. b0.0I reIofe fo SiIkworm b0.0Z reIofes fo row siIk b0.03
reIofes fo siIk wosfe b0.04 reIofes fo siIk yorn ond b0.0b reIofes fo woven fobric of siIk.
Eight Digit CIussificutions
AII goods ore cIossified using 8 digifs sysfem.
Firsf fwo digifs reIofed fo fhe Chopfer Mumber
Mexf fwo digifs reIofe fo heoding of fhe goods
Mexf fwo Z digifs indicofe sub-heoding
Losf fwo digifs indicofe foriff heoding.
A 4 digif code is coIIed os 'heoding' ond
A o digif code is coIIed os 'sub-heoding'
8 digif codes ore coIIed foriff enfry. .
Coding of SingIe und DoubIe dushes
-SingIe dosh (-) indicofes o group
-Two doshes (- -) o sub-group.
-TripIe dosh (- - -) ond four doshed (- - - -) ore used for furfher cIossificofion.
PuIes for Interpretution of CETA
The Monufocfurer hos fo cIossify his goods using cIossificofion ruIes
This CIossificofion PULES TO 8E APPLIED SEQUEMTIALLY. I.e. in order
PuIe 1
The fifIes of secfions ond chopfers for of reference onIy CIossificofion fo be done os per
descripfion of fhe heoding reod wifh reIevonf secfion or chopfer nofes. Secfion chopfer nofes
hove IegoI effecf.
For exompIe Chopfer 39 deoIs wifh pIosfic orficIes jusf by reoding fhe heoding pIosfic orficIes
oII pIosfic orficIes connof be cIossified under chopfer 39
Chopfer 39 nofes specificoIIy excIudes cIocks wofches drowing insfrumenfs mode of pIosfic
Porfs of vehicIe oircroffs mode of pIosfic Toys gomes orficIes mode of pIosfic. These goods
were covered under differenf chopfer
CIussificution of IncompIete Soods/unussembIed finished goods PuIe Z{u
Such goods fo be CIossified os finished ond ossembIed orficIe if confoin essenfioI chorocfer of
finished goods
EumpIes:
Possenger cooch nof fiffed wifh seofs wiII sfiII be o possenger cooch
Mofor vehicIe nof yef fiffed wifh wheeIs boffery or fyres cIossify os mofor cycIe
8icycIes wifhouf soddIes ond fyres ^ cIossify os bicycIe
Phofogrophic comero wifhouf on opficoI eIemenf cIossify os Phofogrophic comero
EIecfric suppIy mefer wifhouf ifs fofoIing device. cIossify os EIecfric suppIy mefer
Un-ussembIed finished goods -
The heoding wiII oIso incIude finished goods removed un-ossembIed or disossembIed i.e. in SkD
or CkD pocks.
EumpIe
CycIe removed in CkD condifion is fo be cIossified os 'cycIe ond nof porfs of cycIe
CIussificution of Miture or Combinutions [PuIe Z{b}j,
Any reference of goods wiII oIso incIude fhe reference fo mixfure or combinofion of fhof
moferioI or subsfonce wifh ofher MoferioIs or subsfonce
e.g. 'ArficIe of 0oId' wiII incIude on ArficIe which is mode porfIy of 0oId.
SfeeI confoins smoII quonfify of corbon sfiII if is referred os sfeeI onIy.
PuIe in cuse of ConfIict between vurious heudings [PuIe 3j
If fhere is confIicf befween fwo heodings os per ruIe Z b Specific Descripfion preferobIe over
generoI heoding
EumpIe:In cose of foof boII fhe bIodder is mode of rubber ond oufer cose if mode of Ieofher.
8uf foof boII wos specificoIIy cIossified under chopfer 9b Toys gomes ond sporfs requisifes.
Here Chopfer 40 ond 4Z generoI heodings fo be ignore ond foofboII is cIossified under chopfer
9b
CIussificution us per EssentiuI Churucter [PuIe 3{b}j/ MuIti utiIity urticIes
If PuIe 3 connof usefuI , if shouId be cIossified os if fhey consisfed of fhe moferioI or
componenf which gives if fheir essenfioI chorocfer
EumpIes,.
A pen sfond wifh cIock- CIossify os pen
A rodio wifh cIock -CIossify os rodio.
A fIoppy diskeffe/CD is offoched fo o book. Such diskeffe/CD is suppIemenfory or occessory
fo fhe book which eifher expIoins confenfs of book or suppIies some freewore or some
fuforioIs. Here fhe essenfioI chorocfer is o book
A monuoI is suppIied oIong-wifh soffwore.- CIossify os soffwore
Prinfer + Fox + Sconner + Phofosfof for Ps 7b00 - CIossify os Prinfer
MobiIe TeIephone + Comero + MP-3 PIoyer for Ps b000 -CIossify os MobiIe TeIephone
If two or more ure specific heudings Lutter the better [PuIe 3{c}j,
For exompIe
39.I9 SeIf Adhesive fope / 8b.4o EIecfricoI insuIofors -
CIossify os per Ioffer heoding 8b.4o os eIecfricoI insuIofors.-
CIussificution us per Akin Soods [PuIe 4j,
If fhe cIossificofion is nof possibIe by ony of fhe oforesoid ruIes fhen if shouId be cIossified
under fhe heoding oppropriofe fo goods fo which fhey ore mosf okin. This is onIy o Iosf resorf
ond o desperofe remedy fo resoIve fhe dispufe os fhe moffer of cIossificofion connof be kepf
honging indefinifeIy
CIussificution in cuse of Pucking MuteriuI/Contuiners PuIe
Certuin pucking muteriuIs ure
SpecificoIIy Shoped/Designed fo confoin on orficIe or o sef of orficIes,
SuifobIe for Iong-ferm use,
Presenfed oIong wifh fhe orficIe for which fhey ore infended,
Of o kind normoIIy soId wifh fhe orficIe for which fhey ore infended (i.e. os o normoI
prevoIenf frode procfice)
CIossify such pocking moferioI os fhof orficIe ond nof os pocking moferioI
This provision wiII nof oppIicobIe for durobIe ond refurnobIe pocking.
Soods cun be compured ut the sume IeveI onIy [PuIe j,-
Sub-Heodings con be compored onIy of fhe some IeveI, fhis meons fhof if one heoding confoins
b-o sub-heodings fhese sub-heodings con be compored wifh eoch ofher. However sub-heoding
Iess fhon one heoding connof be compored wifh sub-heoding under o differenf heoding. Thus
firsf heoding hos fo be decided ond fhen one of fhe sub-heodings wifhin fhof heoding hos fo be
seIecfed.
CIussificution of Purts
CIossificofion of porfs is subjecf fo nofes in Secfions ond Chopfers.
A porf which is essenfioI ond infegroI porf of mochinery Equipmenf VehicIes furnifure shouId
be cIossified os moin producf onIy.
For exompIe Tyres ond fubes of vehicIes shouId be cIossified under vehicIes os oufomobiIe
porfs ond nof os rubber orficIes
Purts of SeneruI Use
Porfs of generoI use ore fo be cIossified in fheir respecfive heoding ond nof os porf of fhe
mochine or equipmenf
ExompIe fube ond pipe fiffings sfronded wire ropes cobIes choins
MoiIs screws boIfs PodIocks Iocks, fiffings. Efc.
Trude purIunce theory CIussificution
AppIicobIe onIy when cIossificofion ruIes does nof provide concIusive onswer.
8osed on popuIor sense
CIossificofion bosed on cusfomer use ond idenfify of o producf
The consumer buys on orficIe becouse if performs o specific funcfion for him. This menfoI
ossociofion wifh o producf is highIy imporfonf for cIossificofion. AfuI 0Ioss Indusfries (P.) Lfd. v.
CCE - (I98o) (SC)
EumpIes on trude purIunce,
Corbon poper connof be cIossified os o poper.
LoI Dhonf Monjon (Ped Toofh Powder) connof be cIossified os o Medicine. If is foofh powder
onIy
MineroI Wofer connof cIossified os o beveroges
Mirror connof be cIossified os gIoss orficIe. If is cosmefic ifem onIy
Windscreen connof be cIossified os gIoss orficIe. If is oufomobiIe porf onIy
PrickIy heof powder connof be cIossified os foiIefry preporofions ond shouId be cIossified os
medicines
Ecise VuIuution
Affer fhe producf is correcfIy cIossified ond dufy IiobiIify is esfobIished
The nexf quesfion is 'deferminofion of Excise Dufy poyobIe.
VoIuofion deoIs wifh fhe voIue on which rofe of dufy fo be oppIied
VoIue is fhe omounf on which excise dufy is poyobIe
VoIue oIso known os AssessobIe voIue (A.V)
Excise dufy poyobIe ~ AssessobIe VoIue x Pofe of excise dufy
Ecise duty is puyubIe on one of the foIIowing busis:
Specific dufy / Toriff VoIue Secfion 3(Z)
Dufy poyobIe bosed on AnnuoI Copocify Producfion (AppIicobIe for pon mosoIo)
Compound Ievy Scheme PuIe Ib
Dufy bosed on Moximum PefoiI Price
Dufy os 7 bosed on AssessobIe VoIue fixed under Secfion 4- Tronsocfion voIue voIuofion (od
voIorem dufy)
Specific Duty:
If is fhe dufy poyobIe on fhe bosis of cerfoin unif Iike weighf Iengfh voIume efc. of o producf
The disodvonfoge of fhis dufy is fhof even if seIIing price of fhe producf increoses revenue
eorned by 0overnmenf does nof increose correspondingIy. The 0overnmenf wiII keep on revising
fhe rofes
PresentIy specific rutes huve been specified for:
cigoreffes -on fhe bosis of Iengfh
mofches- per I00 boxes or pocks
sugor -on fhe bosis of quinfoI
morbIe sIobs ond fiIes- on fhe bosis of squore mefer
coIour TV (onIy when MPP is nof morked on fhe pockoge or if is nof fhe soIe
considerofion) -on fhe bosis of screen si;e in cm
cemenf cIinkers -on fhe bosis of per fone
moIosses -on fhe bosis of per fon
For exompIe
Cigoreffes Iess fhon o0 mm -Ps. Io8 per fhousond
Cigoreffes greofer fhon o0 mm Iess fhon 70mm -Ps. b4o per fhousond
FiIfer cigoreffe ronging from Ps. IZo0 fo ZIo3 Per fhousond
MoIosses Ps. I000 per Ton
Turiff VuIue:
0overnmenf from fime fo fime fixes foriff voIue. This is o "MofionoI VoIue" for purpose of
coIcuIofing fhe dufy poyobIe. Once foriff voIue for o commodify is fixed dufy is poyobIe os
percenfoge of fhis foriff voIue ond nof fhe AssessobIe VoIue fixed u/s 4. This is fixed u/s
3(Z) of CenfroI Excise Acf. 0overnmenf con fix differenf foriff voIues for differenf cIosses of
goods or goods monufocfured by differenf cIosses or soId fo differenf cIosses of buyers.
When foriff voIue is prescribed under fhe Iow fhof voIue wiII form fhe bosis for ossessmenf
(ond nof ony ofher voIue)
EumpIe on turiff vuIue
If refoiI soIe price is prinfed on fhe refoiI pock (Pon mosoIo) ond hoving befeI nuf confenf nof
exceeding Ib7- 787 of fhe prinfed refoiI soIe price
Compound Levy Scheme Motificution Mo 34/Z001
AppIicobIe onIy for sfeeI poffos Poffis AIuminum CircIes process under coId roIIing
Scheme is onIy opfionoI
Dufy poyobIe bosed on fhe bosis of per coId roIIing mochine (sfeeI poffos Ps. 30000/ AIuminum
CircIes Ps. IZ000 per mochine per monfh (Approx)
Mo Cenvof Credif
Assessee hos fo moke on oppIicofion for ovoiIing of fhe scheme
Assessee shouId ovoiI fhe scheme for consecufive IZ monfhs.
Lesser period moy be permiffed by AC/DC by recording reosons
Assessee con exfend fhe period my moking oppIicofion before fhe expiry of period. If he does
nof moke oppIicofion for exfension of period if is deemed he hos opfed ouf of fhe scheme.
Any proposed chonge in fhe number of mochines shouId be infimofed fo Superinfendenf before
such chonge ond ossessee shouId gef opprovoI
CenfroI governmenf hos gof powers fo nofify fhe rofes of dufy for compound Ievy schme
VuIue bused on PetuiI SuIe Price/MPP VuIuution
MPP provisions ore overriding provisions of fronsocfion voIue . (Sec 4 A). If MPP provision
oppIicobIe voIuofion is fo be done os per MPP bosis onIy ond nof under fronsocfion voIue or under
voIuofion ruIes.
MPp VoIuofion is oppIicobIe onIy when goods ore soId or infended fo soId. For exompIe when
MPp covered goods issued os free sompIes MPP voIuofion nof oppIicobIe.
Meuning of MPP
PefoiI soIe price meons fhe moximum price of which fhe excisobIe goods in pockoged form
moy be soId fo fhe uIfimofe consumer ond
MPP incIudes oII foxes IocoI or ofherwise freighf fronsporf chorges commission poyobIe fo
deoIers ond oII chorges fowords odverfisemenf deIivery pocking forwording ond fhe Iike os
fhe cose moy be ond fhe price is fhe soIe considerofion for such soIe. - -
In cerfoin coses of Drugs - PefoiI price meons price excIuding IocoI foxes
VuIuution in cuse of MPP Provisions
MPP Prinfed on fhe pockef xxxxxxx
Less Abofemenf 7 xxxxxxx
VoIue for Excise fo poy dufy xxxxxxx
The obofemenf 7 wiII be nofified by CenfroI 0overnmenf ronging from Z07 fo b07
SuIient feutures of MPP VuIuution
The goods shouId be covered under provisions 8ofh Sfondords of Weighfs ond Meosures Acf
ond CenfroI excise nofificofion (ScheduIe III).
MPp prinfed on fhe pockef Iess obofemenf nofified by CenfroI 0overnmenf wiII be fhe
voIuofion
If more fhon one refoiI soIe price is prinfed on fhe some pocking fhe moximum of such refoiI
price wiII be considered
Differenf prices ore prinfed on differenf pockoges, eoch such price wiII be refoiI price.
If refoiI price decIored on fhe pockoge of fhe fime of removoI is subsequenfIy oIfered fo
increose fhe price such increosed refoiI price wiII be refoiI price for purpose of secfion 4 A
When ossessee decIores fwo MPP on fhe pockef ond if higher MPP is scored ouf fo show soving
scored ouf MPP is ignored even if is visibIe. (C8EC CircuIor Mo o73/o4 dofed Z8.I0.0Z)
If goods covered under MPP provisions ore imporfed CVD wiII be poyobIe on bosis of voIuofion
u/s 4A i.e. on bosis of MPP prinfed on corfon.
If refoiI price nof indicofed or wrongIy indicofed of fhe fime of removoI fhe goods ore IiobIe
fo confiscofion. In such cose fhe 'refoiI soIe price' wiII be oscerfoined os per MPP VoIuofion
ruIes in fhe prescribed monner ond dufy wiII be poyobIe os per fhe ruIes.
CVD duty rute on imported goods when product covered under MPP -
If goods covered under MPP provisions ore imporfed CVD wiII be poyobIe on bosis of
voIuofion u/s 4A i.e. on bosis of MPP prinfed on corfon.
If imporfed goods ore prinfed wifh MPP if fhey ore nof soId buf used for process CVD
poyobIe bosed on fronsocfion voIue
MPP in cuse of MuItipIe und Combinution Puckuges
(C8EC CircuIor Mo o73/o4 dofed Z8.I0.0Z
In cose of muIfipIe piece pockoges consisfing or Z or more ifems of some kind voIuofion is fo
done os beIow:
MPP printed on MuItipIe pucket wiII be considered vuIuution when
IndividuoI ifems connof be soId seporofeIy/morked shouId nof seII seporofeIy
If individuoI ifems suppIied free ond no MPP prinfed on individuoI ifems
If individuoI ifems hove MPP prinfed buf scored ouf fo show shoving
Aggregute of MPP of individuuI puckets wiII be considered when
IndividuoI ifems cobIe of soId seporofeIy ond no resfricfion on fhe soIe of individuoI ifems
Assessment bused on VuIue {Invoice Price}/ Trunsuction VuIue
Where CenfroI Excise is poyobIe on fhe bosis of voIue if is known os "odvoIorem dufy". Sec 4
If is Dufy chorged bosed on VoIue (Invoice) wifh cerfoin oddifions ond deducfions.
When fhe dufy of excise is chorgeobIe wifh reference fo voIue fhe fronsocfion voIue on eoch
removoI of goods considered for fhe purpose of voIuofion if oII fhe foIIowing condifions ore
sofisfied -
The goods shouId be soId of fhe fime ond pIoce of removoI.
8uyer ond ossessee shouId nof be reIofed fo eoch ofher
Price shouId be fhe soIe considerofion for fhe soIe.
Eoch removoI wiII be freofed os o seporofe fronsocfion ond voIue for eoch removoI wiII be
seporofeIy fixed.
1, The goods shouId be soId ut the time und pIuce of removuI,
The Price of 0oods soId of fhe fime ond pIoce of removoI is onIy reIevonf .Any increose or
decreose offer fhe removoI of goods is nof reIevonf Secfion 4(I)(o). ExompIe deIivered fo
onofher buyer offer removoI of differenf price is nof reIevonf for voIuofion. However where fhe
ogreemenf provide escoIofion cIouse Price reoIi;ed os per escoIofion cIouse offer removoI is fhe
voIue.
PIuce of removuI -' meuns
o focfory or ony ofher pIoce or premises of producfion or monufocfure of fhe excisobIe goods
from where such goods ore removed or
(ii) A worehouse or ony ofher pIoce or premises wherein fhe excisobIe goods hove been
permiffed fo be deposifed wifhouf poymenf of dufy from where such goods ore removed
(iii) A depof premises of o consignmenf ogenf or ony ofher pIoce or premises from where
excisobIe goods ore fo be soId offer fheir cIeoronce from focfory. [Secfion 4(3)(c)].
Time of removuI - As per section 4{3}{cc}
In cose of soIe from depof/pIoce of consignmenf ogenf 'fime of removoI' shoII be deemed fo
fhe fime of which fhe goods ore cIeored from focfory.
Z, uyer und seIIer shouId not be reIuted to euch other
Persons shuII be deemed to be "reIuted" if
They ore infer-connecfed underfokings os per MPTP Acf ( ICU wiII be freofed reIofive onIy
When fhey become ICU by virfue of HoIding ond Subsidiory Compony)
They ore so ossociofed fhof fhey hove inferesf direcfIy or indirecfIy in fhe business of eoch
ofher.
Amongsf fhem fhe buyer is o reIofive ond o disfribufor of fhe ossessee or o sub-disfribufor of
such disfribufor, or
They ore reIofives os per CIouse 4I of Sec Z of Componies Acf
Excepf fhe obove four cofegory none of fhe ofher persons ore freofed os reIofives. For
exompIe some monogemenf componies Common direcfor componies common porfners firms one
side inferesf efc ore nof freofed os reIofive persons
PeIutive us per CIuuse 41 of Section Z of the Compunies Act
A person shoII be deemed fo be o reIofive of onofher if ond onIy if
They ore members of o Hindu undivided fomiIy, or
They ore husbond ond wife, or
Fofher Mofher
8rofher sisfer son ond doughfer ond fheir spouses
0rond fofher ond grond mofher 8ofh mofernoI ond pofernoI
0rond son grond doughfer ond fheir spouses
Under fhis cIouse o nofuroI Iiving person con onIy freofed os reIofive. A Compony
o firm ond HUF connof freof os reIofives.
Price must be soIe considerution -
Price shouId be soIe considerofion of soIe.
Price is fhe considerofion given for purchose of o fhing
If the Price is not soIe Considerution
The price is fo be odjusfed for by odding
Cosf of row moferioI suppIied by buyer of free or reduced cosf
Cosf of fooIs design drowing mouIds suppIied by buyer
Inferesf free deposifs received from buyer if fhe price is reduced
Meuning of Trunsuction VuIue
Price ocfuoIIy poid or poyobIe for goods by buyer fo SeIIer or fo fhird person on behoIf of
The poymenf shouId be 'by reoson of or in connecfion wifh fhe soIe. The omounf moy be
poyobIe moy be before or offer soIe.( Price shouId quonfifiobIe of fhe fime of removoI)
Any omounf chorged 8y SeIIer for or fo moke provision for odverfising or pubIicify morkefing
ond seIIing orgoni;ofion expenses sforoge oufword hondIing servicing worronfy commission or
ony ofher moffer is incIudibIe
However these epenses ure incIudibIe onIy when foIIowing conditions ure sutisfied i,e,
(o) The omounf shouId be poid or poyobIe fo ossessee or on behoIf of ossessee ond
(b) Poymenf shouId be by reoson of soIe or in connecfion wifh soIe.
IncIusions in Trunsuction VuIue
Pucking churges:
AII Pocking Primory Secondory. Or specioI wiII form porf of fhe fronsocfion voIue. Pocking
suppIied by buyer shouId oIso be incIudibIe
DurobIe ond PefurnobIe pocking incIudibIe onIy if fhe oudif reporf reveoIs fhof cosf wos nof
omorfised -circuIor Mo. o43/34/Z00Z-CX dofed I-7-Z00Z.
Design ond Engineering Chorges of producf- incIudobIe
ConsuIfoncy chorges reIofing fo monufocfuring - incIudobIe
CompuIsory offer SoIes Service / service in worronfy period - incIudobIe
Looding ond hondIing chorges wifhin fhe focfory -incIudobIe
Commission fo SeIIing Agenfs- incIudobIe

EcIusions in Trunsuction VuIue
LocoI Toxes: soIes fox, Excise dufy ond ofher foxes poyobIe on finished producf- EquoIi;ed
deducfion of foxes nof permissibIe -
Oufword hondIing - nof incIudibIe in voIuofion
Freighf ond fronsif insuronce chorges -
Processing cosf offer removoI if such process does nof omounf fo 'monufocfure' - C8E&C
circuIor Mo. I38/08/Z000-CX.4 dofed 3.I.Z00I.
MofionoI Inferesf on securify deposif/odvonces - IncIudibIe onIy when fhe price is reduced
becouse of deposif
Interest on PeceivubIes und on DeIuyed puyment -- CE&C circuIur Mo, 43/34/Z00Z-CX
duted 1-7-Z00Z,
ShoII nof be regorded os porf of fhe ossessobIe voIue provided fhof:
The inferesf chorges ore cIeorIy disfinguished from fhe price ocfuoIIy poid or poyobIe for fhe
goods,
The finoncing orrongemenf is mode in wrifing, ond
Where required ossessee demonsfrofes fhof such goods ore ocfuoIIy soId of fhe price
decIored os fhe price ocfuoIIy poid or poyobIe
InstuIIution und Erection Epenses - CLAPIFICATIOM Y CE&C
The 8oord hos cIorified wifh regord fo erecfion on commission chorges is os foIIows
If finoI producf is nof excisobIe quesfion of incIuding erecfion ond commissioning
chorges does nof orise.
If o mochine is cIeored from o focfory on poymenf of oppropriofe dufy ond Iofer foken
fo premises of fhe buyer for insfoIIofion/erecfion ond commissioning info on immovobIe
properfy no furfher dufy wiII be poyobIe
If porfs/componenfs ore broughf fo sife ond fhe mochine is erecfed/insfoIIed ond
commissioned if fhe producf is excisobIe commodify cosf of erecfion insfoIIofion ond
commissioning wouId be incIuded in ossessobIe voIue. -CE&C circuIur Mo,
43/34/Z00Z-CX duted 1-7-Z00Z,
unk churges for coIIection of suIe proceeds- nof incIudibIe in voIuofion
Truining churges to customer -
Troining chorges fo cusfomer wiII be incIudibIe if fhey ore in connecfion wifh soIe or by reoson
of soIe. If fhe fronsocfion of providing froining fo empIoyees of cusfomer is on independenf
fronsocfion if moy be in reIofion fo soIe buf nof in connecfion wifh soIe
Inspection churges / uddition testing churges puid by buyer
Assessee corries ouf his own inspecfion- incIudobIe
Cusfomer corries ouf oddifionoI inspecfion borne by fhe buyer. Mof incIudibIe
If such fesfing is o mondofory requiremenf if shouId be incIudibIe whefher borne by
ossessee or buyer.
This is becouse fhere is no soIe wifhouf such fesfing.
Subsidy / Pebute obtuined by ussessee
A generoI subsidy / rebofe ore obviousIy nof being incIudibIe os if hos no connecfion wifh
individuoI cIeoronces of goods.
Profit eurned on post removuI uctivity -
Profif eorned on posf removoI ocfivify is nof fo be odded unIess fhere is ony deIiberofe
offempf fo diverf o porf of fhe genuine price ond show if os ofher chorges
Advertisement und suIe promotion Epenses- incurred by buyer if done on his own ore nof fo
be incIudobIe
Discounts
AII discounfs ore deducfibIe if benefif posses on fo buyer.
Discounf need nof be uniform. Differenf discounfs fo be given fo differenf persons
There is no condifion or provision fhof such discounf shouId be known of fhe fime of removoI of
goods from focfory. DifferenfioI discounf is oIso permissibIe. Cosh discounf wiII be deducfibIe
onIy if ocfuoIIy possed on fo buyer. C8E&C circuIor Mo. o43/34/Z00Z-CX dofed I-7-Z00Z
Discounfs con be given of ony fime -. For exompIe yeor-end discounf or furnover discounf.
VuIuution PuIes
PuIes oppIicobIe when ony of fhe four condifions of fronsocfion voIue nof fuIfiIIed
VuIuution in cuse if goods ure not soId: {PuIe 4}
ExompIes SompIes free worronfy cIoims
voIue wiII be VoIue of idenficoI simiIor goods soId by Assessee of Some fime
If does nof seII fhe goods on fhe some fime VoIue of fhe neoresf dofe subjecf fo odjusfmenf
for price vorionce in dofes of deIivery.
EumpIe on sumpIe vuIuution
Cuse- 0 pieces of SumpIes ure removed on 1,7,Z009
AIternutive 1
b0 pieces oIso soId on I.7.Z009 of Ps. IZ0 per Piece. VoIue for sompIe- Ps. IZ0 per piece
AIternutive Z
b0 pieces ore nof soId on fhe some doy buf differenf quonfifies ore soId of differenf price on
I.7.Z009 VoIue for sompIe con be foken on price of which Highesf qfy soId (WhoIe soIe price)
con be foken.
AIternutive 3
There is no soIes on I.7.Z009
VoIue wiII be foken of neoresf dofe soIe price subjecf fo odjusfmenf for price vorionce if ony
befween neoresf dofe ond sompIes removed dofe.
Discounts
Trode
Discounf
Cosh
Discounf
SpecioI
Discounf
Yeor end
Discounf
8uIk Purchoses/
SuppIying
AddifionoI
Qfy free
Prompf/fimeIy
Poymenf/cosh
Purchose
SeosonoI/
OccosionoI
Torgefs/
CIeoronce
SoIe
VuIue in cuse of new product issued us sumpIe-
Where fhe voIue is nof deferminobIe of fhe fime of removoI ond voIue con be known of
subsequenf dofe- requesf con be mode for ProvisionoI Assessmenf
VuIue in cuse of oId sumpIe
OId sompIe differenf qfy si;e ond Differenf chorocfer. VoIue con be mode under ruIe II
(8OJ)
Soods soId ut different pIuce /other thun pIuce of removuI {PuIe }
Ex FOP deIivery confrocf
VoIue wiII be FOP price minus freighf .The ocfuoI cosf of fronsporfofion from pIoce of removoI
up fo pIoce of deIivery of fhe excisobIe goods wiII be oIIowobIe os deducfion. Cosf of
fronsporfofion con be eifher on ocfuoI bosis or on equoIi;ed bosis.
The deducfion of Freighf wiII be oIIowobIe onIy if fhe invoice indicofes, fhe fronsporfofion cosf
does nof incIude freighf for refurn/empfy journey- CircuIor Mo.8Z7/4/Z00o-CX dofed
IZ.04.Z00o
EumpIe on VuIuution under PuIe
Focfory of Chennoi (PIoce of removoI). 8uyer pIoce Af 8ongoIore (PIoce of deIivery). Mo soIe of
Focfory. SoIe of buyer pIoce in 8ongoIore. FO P price up fo 8ongoIore Ps. IZ0 per unif. freighf
from Chennoi fo 8ongoIore per unif Ps. I0 . VoIue per unif wiII be Ps. II0 (IZ0-I0)
Focfory of Chennoi. Depof of 8huvoneswor (PIoce of removoI). 8uyer pIoce Af koIkoffo (PIoce of
deIivery). Mo soIe of Focfory. Mo soIe of Deporf .SoIe of buyer pIoce in koIkoffo.. FO P price up
fo koIkoffo. Ps. Z00 per unif. freighf from Chennoi fo 8huvoneswor Ps. per unif Ps. Z0 . freighf
from 8huvoneswor fo koIkoffo . Ps. I0 Per unif VoIue per unif wiII be Ps. I90 (Z00-I0) . ond
nof I70 (Z00-Z0-I0) . Mo deducfion for freighf os Chennoi is nof o pIoce of pIoce of removoI
VuIue when price is not the soIe considerution [PuIe j
AssessobIe VoIue' wiII be fhe price chorged by ossessee pIus money voIue of fhe oddifionoI
considerofion received.
EumpIe
The buyer moy suppIy ony of fhe foIIowing direcfIy or indirecfIy free or of reduced cosf.
MoferioIs componenfs porfs ond simiIor ifems incIuding pockoging moferioIs
TooIs dies mouIds drowings bIue prinfs fechnicoI mops ond chorfs ond simiIor ifems used
Engineering deveIopmenf orfwork design work ond pIons ond skefches u
In cose of inferesf free odvonces received by seIIer nofionoI inferesf wiII be odded onIy when
fhe price wos reduced becouse of inferesf free odvonce.
ExompIe on price is soIe considerofion
ExompIe I
A seIIer seII o unif of price of Ps. I00
Assume 8uyer suppIies moferioI worfh Ps. o0 per unif
Design ond drowing worfh Ps. I0 per unif
8uyer wiII poy onIy boIonce Ps. 30 (I00-o0-I0).
Here fhe Ps. 30 poid by buyer is nof soIe considerofion for soIe.
VoIue wiII be 30 +I0+o0 ~ I00 is fhe voIue
ExompIe Z
A seIIer normoIIy seII o unif of price of Ps. I00
Assume fhe buyer poid price in odvonce ond oIso some deposif
The SeIIer reduces fhe price fo Ps. 80 becouse of odvonce poymenf ond deposif
Here fhe price Ps. 80 is nof soIe considerofion for soIe
Ps Z0 fo be odded fo Ps. 80 fo orrive fhe voIue
VuIuution for SuIe ut depot / consignment ugent pIuce [PuIe 7j
PIoce of removoI incIudes depof/ pIoce of consignmenf ogenf
Time of removoI in cose of depof is fime when such goods ore removed from focfory.
VoIue is price prevoiIing of fhe depof os on dofe of removoI from focfory.
Price of which such goods ore subsequenfIy soId fo buyer from fhe depof is nof reIevonf
for purpose of excise voIuofion
Mo deducfion for freighf from focfory fo depof
One doy differenf prices. Price of highesf qfy soId is fhe voIue ('normoI fronsocfion
voIue)
If fhe price of depof on fhe dofe of removoI is nof ovoiIobIe depof price of neoresf
dofe con be foken subjecf fo odjusfmenf for vorionce if ony
Freighf ond insuronce from depof onwords is nof incIudibIe in voIue.
Meuning of 'normuI trunsuction vuIue'
As per VoIuofion PuIe Z(b) "normoI fronsocfion voIue" meons fhe fronsocfion voIue of which fhe
greofesf oggregofe quonfify of goods is soId. The ferm greofesf oggregofe quonfify is used in
ruIe 7 of Cusfoms VoIuofion PuIes. For exompIe if ob unifs ore soId Ps. I000 bb unifs ore soId
Ps. 9b0 ond 80 unifs ore soId Ps. 900, fhen greofesf oggregofe quonfify is 80 which is soId
Ps. 900 per unif which wiII be fhe bosis for voIuofion.
EumpIe on depot vuIuution:
VuIuution in cuse of cuptive consumption {PuIe )/
Copfive consumpfion meons goods ore nof soId buf consumed wifhin fhe focfory.
VoIuofion shoII be done on bosis of cosf of producfion pIus I07. Cosf of producfion is fo be
defermined os per CAS 4
Focfory
Af Chennoi
Depof of
koIkofo
0oods despofched on 4.I.09
0oods reoched depof on 7.I.09
Focfory price per unif on
04.0I.I0 Ps. I00
07.0I.I0 Ps. II0
IZ.0I.I0 Ps. IZ0
Depof price per unif on
04.0I.I0 Ps. I30
07.0I.I0 Ps. I40
Depof soId goods fo consumer
On IZ.0I.I0 of Ps. Ib0
AV is Price of depot on the dute of removuI
From Fuctory i,e, on 04,10,10 Ps, 130
Cost of production us per CAS 4
MoferioI consumed (Cosf shouId be excIusive of IocoI
foxes ond excise)
xxxxxxx
Direcf Iobour/woges xxxxxx
Direcf expenses xxxxxx
Works overheods xxxxxx
QuoIify confroI cosfs xxxxxx
Peseorch ond deveIopmenf cosfs xxxxxx
Adminisfrofion overheods reIofing fo producfion xxxxxx
Less: SoIe of scrop xxxxxx
Cosf of producfion xxxxxx
Add: I07 xxxxxx
VoIue for excise (AssessobIe voIue) xxxxxx
SeIIing ond disfribufion cosfs fo be ignored
VuIuution in cuse of SuIe to/through reIuted person PuIe 9/ SuIe through ICU
{HoIding und Subsidiury compuny} PuIe 10
PuIe 9 und 10 uppIicubIe onIy
When oII goods ore soId onIy fo or fhrough reIofed persons. Or
When fhere is o subsfonfioI soIe fo reIofed persons ond minor omounf of soIe fo
unreIofed person.
PeIutive person vuIuution ruIe not uppIicubIe
When fhe goods ore soId porfIy fo reIofed persons ond porfIy fo unreIofed
persons (AppIicobIe ruIe is ruIe II 8OJ)
When fhe price of PP ond UPP is some. Ie soIe fo PP of morkef price
VoIue wiII be price of which fhe reIofive person soId fo unreIofive person.
Inferconnecfed underfokings excepf hoIding ond subsidiory ore nof reIofive persons
EumpIe
Mr. A SeII goods fo Mr. 8 Ps I00 per Unif. The some goods wos SoId by Mr. 8 fo Mr.C of Ps.
II0 per Unif. A ond 8 ore reIofed persons 8 ond C ore unreIofed persons. The AssessobIe for
Mr. A removoI wiII be Ps. II0 per unif. If 8 ond C ore reIofed persons fhe price of C fo
unreIofed person wiII be fhe voIue. If 8 or C ore nof soId fhe goods ond consumed copfiveIy.
VoIuofion fo be done os per ruIe 8 (Copfive consumpfion bosis)
VuIue in Cuse of Job Work- PuIe 10 A {AppIicubIe from 01,04,Z007}
Where fhe goods ore soId from fhe pIoce of job worker fhe principoI monufocfurer (fhe
person who suppIies moferioI fo jobwoker) fronsocfion voIue (seIIing price) wiII be voIue
where fhe buyer ond principoI monufocfurer ore nof reIofed ond Price is soIe
considerofion.
Where fhe goods ore nof soId from fhe pIoce of job worker removed from goods from
job worker pIoce ond soId of some ofher pIoce Price of such goods of neoresf pIoce of
removoI is fhe voIue where fhe buyer ond principoI monufocfurer ore nof reIofed ond
Price is soIe considerofion.
Where fhe voIue connof be defermined os obove fwo coses fhe voIue wiII be defermined
os per ofher voIuofion ruIes
Wifh fhis new ruIe profif morgin of principoI monufocfurer is broughf in fo fox nef.
EumpIe for Job work vuIue
Cosf of fhe Ieofher suppIied by principoI monufocfurer for moking o poir of
Ieofher shoes Ps. b00
Job worker chorges Ps. Ib0 per poir fowords Iobour chorges ond his profif
Cosf of fronsporf from row moferioI suppIier fo jobwoker pIoce Ps. I0
Jobworker finish fhe work ond principoI monufocfurer wonfs fo seII fhe shoes
from fhe job worker pIoce of Ps. 999-9b.
The A V wiII Ps. 999-9b
est gudgment Assessment VuIuution [PuIe 11j
8OJ onIy when if nof possibIe fo voIue from PuIe 4 fo I0A
The voIue shoII be defermined using reosonobIe meons consisfenf wifh fhe principIes ond
generoI provisions of fhese ruIes ond of secfion 4(I) of fhe Acf. . If is mixfure ond combinofion
of ruIe 4 fo I0 A.
This ruIe is oppIicobIe when fhe goods ore soId porfIy fo reIofed ond porfIy fo unreIofed
persons os fhere is no specific provision mode.
VuIuution in cuse of Computer Softwure
VoIue of preIooded operofionoI soffwore nof incIudibIe of voIuofion in cose of compufer, even
compufer connof funcfion wifhouf soffwore. Soffwore is nof o porf of Compufer. Compufer is
compIefe wifhouf soffwore. CCE Vs Acer Indio Lfd (Z004) (SC) I7ZELTZ89
Cum Duty price
When fhe price is nof soIe considerofion ond if ony AddifionoI Considerofion is odded fo orrive
AssessobIe VoIue if shouId be freofed os cum dufy price - If Assessee removes goods wifhouf
poymenf of dufy by misfoke (freofing dufiobIe goods os exempfed goods) fhe price shouId be
freofed os cum dufy price CCE Vs Morufhi Udyog Lfd (Z00Z) (SC).
If fhe goods ore covered under MPP obofemenf deducfion wiII nof ovoiIobIe
If fhe informofion is specific (in exom quesfion) if shouId be cum dufy price
And coIcuIofion shouId be mode bockwords-
A V~ (Cum dufy price minus-permissibIe deducfion x I00/I00+rofe of dufy
VuIuution in cuse of ought out goods / spure purts /ConsumubIes/ Accessories
8oughf ouf spores porfs fiffed ond deIivered ond oIong wifh moin producf incIudibIe in voIuofion
VuIuution in cuse of uccessories
Cosf of Accessories which ore opfionoI whefher fiffed or nof fo fhe moin producf wiII nof be
incIudibIe in fhe VoIuofion.
-Cost of ConsumubIe is not incIudibIe in the vuIuution; even the muin product cunnot
function with out such consumubIe,
ExompIe ribbon in cose of fypewrifer cosseffe in cose of fope recorder ond needIe in cose of
grom phone.
VuIuution uppIicution Churt
Sfep I
Firsf check whefher dufy is poyobIe bosed on AnnuoI copocify producfion if yes poy dufy bosed
on onnuoI copocify producfion
Step 1
If AnnuoI copocify Producfion voIuofion nof oppIicobIe check whefher dufy poyobIe bosed on
foriff voIues if yes voIue os per foriff voIues
Step Z
If foriff voIues does nof oppIy check whefher MPP VoIuofion oppIicobIeond MPP prinfed goods
ore soId or infended fo soId if yes voIue os per MPP provision
Step 3
If MPP VoIuofion does nof oppIy check whefher 4 condifions of Tronsocfion voIue is sofisfied
if yes voIue os per fronsocfion voIue
Step 4
If 4 condifions of fronsocfion voIue nof sofisfied voIue os per voIuofion ruIes.
Ecise Procedures
Ecise Procedures incIude
Pegisfrofion
Moinfoining proper producfion ond sfock regisfers.
Procedures fo be foIIowed when removing of goods
Poymenf of dufy ond
FiIing of Pefurns
SpecioI procedure for Iorge fox poyer.
Coveruge of ecise procedures, The procedures ure covered in
Excise PuIes Z00Z
Excise MonuoI Z00I
Excise removoI of goods Af concession rofe PuIes Z00I
Excise CircuIors Mofificofions
Pegistrution of fuctory/wurehouse Sec PuIe 9
Mofificofion M0 3b &3o/Z00I
Persons requiring registrution
Every monufocfurer of excisobIe goods (incIuding 0ovf oufonomous corporofions) on which
excise dufy is IeviobIe.
An imporfer /'DeoIers who desire fo issue CEMVATA8LE invoices
Persons hoIding privofe worehouses.
Persons who obfoin excisobIe goods for ovoiIing end-use bosed exempfion nofificofion.
Exporfers monufocfuring or processing exporf goods infending fo cIoim rebofe of such dufy
EOU unifs procuring goods from DTA or suppIying goods fo DTA
Persons Eemption from Pegistrution Motificution Mo, 3/Z001- dt,Z,,Z001
Persons who monufocfure fhe excisobIe goods which ore chorgeobIe fo niI rofe of dufy or ore
fuIIy exempf from dufy by o nofificofion
SSI unifs ovoiIing fhe sIob exempfion bosed on voIue of cIeoronces under o nofificofion. OnIy
decIorofion when fhe voIue of fheir cIeoronces fouches Ps.40 Iokhs.
job-worker of reody-mode gormenfs need nof gef regisfered if fhe principoI monufocfurer
underfokes fo dischorge fhe dufy IiobiIify
Persons monufocfuring excisobIe goods by foIIowing fhe worehousing procedure under secfion
ob of Cusfoms Acf
The person who corries on whoIesoIe frode or deoIs in excisobIe goods (excepf firsf ond second
sfoge deoIer os defined in Cenvof Credif PuIes Z004).
I007 EOU/SEZ Iicensed under fhe provisions of fhe Cusfoms Acf
Procedure for Pegistrution

AppIicofion in form A-I duIy fiIIed up ond signed oIong wifh seIf-offesfed copy of PAM shouId
be submiffed fo JurisdicfionoI AC/DC.
EOU Iocofed in porf fowns oppIicofion shouId be submiffed fo DC/AC Cusfoms
If PAM is nof ovoiIobIe copy of oppIicofion mode for PAM shouId be submiffed
AC/DC wiII scrufini;e fhe oppIicofion
Pegisfrofion cerfificofe wiII be gronfed wifh in 7 working doys
Peg. Mo is bosed on Ib digif PAM (E C C Mo.)
Ponge Officer ond Secfor Officer shoII verify oddress ond premises wifhin b working doys
offer regisfrofion
Other Provisions with regurd to registrution
Seporofe regisfrofion is required in respecf of seporofe premises excepf in coses where fwo
or more premises ore ocfuoIIy porf of fhe some focfory
Pegisfrofion Cerfificofe moy be gronfed fo minors if guordions conducf business
Pegisfrofion is nof fronsferobIe.
Any Chonge in consfifufion fo be infimofed wifhin 30 doys of chonge. Mo fresh regisfrofion
required.
If fhere is ony chonge in informofion given in form A-I fhe chonge shouId be informed in form
A-I
CIosure of business
AppIy for de-regisfrofion. Surrender originoI PC ond poy dufy up fo dofe.
Pegisfrofion con be revoked or suspended if monufocfurer or his empIoyee breoch of ony of
fhe provisions of CenfroI Excise Acf or PuIes or hos been convicfed under secfion IoI of Indion
PenoI Code.
PenuIty for non-registrution
Up fo dufy of confrovening goods or Ps.Z000 whichever is higher
In oddifion Confiscofion
If is oIso on offence under secfion 9 of CEA imprisonmenf up fo seven yeors (minimum o
monfhs) con be imposed
Fuctory' under CentruI Ecise - Section Z{e}
Focfory meons os ony premises incIuding fhe precincfs fhereof wherein or in ony porf of
which excisobIe goods ore monufocfured
Precincfs meon oreo encIosed by compound woII. A Confeen o recreofion cIub o shed o cycIe
sfond Iocofed in side fhe compound woII wiII be o focfory
WhoIe premises wiII be 'focfory' if in ony of ifs porf excisobIe goods ore monufocfured.
If is nof necessory fhof focfory regisfered under focfories ocf.
WhoIe premises wiII be 'focfory' if in ony of ifs porf excisobIe goods ore monufocfured
Pecords for storuge of goods
DuiIy Stock Account of stored goods PuIe 10
A doiIy sfock hos fo be moinfoined by every ossessee.
DSA shouId be moinfoined on doiIy bosis in o IegibIe monner
Enfry in DSA fo be mode offer goods ore fuIIy monufocfured duIy fesfed ond pocked
PurticuIur of DSA
Dofe
Descripfion of goods monufocfured or produced
Opening 8oIonce
Quonfify produced or monufocfured
Invenfory of goods
Quonfify Pemoved
AssessobIe VoIue
Amounf of dufy poyobIe
PorficuIors regording omounf of dufy ocfuoIIy poid.
Monufocfurer or his oufhori;ed ogenf oufhenficofes fhe firsf poge ond Iosf poge of such book.
Period
AII such records shoII be preserved for b yeors.
PenuIty wiII be Ievied
for nof moinfoining or Overwrifing ond cuffing or
Difference befween DSA sfock ond PhysicoI Sfocks
PenoIfy wiII be dufy poyobIe on goods or Ps. Z000 which ever is higher ond Confiscofion
CIeurunce of Soods for home consumption PuIe 11
CIeoronce meons removoI of excisobIe goods from fhe focfory.
ExcisobIe goods con be removed from focfory onIy under Invoice'.
Pequirements of Invoice PuIe 11{Z}
Invoice shouId be serioIIy numbered. SerioI Mo by prinfing or by fronking mochine.
The serioI number shouId sforf from Isf ApriI ond wiII confinue for fhe whoIe finoncioI yeor.
8efore using serioI numbers fhe serioI number shoII be infimofed fo Ponge Superinfendenf
Invoice to be prepured in tripIicute with suitubIe murks
OriginoI shoII be morked 'OPI0IMAL FOP 8UYEP'
DupIicofe copy shoII be morked 'DUPLICATE FOP TPAMSPOPTEP'
TripIicofe shoII be morked 'TPIPLICATE FOP ASSESSEE'.
AddifionoI Copies if ony con be moinfoined ond fhey shouId be morked os 'MOT FOP CEMVAT
PUPPOSES'.
OnIy one invoice book shouId be used of o fime
Seporofe series of invoice for exporf ond home consumpfion permiffed. Assessee hos fo jusf
infimofe AC / DC.
Invoice fo be oufhenficofed by owner or oufhori;ed person
Invoice shouId be in book form
The invoices con be 'Ioose Ieof' onIy if Invoices ore compuferi;ed.
Mon CompIionce of obove goods con be defoined or Cenvof credif con be denied -
In invoice dufy poyobIe shouId be rounded fo in neoresf rupee (sec 37 D) -
Contents of Invoice
Mome oddress Pegisfrofion Mumber of Monufocfurer
Mome of propriefor in cose of propriefor ship firm korfo Heod in cose of HUF
Mome ond oddress of consignee
Descripfion ond cIossificofion of goods
Time ond dofe of removoI
Quonfify ond AssessobIe VoIue of goods
Pofe of dufy
Dufy poyobIe on fhe goods.
Mode of fronsporf
Mome ond Address of fhe jurisdicfionoI CenfroI Excise Division of ossessee
SuppIementury Invoice for differentiuI duty -
Prepored when Assessee moy hove fo poy differenfioI dufy
ShouId confoin cross-reference fo fhe originoI invoice
Computerizution of Invoices
Mo permission is required.
Pequirements
{1}In Cuse of running stutionery
fhe sfofionory shouId be pre-prinfed wifh oII defoiIs
Affer invoices ore prepored fripIicofe copy shoII be refoined in bound book form.
{Z}If cuse of Iunk stutionery
Compufer soffwore shouId generofe serioI number oufomoficoIIy
Some number connof be generofed more fhon once. -
Price of goods shouId indicute umount of duty puid there on Sec 1Z A
Every person IiobIe fo poy dufy of fhe fime of cIeoronce of goods prominentIy indicute in oII
documenfs reIofing fo ossessmenf ond soIes invoice fhe omounf of dufy which wiII form porf of
price of which goods ore soId.
Munner of Puyment of Duty PuIe
Due dute for puyment of Ecise duty
Muture of Assessee Month Due Dute
AII Assessee excepf SSI ApriI fo Feb bfh of fhe foIIowing monfh
SSI- ApriI fo Feb- Ibfh of fhe foIIowing monfh
AII Assesses- Morch Morch 3I
In cose of E poymenf ApriI fo Februory ofh ond Io
fh (for SSI)
foIIowing monfh
respecfiveIy
EOU now con poy dufy on monfhIy bosis vide nofificofion Mo Z3/Z008 df Z3/0b/Z008 (eorIier
doy bosis)
e-puyment mundutory for poymenf of dufy by oII ossessee who hove poid excise dufy of rupees
b0 Iokh or more in cosh during fhe preceding finoncioI yeor. This provision wouId come info
effecf from 0I-04-Z007. Poymenf is fo be mode fhrough infernef bonking. This Iimif is Ps. I0
Iokhs (gross ie incIuding cenvof credif ufiIi;ofion) W E F 0I.04.Z0I0
Dischorge of dufy IiobiIify onIy if fhe omounf poyobIe is credifed fo C. 0 A/c
Poymenf by Cheque fhe dofe of presenfofion of fhe cheque is fhe dofe of poymenf- subjecf fo
reoIi;ofion of fhof cheque.
Poymenf of dufy oIso incIude puyment of un umount os per cenvof credif ruIes
If fhe due dofe is hoIidoy dufy con be poid on nexf working doy.
DeIuy in puyment of duty- Inferesf poyobIe I37 p.o sforfing from firsf doy offer due dofe
fiII fhe poymenf of dufy
If Assessee defuuIts puyment of duty more thun 30 duys
Assessee wiII forego fhe monfhIy fociIify of poymenf of fhe dufy
Such forfeifure wiII be fiII such dofe on which oII dues incIuding inferesf fhereof ore poid
During such punishmenf period Poymenf of dufy shouId be mode on eoch consignmenf bosis
without uvuiIing cenvut credit
in fhe evenf of ony foiIure if shoII be deemed fhof such goods hove been cIeored wifhouf
poymenf of dufy ond penoIfies con be Ievied
SAP-7 ChuIIun
Excise dufy is fo be poid using 0 A P 7 ChoIIon. (TP o choIIon up fo 3I.03.Z007)
PurticuIurs of ChuIIun
Mome oddress feIephone no of Assessee
Ib Digif ECC Mo of ossessee
Commissionerofe code Division code ronge
8 digif occounfing code of dufy/cess poyobIe
Poymenf shouId be mode in Designofed 8onk wifh signofure of Assessee
The choIIon shouId be serioIIy numbered from Isf ApriI onwords -
Counfersignofure of excise officer is nof necessory in choIIon
Affer poymenf ossessee shouId ensure fhe counfer foiI shouId confoin wifh bonk seoI 8SP
code of bronch (7 digifs) Dofe of deposif (8 digifs) ond choIIon serioI number (b digifs). TofoI
Z0 digifs known os CIM (choIIon idenfificofion Mumber) ond if shouId be quofed in refurn
PersonuI Ledger Account {PLA}/ Current Account
PLA is dufy poymenf regisfer
Assessee shouId poy dufy fhrough PLA.
Mo specific permission is necessory.
The PLA debifed wifh dufy poyobIe ond credifed when dufy is deposifed in bonk by 0AP 7
choIIon
PLA contuins foIIowing detuiIs:
SerioI Mo. ond dofe
DefoiIs of credif Iike 0AP 7 choIIon number dofe ond omounf for eoch subheod of excise dufy
defoiIs of debif ond boIonce.
Muintenunce of PLA
PLA hos fo be moinfoined in fripIicofe using indeIibIe penciI ond bofh sided corbon
Eoch enfry shouId be serioIIy numbered ond shouId be mode on o seporofe Iine.
The running serioI number shouId sforf from I every finoncioI yeor.
8ofh debif ond credif enfry shouId nof be on some Iine
PLA ond Cenvof credif shouId be used onIy for poymenf dufy ond nof for ofher poymenfs Iike
renf fines penoIfies efc
Correcfions in PLA ore nof oIIowed.
If ony correcfion is necessory fhe originoI enfry shouId be neofIy scored ouf ond offesfed by
ossessee. Fresh enfry fo be mode in nexf row.
Two copies of PLA ond copies of 0AP 7 receipfed choIIon shoII be submiffed oIong wifh Excise
refurn
PeriodicuI returns- PuIe 1Z
The foIIowing ore fhe vorious refurns ore fo be fiIed by fhe ossessee fhe refurn is required in
quinfupIicofe ond Assessee wiII hove sixfh copy os his record copy.
Form of Peturn Description Who is required to fiIe Due dute for fiIing return
EP-I[PuIe IZ(I) of
CenfroI Excise
PuIes]
MonfhIy Pefurn by Iorge
unifs
Monufocfurers nof
eIigibIe for SSI
concession
I0fh of foIIowing monfh
EP-Z[PuIe IZ(I) of
CenfroI Excise
PuIes]
Pefurn by EOU EOU unifs I0fh of foIIowing monfh
EP-3[Proviso fo
PuIe IZ(I) of
CenfroI Excise
PuIes]
QuorferIy Pefurn by
SSI
Assessees ovoiIing SSI
concession
Z0fh of foIIowing quorfer
EP-4[ruIe IZ(Z) of
CenfroI Excise
PuIes]
AnnuoI FinoncioI
Informofion Sfofemenf
Assessees poying dufy
of Ps one crore or more
per onnum fhrough PLA
AnnuoIIy by 30fh Movember
of succeeding yeor
EP-b [PuIes 9A(I)
ond 9A(Z) of
Cenvof Credif
PuIes]
Informofion reIofing fo
PrincipoI Inpufs
Assessees poying dufy
of Ps one crore or more
per onnum fhrough PLA
ond monufocfuring
goods under specified
foriff heodings
AnnuoIIy by 30fh ApriI for
fhe currenf yeor (e.g.
refurn for Z009-I0 is fo be
fiIed by 30-4-Z009].
EP-o [PuIe 9A(3) of
Cenvof Credif
PuIes]
MonfhIy refurn of
receipf ond consumpfion
of eoch of PrincipoI
Inpufs
Assessees required fo
submif EP-b refurn
I0fh of foIIowing monfh
EP-7 [PuIe 9A(4) of
Cenvof Credif
PuIes]
AnnuoI InsfoIIed
Copocify producfion
Sfofemenf
Assessees required fo
submif EP-b refurn
AnnuoIIy by 30fh ApriI for
fhe currenf yeor (e.g.
refurn for Z009-I0 is fo be
fiIed by 30-4-Z009].
Submission of Iist of records PuIe ZZ{Z}
Every ossessee shouId submif o Iisf in dupIicofe of oII records Prepored or moinfoined by him
For receipf purchose goods
For Monufocfure sforoge of goods
For SoIe or deIivery of goods
Pegisfers shouId be moinfoined for inpufs ond copifoI goods.
The obove records ond Cosf Audif Peporf Income Tox Audif Peporf u/s 44A8 of Income Tox
Acf ShouId be submiffed for scrufiny in cose of inspecfion fo Ponge officer Audif persons
Meuning of 'record'
AII occounfs ogreemenfs invoice price Iisf refurn sfofemenf or ony ofher source documenf
whefher in wrifing or in ony ofher form soIes invoice purchose invoice journoI voucher deIivery
choIIon ond debif or credif nofes. -
EIectronic fiIing of Peturns
C8E&C hos infroduced fhe fociIify of fiIing fhe monfhIy/quorferIy excise refurns eIecfronicoIIy.
This fociIify of e fiIing of excise refurns mode effecfive ond if is opfionoI.
To ovoiI fhe fociIify of e fiIing ossessee shouId submifs on oppIicofion in fhe prescribed form
for e fiIing
Assessee shouId Submif refurns offer receipf confirmofion User ID ond Possword from fhe
Deporfmenf
JO WOPk
Meuning-{Motificution M0 Z14/}
Processing or working upon of row moferioIs or semi-finished goods
So os fo compIefe o porf or whoIe of fhe process resuIfing in fhe monufocfure Or finishing of
on orficIe or
Any operofion which is essenfioI for fhe oforesoid process.
Persons eIigibIe to send muteriuIs for gob work
(o) Monufocfurers (b) Exporfers (c) Unifs in SEZ EOU EHTP & STP (d) persons suppIying U
M O efc
Job worker con use his own moferioI ond recover chorges fherefore from fhe principoI
monufocfurer.
Inputs thut cun be sent for gob work
AII inpufs excepf dieseI pefroI ond oiI fiIomenf yorn
Duty IiubiIity in cuse of Job Work
If job work process is o monufocfure job worker hos fo poy excise dufy.
Job worker wiII eempt from puyment of duty in the foIIowing cuses
ShouId nof receive moferioI from froder or buyer
The monufocfurer shouId give decIorofion fo jurisdicfionoI CEO fhof he wiII underfoke dufy
IiobiIify
Affer fhe job work processed moferioI boIonce unused moferioI ond scrop shouId be refurned
fo suppIier.
0oods con be cIeored direcfIy from fhe pIoce of job worker wifh permission of Commissioner.
Eemption from duty for gob worker when muteriuI received under Cenvut
provisions
MoferioI received by o monufocfurer under CEMVAT con be senf fo o job worker
He shouId moferioI broughf bock by fhe monufocfurer for furfher processing.
In such coses fhere is no dufy IiobiIify on fhe job worker ond he is exempfed from fhe some.
Lurge tu puyer units PuIe 1Z
Meuning of Lurge tu puyer unit
Who is presenfIy ossessed fo income fox in ony of fhe five cifies (8ongoIore Chennoi DeIhi
koIkofo or Mumboi)
hos one or more regisfered premises under fhe CenfroI Excise Acf I944 or Service fox Acf
ond on ossessee under fhe Income Tox Acf I9oI who hoIds o Permonenf Accounf Mumber
issued under secfion I39A of fhe soid Acf ond
Who hus puid during finunciuI yeur Z004-0
excise dufy in cosh (occounf currenf) of Ps b crore or more, or
service fox in cosh (occounf currenf) of Ps b crore or more, or
odvonce (income) fox/corporofion fox of Ps I0 crore or more
A Iorge foxpoyer who sofisfies fhe condifions menfioned obove moy fiIe on oppIicofion in
prescribed form duIy compIefed in oII respecfs fo fhe Chief Commissioner of CenfroI
Excise indicofing his wiIIingness fo be o Iorge foxpoyer. He con ovoiI fociIify of oII fhe excise
service fox ond income fox of one pIoce in singIe window cIeoronce. However fhe scheme is onIy
opfionoI.
Procedure for LTP units
LTP cun uvuiI the foIIowing fuciIity-
Con remove excisobIe goods excepf pefroI ond dieseI oiI wifhouf dufy fo ony person regisfered
premises excepf FSD/SSD
PemovoI shouId be wifh invoice or fronsfer choIIon
The goods con be cIeored for Home consumpfion or exporf wifh in o monfhs from fhe dofe of
sending fhe moferioI
If nof cIeored fhe recipienf premises hos fo poy dufy wiII inferesf u/s II A8
The fronsfer choIIon or invoice shouId confoin simiIor porficuIors of invoice PuIe II
A Iorge foxpoyer shoII submif fhe monfhIy refurns os for eoch of fhe regisfered premises.
A Iorge foxpoyer on demond moy be required fo moke ovoiIobIe oII records in eIecfronic medio
such os compocf disc or fope for fhe purposes of corrying ouf ony scrufiny ond verificofion os
moy be necessory.
AvoiImenf of LT P scheme is opfionoI
A Iorge foxpoyer moy wifh infimofion of of Ieosf fhirfy doys in odvonce opf ouf fo be o Iorge
foxpoyer from fhe firsf doy of fhe foIIowing finoncioI yeor.
Power to impose restrictions in certuin types of cuses,
CenfroI 0overnmenf if necessory in fhe pubIic inferesf fo provide for cerfoin meosures
Considerutions for tuking meusures
Exfenf of evosion of dufy
Mofure ond fype of offences or
Such ofher focfors os moy be reIevonf
Meusures:
Moy pIoce resfricfions on o monufocfurer FSD/SSD or exporfer specify nofure of
resfricfions incIuding suspension of regisfrofion in cose of o deoIer
Types of fociIifies fo be wifhdrown
Procedure for issue of such order by on officer oufhori;ed by fhe 8oord.
The circumstunces under which the restrictions ure pIuce ure
PemovoI of goods wifhouf fhe cover of on invoice ond wifhouf poymenf of dufy,
removoI of goods wifh ouf Correcf VoIue
Excess soIe price reoIi;ed nof occounfed,
AvoiIing CEMVAT Credif wifhouf fhe receipf of goods/ specified documenfs
AvoiIing CEMVAT Credif on invoices or ofher documenfs which o person hos reosons fo beIieve
os nof genuine
issue of excise dufy invoice wifhouf deIivery of goods specified in fhe soid invoice,
cIoiming of refund or rebofe which ore nof genuine
Ecise Administrution
Meuning of CEO: AII obove in fhe hierorchy from Chief Commissioner fo Inspecfor incIuding
Commissioner (AppeoIs) ond Officer of Sfofe governmenf if C8EC enfrusfed ony powers fo him
Meuning of Adgudicuting uuthority: Aufhorify who hos righf fo poss orders decisions under
Acf excIuding Commissioner AppeoIs AppeIIofe fribunoI ond C8EC
CenfroI 8oord of Excise ond Cusfoms (C8EC)
Chief Commissioner/Direcfor
0eneroI
Commissioner
AddifionoI/Joinf Commissioner
Depufy/Assisfonf Commissioner
Superinfendenf
Inspecfor
ourd - CE&C,
Formed under CenfroI 8oords of Pevenue Acf I9o3. Heod Quorfer in Mew DeIhi
Consisfing of six fo seven members heoded by Choirmon
Choirmon hos powers fo odminisfer fhe Excise Acf/disfribufe work
CenfroI Excise PuIes oufhori;es 8oord fo oppoinf CenfroI Excise Officers. PuIe 3(I)
8oord con exercise oII powers conferred on fhese officers under fhe CenfroI Excise Acf.
8oord con oufhori;e CC/C/JC/DC/AC fo oppoinf officers beIow ronk of AC.
Secfion 378 of CEA oufhori;es 8oord fo issue orders insfrucfions ond direcfions fo CenfroI
Ecise Officers
The Provisions wifh regord fo Excise Officer ore simiIor in secfion 4(I) ond IbI A of Cusfoms
Acf os beIow.
Chief Commissioner of CentruI Ecise
Counfry is divided in severoI ;ones.
Eoch ';one' is under supervision of 'Chief Commissioner of CenfroI Excise'
8oord Specify fhe jurisdicfion of Chief Commissioner Commissioner or Commissioner (AppeoIs).
Commissioner of CentruI Ecise
Eoch ';one' covers vorious Commissionerofe ond
Commissioner of CenfroI Excise (CCE) is Adminisfrofive in-chorge of fhe 'Commissionerofe'.
AdditionuI Commissioner of CE -
There moy be one or more AddifionoI Commissioner in o Commissionerofe.
Pesfricfions on powers of AddifionoI Commissioner hove been pIoced fhrough odminisfrofive
insfrucfions.
Commissioner hos unIimifed powers of odjudicofion whiIe AddI Commissioner hos resfricfed
powers of odjudicofion.
Deputy Commissioner/Assistunt Commissioner
Eoch Commissionerofe of CenfroI Excise is divided info divisions
S Se eg gr re eg gu ut ti io on n o of f e e c ci is se e f fu un nc ct ti io on ns s
Country
Zones
Commissionerute
Divisions
Punge
Chief Commissioner
Commissioner/ AddI, /goint Commissioner
DC/AC
Superintendent
Heud/In churge
Eoch division is under odminisfrofive confroI of 'Depufy Commissioner or Assisfonf
Commissioner of CenfroI Excise'
Assisfonf Commissioner (Senior ScoIe) is designofed os Depufy Commissioner
8ofh Assisfonf Commissioner ond Depufy Commissioner hove some powers.
Superintendent
The division under eoch Depufy / Assisfonf Commissioner of CenfroI Excise is furfher divided
info vorious ronges
Eoch ronge is under confroI of Superinfendenf of CenfroI Excise who is of fhe ronk of o
0o;effed Officer.
Inspecfors work under Superinfendenf ond some powers hove been deIegofed fo fhem.
Inspecfors ore nof o 0o;effed Officers.
POWEPS OF CEMTPAL EXCISE OFFICEPS
Ecise Officer Power to Access to registered premises,
An officer empowered by fhe Commissioner shoII hove occess fo ony regisfered premises
He con corry ouf ony scrufiny verificofion ond checks.
Every ossessee ond FSD & SSD shoII furnish fo fhe officer o Iisf in dupIicofe of oII fhe
records
Pecords ond Audif reporfs moke ovoiIobIe fo fhe officer or fhe oudif porfy
Visit ook of Ecise Officers
Eoch focfory is required fo moinfoin o visif book in prescribed form.
Inspecfor ond Superinfendenf visifing fhe focfory ore required fo fiII in fhe book.
Pestrictions on visit to SSI
Excise Officers ond deporfmenfoI oudif porfies con visif SSI unifs for specific purposes onIy
ond on specific wriffen permission of Assisfonf/Depufy Commissioner.
Ecise officer power to stop conveyunce seurch und seize:
If he hos reoson fo beIieve fhof fhe goods ore being corried wifh fhe infenfion of evoding dufy.
Power to detuin or seize the goods -PuIe Z4 of CentruI Ecise PuIes.
ony goods which ore IiobIe fo excise dufy buf no dufy is poid fhereon or
fhe soid goods ore removed wifh infenfion of evoding fhe dufy poyobIe fhereon
Peturn of Seized Documents/ books PuIe Z4 A of CentruI Ecise PuIes {Motificution Mo
17/Z009 dt 07,07,Z009
The books of occounfs or ofher documenfs sei;ed by fhe CenfroI Excise Officer or produced
by on ossessee or ony ofher person which hove nof been reIied on for fhe issue of nofice under
fhe Acf or fhe ruIes mode fhere under shoII be refurned wifhin thirty duys of fhe issue of soid
nofice or wifhin thirty duys from fhe dofe of expiry of fhe period for issue of soid nofice:
Provided fhof fhe Commissioner of CenfroI Excise moy order for fhe refenfion of such books of
occounfs or documenfs for reosons fo be recorded in wrifing ond fhe CenfroI Excise Officer
shoII infimofe fo fhe ossessee or such person obouf such refenfion.
Ecise Officers power to issue summons sec 14
Asking o person fo oppeor before fhe nomed oufhorify ond give evidence ond produce
documenfs or ofher fhings.
Person summoned is bound fo offend ond sfofe fhe frufh upon fhe required subjecf
Ecise officer power to urrest u person [Section 13j,
An Excise Officer nof beIow fhe ronk of Inspecfor fo orresf o person whom fhey hove 'reoson
fo beIieve' fo be IiobIe fo be punished under provisions of fhe Acf
Such orresf con be onIy wifh prior opprovoI of Commissioner of CenfroI Excise.
Cenvut Credit
Cenvut Credit HighIights
Cenvof Credif PuIes Z004 wifh effecfive from. I0-9-Z004.
Infegrofion of CenfroI Excise ond Service fox
AppIicobIe for Monufocfurer Service provider
Monufocfurer con foke credif for excise dufy ond Service fox
Service provider wiII foke credif for service fox ond Excise dufy
Credif of dufy poid on inpufs ond Service fox poid on inpuf services providing oufpuf service
The inpuf moy be used direcfIy or indirecfIy in or in reIofion fo monufocfure
Mo inpuf credif if finoI producf/oufpuf service exempf from dufy/ service fox -
Cenvof Credif PuIes do nof require inpuf-oufpuf correIofion fo be esfobIished
Credif for specified dufies
Credif of dufy service fox onIy bosed on documenfs
Pecords fo be moinfoined ond refurns fo be furnished
Importunt Definitions
Eempted Soods
ExcisobIe goods fuIIy exempfed from dufy
ExcisobIe goods Chorged fo MiI dufy
Eempted Service
Services Where no service fox poyobIe,
ToxobIe service whoIIy exempfed from fox
FinuI Product
ExcisobIe goods monufocfured or produced using inpuf or inpuf service
First Stuge DeuIer
DeoIer who purchoses goods direcfIy from Monufocfurer from his focfory depofs
Consignmenf ogenf wifh invoice
Second Stuge DeuIer
DeoIer who purchoses goods direcfIy from Firsf Sfoge deoIer
Output service"
ony foxobIe service provided by fhe provider of foxobIe service fo o cusfomer cIienf
subscriber poIicy hoIder or ony ofher person
PictoriuI diugrum of Inputs
Z, Inpuf incIude goods used in fhe monufocfure of copifoI goods which ore furfher used in fhe
focfory of fhe monufocfurer but shuII not incIude cemenf ongIes chonneIs CenfroIIy Twisfed
Deform bor(CTD) or Thermo MechonicoIIy Treofed bor(TMT) ond ofher ifems used for
consfrucfion of focfory shed buiIding or Ioying of foundofion or moking of sfrucfures for
supporf of copifoI goods ,
Conditions for uvuiIing the credit
Inpufs shouId be used in fhe focfory.
If Inpufs used oufside focfory no credif
Inpufs con be used direcfIy or indirecfIy for monufocfure of finoI producf or providing oufpuf
service.
Inpufs moy or moy nof presenf in finoI producf
Inpuf oufpuf correIofion nof necessory i.e. One fo one CorreIofion nof required
Credif on inpuf process Ioss wiII oIso be oIIowed
Mo credif if inpufs desfroyed during fronsif or before issue for producfion
Credif con be ovoiIed if inpufs desfroyed during fhe process/in fhe course of monufocfure.
IIIustrutions on inputs eIigibIe for cenvut credit
Process Iosses ond hondIing Ioss ore oIIowobIe
Loss of inpufs during hondIing eIigibIe
Excessive Ioss oIso permissibIe
Inpufs required for quoIify confroI fesfs ore eIigibIe
Pepeofed use is nof o bor for ovoiIing Cenvof credif
Inpufs used in effIuenf freofmenf pIonf eIigibIe
Defecfive finoI producf is 'inpuf' for purpose of ovoiIing Cenvof credif
Inputs
Firsf porf
AII inpufs
excIuding
I.pefroI ond
dieseI
Z. Pefer
beIow
Second porf-
Lisf of
Inpufs
Pocking
MoferioI
Spores Porfs
componenfs
Accessories
Used
os
fueI
Cons
umob
Ies
Ip used in
0enerofion
disf .of
EIecfricify
IP used in
poinfing
bronding
IobeIing
Cenvut Credit PuIe 3
Who cun uvuiI Cenvut Credit?
Monufocfurer
Service provider
CupituI Soods
Sforoge
fonk/
MouIds/dies/
Pefrocforiness
Tubes & Pipe
Fiffings used
In focfory
Mofor VehicIes
Owned by
Courier fronsporf
TroveI Agenfs efc
0oods foIIing under
Chopfer o804
o80b
(0rinding wheeIs efc)
PoIIufion ConfroI
Equipmenf
Componenfs/
Spores/
Accessories
Of goods Iisfed
AII 0oods foII
Under Chopfer
8Z848b90
Office equipmenfs/AppIionces ore nof copifoI goods for monufocfurer. Service
provider con foke credif on office equipmenf ond oppIionce if fhey use for
providing oufpuf service
CopifoI 0oods shouId be received in fhe focfory of monufocfurer/premises of
service provider.
Input Service
Used by
Monufocfurer for
Monufocfure /
CIeoronce of
FinoI producf
Used in
sefup
Pepoir
renovofion
Modernisof
ion of
Focfory/pr
emises
Compufer
Mefworking
Shore Pegisfry &
Securify
Inword
Tronsporf
Of inpufs ond C0/
Oufword fronsporf
Up fo pIoce of
removal
Sforoge up fo fhe
PIoce of removoI
Procuremenf of
Inpufs
Accounfing Audifing
Finoncing QuoIify
ConfroI cooching &
Troining
Any Service
Used by service
Provider for
Providing
Oufpuf service
Service used in
Adverfisemenf
SoIes promofion
Morkef reseorch
E O U when fhey cIeor goods fo DTA
Duties on which credit cun tuken
I.8osic excise dufy - Firsf ScheduIe of CETA
Z.SpecioI excise dufy- Second ScheduIe of CETA
3. AddifionoI Excise Dufy Of 0SI
4.AddifionoI Excise Dufy of TexfiIe ArficIes
b.AddifionoI Excise Dufy CIouse 8b of Finonce 8iII Z00b (PoyobIe on fobocco Producfs)
o.MofionoI CoIomify Confingenf Dufy
7. Educofion cess on dufy of oII obove
8. AddifionoI Cusfoms Dufy (CVD) u/s 3(I) & 3(3) of CETA equivoIenf fo I fo o
9. AddifionoI Cusfoms dufy CVD u/s 3(b) (service provider connof ovoiI)
9. Educofion cess ond secondory/higher educofion cess Levied on imporfs equoI fo obove I fo o
I0 Service fox poid on inpuf Services
Mote
Credif for 4 fo o ond corresponding CVD wiII be ufiIi;ed onIy for poymenf of respecfive dufies
AddifionoI Excise Dufy Of 0SI credif con be ufiIised onIy for some dufy os weII os 8osic excise
dufy ond specioI excise dufy
Credif on Educofion cess wiII be ovoiIobIe onIy for poymenf of EC
The credif of oddifionoI dufy of cusfoms under 3(b) of fhe Cusfoms Toriff Acf I97b shoII nof
be oIIowed if fhe invoice or fhe suppIemenfory invoice os fhe cose moy be beors on indicofion fo
fhe effecf fhof no credif of fhe soid oddifionoI dufy shoII be odmissibIe,
There is provision for refund of CVD u/s 3(b) if cenvof credif wos nof ovoiIed when soIes fox
wos poid on fhe removoIs
UtiIizution of Cenvut Credit PuIe 3{4}
The Credit of Cenvut cun be utiIized for the foIIowing- for the puyment of
dufy on finoI producf by monufocfurer
on omounf equoI when inpufs removed os such or offer porfioI processing
omounf when copifoI goods cIeored os such
on omounf when goods cIeored offer repoirs
on omounf when inpufs senf for Job work nof refurned wifh in I80 doys
on omounf When poymenf of I07 on fhe exempfed voIue of goods
For reversoI of Cenvof credif when common inpufs used for dufiobIe ond exempfed producfs
For poymenf of Service fox by service provider
8y producf wosfe scrop ond Infermediofe producf is freofed os finoI producf for ovoiIing
cenvof credif
Credif con be ovoiIed onIy up fo monfh end suppIies
Cenvut Credit When F P ceuses to eempt und dutiubIe PuIe 3{Z}
Cenvut credit cun be tuken on
Inpuf Iying in sfock
Inpuf presenf in process ond finoI producf
Cenvut Credit When dutiubIe F P become to eempt und no duty puyubIe
PuIe 11{3} & 11{4}
When fhe dufiobIe producf becomes exempf by virfue of nofificofion u/s b A of CenfroI Excise
Acf or where fhe monufocfurer /service provider is ovoiIing condifionoI exempfion
The munufucturer or service provider shouId be reverse or puy un umount equuI to cenvut
credit uvuiIed on
Inpuf Iying in sfock
Inpuf presenf in process ond finoI producf
There is no necessify fo reverse or poy on cenvof credif ovoiIed on inpuf service.
SimiIor Provision oIso mode in cose of SSI unifs who is nof ovoiIing fhe benefif of exempfion
nofificofion ond decided fo ovoiI exempfion nofificofion
PemovuI of Inputs/CupituI goods PuIe 3{}& {A}
When monufocfurer/Service provider removes inpufs/ CopifoI goods" os such" offer ovoiIing
Credif- (os such meons- wifh ouf using)An omounf equoI fo cenvof credif ovoiIed shouId be poid
If copifoI goods removed offer use on omounf equoI fo cenvof credif ovoiIed is reduced by
Z.b 7 per quorfer or porf fhere of from the dute of uvuiIment is fo be poid
If copifoI goods removed offer use os o scrop dufy shouId be poid bosed on fronsocfion voIue
Written off of inputs und CupituI goods in books of uccount before use PuIe 3 {}
If fhe voIue of ony
(i) Inpuf or
(ii) CopifoI goods before being puf fo use
on which CEMVAT Credif hos been foken is wriffen off fuIIy or where ony provision fo wrife off
fuIIy hos been mode in fhe books of occounf fhen fhe monufocfurer shoII poy on omounf
equivoIenf fo fhe CEMVAT credif foken in respecf of fhe soid inpuf or copifoI goods:
If fhe soid inpuf or copifoI goods is subsequenfIy used in fhe monufocfure of finoI producfs fhe
monufocfurer shoII be enfifIed fo foke fhe credif of fhe omounf equivoIenf fo fhe CEMVAT
Credif poid eorIier subjecf fo fhe ofher provisions of fhese ruIes."
PeversuI of Cenvut Credit in cuse of Pemission of duty PuIe 3 {C}
Where on ony goods monufocfured or produced by on ossessee fhe poymenf of dufy is ordered
fo be remiffed under ruIe ZI of fhe CenfroI Excise PuIes Z00Z fhe CEMVAT credif foken on
fhe inpufs used in fhe monufocfure or producfion of soid goods shoII be reversed."
Cenvut Credit in respect of umount puid on CupituI goods removed PuIe 3 {}
The amount paid when capital goods removed after use and duty paid when capital goods removed
as scrap is eligible for Cenvat credit for the buyer .
Cenvut Credit in respect of EOU/STP/EHTP PuIe 3{7}
When goods cIeured to DTA Cenvut credit cun be uvuiIed us beIow
X x {(I+8CD/Z00) x (CVD/I00)}
where X is fhe ossessobIe voIue
8CD is fhe bosic cusfoms dufy ond
CVD is fhe oddifionoI dufy of cusfoms. [Mofificofion Mo. 48/Z008 CE (M.T.) dofed 0b.IZ.Z008.
PeversuI of Cenvut Credit in cuse of discount ufter removuI/reduction in duty
When monufocfurer ovoiIed credif on dufy on fhe bosed on invoice
SubsequenfIy fhe suppIier gives discounf by woy of reducfion of price buf dufy wos nof
reduced no need fo reverse of cenvof credif ovoiIed
However suppIier gives discounf in reducing fhe dufy oIso fhe monufocfurer con ovoiI
cenvof credif onIy fhe dufy omounf poid fo suppIier.
The reduced omounf of dufy shouId be reverse
C8EC CircuIor Mo. 877/Ib/Z008-CX Dofed I7/II/Z008
Conditions for uvuiIing credit PuIe 4
When Credit cun be uvuiIed
In cose of inpufs ImmediofeIy offer receiving in fo focfory
In cose of Inpuf service onIy offer poymenf of inpuf service biII
In cose of copifoI goods offer receiving in fo focfory.
Quuntum of Credit
For Inpufs- FuII on oII eIigibIe dufies
In cose of CopifoI goods- b07 in fhe Firsf yeor ond 8oIonce in nexf yeors
When CopifoI goods cIeored in fhe some yeor os such fuII I007 credif con be ovoiIed. However
reversoI of credif is required.
CEMVAT credif con oIso be ovoiIed even copifoI goods ocquire on Ieose hire purchose or Ioon
ogreemenf.
Mo Cenvof credif on dufy omounf if monufocfurer cIoims depreciofion on dufy omounf u/s 3Z of
Income fox Acf
If inputs CupituI goods cun be sent to gob worker,
oThey shouId be refurned bock wifh in I80 doys. If nof refurned on omounf equoI fo cenvof
credif ovoiIed is poyobIe. Credif con be foken offer fhey receive bock.
oJigs fixfures mouIds jigs con oIso be senf fo job worker no provision fo refurn in I80 doys.
CIeurunce of goods from Job worker pIuce
oPrior opprovoI of commissioner fo be obfoined
oApprovoI for eoch job worker in one finoncioI yeor is require
o8ond fo be execufed if necessory
oCommissioner con impose ony resfricfions.
Pefund of Cenvut Credit PuIe
Where ony inpuf or inpuf service is used in fhe finoI producfs/providing oufpuf service which is
cIeored for exporf under bond or Ieffer of underfoking or ony inpuf used in infermediofe
producf which is cIeored for exporf fhe CEMVAT credif in respecf of fhe inpuf or inpuf service
shoII be ufiIi;ed fowords poymenf of
(i) Dufy of excise on ony finoI producfs cIeored for home consumpfion or for exporf on poymenf
of dufy, or
(ii) Service fox on oufpuf service
And where for ony reoson such odjusfmenf is nof possibIe
The monufocfurer shoII be oIIowed refund of such omounf subjecf fo such sofeguords
condifions ond Iimifofions.
Cenvof refund nof eIigibIe for Exporfs fo MepoI/8hufon
Mo Cenvof if goods exporfed ond exporfer cIoims dufy drowbocks. However cusfoms porfion
wiII be poid.
ExompIe I
Credif of dufy poid on inpufs used in b000 unifs of producf exporfed con be ufiIised on whiIe
poying dufy on 3000 unifs cIeored for home consumpfion.
ExompIe Z
WhiIe poying dufy on X credif con be ufiIised on fhe dufy poid on Inpuf A os weII os Inpuf 8
Pefund of Cenvut Credit in cuse of goods cIeured to Morth eustern
stutes PuIe A
The new ruIe provides fhof fhe CenfroI 0overnmenf moy oIIow refund of CEMVAT credif of dufy
foken on inpufs used in fhe monufocfure of dufiobIe finoI producfs cIeored fo Morfh eosfern
Inpuf A
8000 unifs
Dufy poid
Ps. 10000
Oufpuf 8
8000 unifs
b000 unifs
cIeored for
Exporfs
3000 unifs
CIeored for home
consumpfion
Inpuf A I0000 unifs
Dufy poid Ps.Z0000
Oufpuf X I0000 unifs
CIeored for Home
consumpfion
Inpuf 8 4000 unifs
Dufy poid Ps. 30000
Oufpuf Y 4000 unifs
CIeored for Exporf
sfofes if fhe monufocfurer unobIe fo odjusf fhe credif in respecf of cIeoronces for ofher porf
of counfry for home consumpfion.
Common inputs for dutiubIe und eempted goods PuIe
Where ony inpuf/inpuf service which is excIusiveIy used for monufocfuring of exempfed finoI
producf or exempfed service no Cenvof credif
When inpufs/inpuf services ore used porfIy for monufocfure of dufiobIe goods/foxobIe
services ond porfIy for exempfed goods/services.
In such coses fhe monufocfurer/service provider hos fhree opfions -
Option 1
Moinfoin Seporofe books for oII invenfory used for exempfed goods/Services ond dufiobIe
goods ond foxobIe service
Mo Cenvof ovoiIobIe on inpufs used in exempfed goods/exempfed services
Option Z
Where fhere is no seporofe books
Monufocfurer hos fo poy on omounf of b7 on fhe ossessobIe voIue of Exempfed goods ond he
con ovoiI credif on oII inpufs ond in cose of Service fox poy o7 on fhe AssessobIe voIue of
exempfed services.
Opfion 3
Where fhere is no seporofe books
Monufocfurer hos ovoiI cenvof credif bosed on prorofe.ond reverse of credif on prorofe on
exempfed goods ond services. AnInfimofion fo CEO obouf exercising opfion.
EumpIe: Inpuf A quonfify purchosed Z000 unifs ond dufy poid Ps. b0000 ond if is used for
Monufocfure of fwo Producfs X ond Y where X is dufiobIe ond Y is exempfed. In such coses
The monufocfurer hos fhree opfions os beIow
Opfion I
Moinfoined seporofe records How much quonfify of A wos used fo X ond How much quonfify of A
wos used fo Y ond ovoiI credif onIy dufy poid on Quonfify used fo monufocfure A
Opfion Z
If seporofe records ore nof moinfoined poy on omounf of I07 on fhe AssessobIe voIue of Y ond
credif con be foken on oII unifs of A
Opfion 3
Where fhere is no seporofe books ovoiI credif prorofeMonufocfurer hos ovoiI cenvof credif
bosed on prorofe
In cuse of service provider if no seporofe records ore moinfoined service provider hos fo poy
on omounf equoI fo o7 of AssessobIe voIue.
In cose of service provider who is rendering generoI insuronce services o7 is opfionoI ond he
con foIIow ofher prescribed procedure
Puyment of % not AppIicubIe {Mon oppIicobiIify of seporofe records)
In cose of cerfoin I7 cofegories of service fox such os (Pepoirs & moinfenonce InsfoIIofion
inspecfion consuIfoncy inferior decorofion PeoI Esfofe ogency Audifing efc ) These service
shouId nof be used excIusiveIy for exempfed services .They con be used porfIy for exempfed
service/foxobIe service
The muintenunce of sepurute records/puyment of % on eempted product wiII not
uppIicubIe in cuse of {PreferentiuI removuIs }cIeurunces to
FinoI producf is dispofched fo SEZ unif or deveIoper of SEZ unif EOU EHTP or STP.
FinoI producf is suppIied fo Unifed Mofions or on infernofionoI orgonisofion for fheir officioI
use or suppIied fo projecfs funded by fhem which ore exempf from dufy.
When finoI producf is exporfed under bond wifhouf poymenf of dufy
0oId or siIver orising in course of monufocfure of copper or ;inc by smeIfing.
0oods suppIied ogoinsf InfernofionoI Compefifive 8idding
Distribution of Credit by Input Service Distributor PuIe 7
Input service distributor Meuning
Monoging Office of business of monufocfurer/Service Provider
Which receives invoices under service fox ruIes ond who disfribufe fhe credif fhrough
biII invoice ChoIIon
Conditions
Credif con be ovoiIed onIy when inpuf service biII wos poid
TofoI omounf of disfribufion of credif shouId nof exceed fhe omounf of Service fox poid
Credif of service fox connof be disfribufed when fhe inpuf service wos used excIusiveIy
for exempfed service
EumpIe
An odverfing ogency renders service for o compony Heod office ond for ifs vorious
bronches
Ad ogency roises biII on Heod office ond chorges service fox of Ps. 3 Iokhs on fhe biII
Heod office is known os inpuf service disfribufor
Heod office con disfribufe fhis service fox fo heod office ond vorious broches bosed on
suifobIe proporfion by woy of choIIon
8roches con foke credif on fhe bosis of choIIon issued by Heod office
Storuge of inputs outside fuctory PuIe
AC/DC under excepfionoI Circumsfonces
Considering fhe
Mofure of goods
Shorfoge of spoce in focfory
8y order
permif monufocfurer fo sfore inpufs oufside fhe focfory
Cenvof credif con be ovoiIed in respecf of fhese inpufs
AC/DC Con impose resfricfions/Condifions/Limifofions
If fhese inpufs ore nof used os per ruIes fhe monufocfurer shoII poy on omounf equoI fo
cenvof credif ovoiIed
Documents for AvuiIing cenvut credit PuIe 9
Cenvut Credit cun be uvuiIed onIy bused on the foIIowing documents
For Ecise Duty / CVD
An invoice of fhe monufocfurer focfory/deporf/consignmenf ogenf pIoce
An invoice of fhe imporfer
An invoice of fhe Firsf / Second Sfoge DeoIer
A suppIemenfory Invoice
A biII of enfry
A cerfificofe issued by on opproiser of cusfoms in cose of goods imporfed fhrough posf office
For Service Tu
Invoice / biII / choIIon of fhe service provider
Invoice / biII / choIIon of fhe inpuf service disfribufor
Where fhe specified persons ore IiobIe fo poy Service Tox on fhe bosis of choIIon
EssentiuI Pequirements of Documents to uvuiI cenvut credit
Poymenf of dufy or service fox
Descripfion of goods or foxobIe service
AssessobIe voIue
Pegisfrofion Mumber of CenfroI excise or service fox
Mome ond oddress of fhe focfory or worehouse or provider of inpuf service.
Mew ruIe 9(Z) of Cenvof Credif PuIes provides fhof Cenvof Credif con be foken onIy if
documenf confoin oII defoiIs os prescribed in PuIes (ruIe II of excise ond service fox ruIes) ore
ovoiIobIe. If even one defoiI os required under PuIes is missing permission from Assisfonf/
Depufy Commissioner wiII be required.
In cose of invoice issued by FSD/SSD credif con be foken onIy fhe invoice shouId indicofe
dufy suffered or prorofe dufy suffered in cose proporfionofe sfock is soId.
Pecords und Peturns in Cenvut credit,
For Inputs und CupituI Soods: -
The Monufocfurer/ provider of oufpuf service shoII moinfoin proper records confoining fhe
foIIowing defoiIs:
Peceipf,
DisposoI,
Consumpfion,
Invenfory of Inpuf ond CopifoI 0oods,
For VuIue of input / cupituI goods;
Dufy poid ,
Cenvof Credif Token,
Cenvof Credif UfiIi;ed, ond
PorficuIors of SuppIer of inpuf or copifoI goods.
For Input Services: -
The provider of oufpuf service shoII moinfoin proper records confoining fhe foIIowing defoiIs,
Peceipf of inpuf services,
Consumpfion of inpuf services,
VoIue of inpuf services,
Tox Poid,
Cenvof Credif Token,
Cenvof Credif UfiIi;ed, ond
PorficuIors of provider of service
Peturns under Cenvut Credit
MonfhIy refurn by monufocfurer wifhin I0 doys from cIose of Monfh [ruIe 9(7]
QuorferIy refurn by SSI wifhin Z0 doys from cIose of quorfer [ruIe 9(7)]
QuorferIy refurn by firsf sfoge/second sfoge deoIer wifhin Ib doys from cIose of quorfer [ruIe
9(8)]
HoIf yeorIy refurn wifhin one monfh from cIose of hoIf yeor by provider of oufpuf services
[ruIe 9(9)]
HoIf yeorIy refurn wifhin one monfh from cIose of hoIf yeor by Inpuf Service Disfribufor [ruIe
9(I0)]
MonfhIy refurn by monufocfurer in respecf of principoI inpufs wifhin I0 doys from cIose of
Monfh [ruIe 9A]
Oufpuf service provider or fhe inpuf service disfribufor fo recfify misfokes or omission ond
fiIe revised refurn wifhin o0 doys from fhe dofe of fiIing of originoI refurn
Trunsfer of Cenvut Credit PuIe 10
If o monufocfurer shiffs his focfory fo onofher sife fronsfer his business/ provider of oufpuf
service fronsfers his business by woy of
Chonge of ownership
SoIe Ieose
Merger AmoIgomofion
Monufocfurer/Service provider con fronsfer unufiIised Cenvof Credif
Tronsferee con ovoiI fhe cenvof credif when onIy
Tronsfer wos wifh fhe specific provision for fronsfer of IiobiIifies
The fronsferor fronsfers Inpufs Inpufs in process ond CopifoI goods
Tronsferee shouId occounf credif properIy fo fhe sofisfocfion of AC/DC
Procedure for LTP units PuIe 1Z A
LTP con ovoiI fhe foIIowing fociIify-
Con remove excisobIe goods excepf pefroI ond dieseI oiI wifhouf dufy fo ony person regisfered
premises excepf FSD/SSD
PemovoI shouId be wifh invoice or fronsfer choIIon
The goods con be cIeored for Home consumpfion or exporf wifh in o monfhs from fhe dofe of
sending fhe moferioI
If nof cIeored fhe recipienf premises hos fo poy dufy wiII inferesf u/s II A8
The fronsfer choIIon or invoice shouId confoin simiIor porficuIors of invoice PuIe II
Procedure for LTP units
A Iorge foxpoyer shoII submif fhe monfhIy refurns os for eoch of fhe regisfered premises.
A Iorge foxpoyer on demond moy be required fo moke ovoiIobIe oII records in eIecfronic medio
such os compocf disc or fope for fhe purposes of corrying ouf ony scrufiny ond verificofion os
moy be necessory.
AvoiImenf of LT P scheme is opfionoI
A Iorge foxpoyer moy wifh infimofion of of Ieosf fhirfy doys in odvonce opf ouf fo be o Iorge
foxpoyer from fhe firsf doy of fhe foIIowing finoncioI yeor.
Power to impose restrictions in certuin types of cuses
CenfroI 0overnmenf if necessory in fhe pubIic inferesf fo provide for cerfoin meosures
Considerofion for foking meosures
Exfenf of evosion of dufy
Mofure ond fype of offences or
Such ofher focfors os moy be reIevonf
Meusures:
Moy pIoce resfricfions on o monufocfurer FSD/SSD or exporfer specify nofure of
resfricfions incIuding suspension of regisfrofion in cose of o deoIer
Types of fuciIities to be withdruwn
Procedure for issue of such order by on officer oufhori;ed by fhe 8oord.
Power fo impose resfricfions
The circumsfonces under which fhe resfricfions ore pIoce
PemovoI of goods wifhouf fhe cover of on invoice ond wifhouf poymenf of dufy,
removoI of goods wifh ouf Correcf VoIue
Excess soIe price reoIi;ed nof occounfed,
AvoiIing CEMVAT Credif wifhouf fhe receipf of goods/ specified documenfs
AvoiIing CEMVAT Credif on invoices or ofher documenfs which o person hos reosons fo beIieve
os nof genuine
issue of excise dufy invoice wifhouf deIivery of goods specified in fhe soid invoice,
cIoiming of refund or rebofe which ore nof genuine
Pesfricfions incIude when evosion exceeds Ps. I0 Iokhs
WifhdrowoI of monfhIy poymenf resfricfions on ovoiIing credif
Pecovery of Cenvut Credit wrongIy tuken or erroneousIy refunded PuIe 14
Where fhe CEMVAT credif hos been foken or ufiIi;ed wrongIy hos been erroneousIy refunded
some oIong wifh inferesf shoII be recovered from fhe monufocfurer/Service provider
secfions IIA ond IIA8 of fhe Excise Acf or secfions 73 ond 7b of fhe Finonce Acf shoII oppIy
Confiscutions und PenuIty PuIe 1
If ony person fokes CEMVAT credif in respecf of inpuf/ copifoI goods wrongIy or in
confrovenfion of fhe ruIes fhe goods ore IiobIe for confiscofion ond penoIfy wiII equoI fo dufy
or Ps. Z000 which ever is higher. In cose of inpuf service penoIfy wiII be moximum Ps. Z000
If ony person fokes CEMVAT credif in respecf of inpuf/ copifoI goods/inpuf service on
occounf of froud wiIIfuI mis-sfofemenf coIIusion or suppression of focfs or confrovenfion of
ony of fhe provisions of fhe Excise Acf or fhe ruIes mode fhere under wifh infenfion fo evode
poymenf of dufy fhen fhe monufocfurer shoII oIso be IiobIe fo poy penoIfy in ferms of fhe
provisions of secfion IIAC of fhe Excise Acf./sec 78 of service fox (penoIfy equoI fo dufy or
service fox If dufy ond Inferesf poid wifh in 30 doys penoIfy reduced fo Zb7 of dufy
Mon reversuI of CEMVAT credit, Sec of CentruI ecise Act
"Where on ossessee hos poid dufy of excise on o finoI producf ond hos been foken credif of
fhe dufy or fox or cess poid on inpufs copifoI goods ond inpuf services used in moking of fhe
soid producf buf subsequenfIy fhe process of moking fhe soid producf is heId by fhe courf os
nof chorgeobIe fo excise dufy fhe CenfroI 0overnmenf moy by nofificofion order for non-
reversuI of such credif oIIowed fo fhe ossessee subjecf fo such condifions os moy be specified
in fhe soid nofificofion:
The order for non-reversoI of credif shoII nof oppIy where on ossessee hos preferred o cIoim
for refund of excise dufy poid by him:
CenfroI 0overnmenf moy oIso specify in fhe nofificofion referred fo obove for non-reversoI of
credif if ony foken by fhe buyer of fhe soid producf."
Eport und Other procedures for removuI of goods
Eport Procedures
Mo Excise dufy on exporfs buf confroI is necessory fo ovoid goods diverfed for Home
consumpfion
There ore bosicoIIy fwo procedures for exporfing fhe goods ouf of Indio
(o) In fhe firsf procedure dufies ore poid ond subsequenfIy rebofe (refund) is cIoimed offer
exporfofion of such goods {PuIe 1 of CentruI Ecise PuIes},
(b) Anofher procedure is fo exporf goods under bond wifhouf poymenf of excise dufy. On
ocfuoI exporfofion of goods fhe bond is reIeosed on presenfofion of necessory proofs regording
exporfs. (PuIe 19 of CentruI Ecise PuIes},
Eport cun be mude either of the foIIowing wuys
Exporf procedure under supervision of C E O
Exporf procedure under seIf SeoIing of Monufocfurer
Eport procedure under supervision of C E O:
I The oppIicofion for removoI shouId be mode wifh in Z4 hours before removoI of
goods in form Mo. APE I
Z APE I hos fo be prepored in 4 copies. OriginoI Whife DupIicofe 8uff TripIicofe
Pink. QuodrupIicofe 0reen. CoIor bond con oIso used
3 PorficuIors of APE I ore SimiIor fo fhof of Invoice. AddifionoI PorficuIors ore Dufy
Poid/8ond defoiIs Amounf of rebofe CIoim Cerfificofion of CEO in porf A.
Cerfificofion of Cusfoms officer in Porf 8 ond Pebofe soncfions order.
4 CEO wiII verify VoIue inspecf fhe goods Cerfificofion ond endorse fhe APE I
b Two Copies of APE I refoin ond fwo copies hondover fo ossessee CEO seoI fhe
pockefs Ouf of Z copies refoin one wiII send by CEO fo morifime commissioner
o Exporf shouId be mode wifh in o monfhs
7 Af fhe porf exporfer hos fo submif documenfs. Mo PhysicoI verificofion of porf
unIess seoIs fompered.
8 Cusfoms officer wiII cerfify Porf 8 of APE I
9 Monufocfurer hos fo submif APE I ond Ofher documenfs fo cIoim rebofe
Eport procedure under seIf SeuIing of Munufucturer: The procedure is simiIor fo fhof of
obove. Excepf fhe foIIowing
One Copy of APE I wiII be deIivered fo CEO wifh in Z4 hours of exporf
There is no verificofion ond endorsemenf by CEO on APE I
0oods wiII be verified of cusfoms porf ond cerfificofion of APE I by Cusfoms officer
In cose of in cose of exporfs under free Shipping 8iII i.e. Shipping 8iIIs wherein no
exporf benefifs ore being soughf fhe monufocfurer-exporfer shoII mondoforiIy resorf
fo seIf-seoIing of confoiners.
Eport within months - 0oods musf be exporfed wifhin o monfhs from dofe of removoI from
fhe focfory unIess exfension is gronfed. Exfension con be gronfed by AC / DC / Morifime
commissioner. - Chupter 7 Purt II Puru Z,Z{i} of CE&C's CE MunuuI Z001,
LOUT under ecise
When goods ore exporfed wifhouf poymenf of dufy
Monufocfurer hos fo execufe -Letter of Undertuking- LOUT
Ofher Persons hos fo execufe-8ond
LOUT
Submiffed by Monufocfurer fo CEO/Morifime commissioner in form UT-I
Execufed in fovors or Presidenf of Indio fhrough CEO
Confoins fhe porficuIors of monufocfurer ond regisfrofion number
In LOUT or in ond Munufucturer/eporter hus to decIure thut
Exporf goods wifh in o monfhs
CompIy wifh excise ruIes reguIofions Acf
Exporf fhe goods fo fhe sofisfocfion of AC/DC
Dufy inferesf wiII be poid in evenf of foiIure fo exporf
LOU shouId be occepfed by C E O
onds under Ecise
8ond' meons on underfoking given by fhe ossessee fo 0overnmenf for due fuIfiIImenf of cerfoin
obIigofion
Types of ond - Z types
Surefy 8onds ond Securify 8onds
Surety onds
Surefy bonds ore covered Indion of Confrocf Acf.
In Surefy 8ond onofher person sfonds os surefy fo guoronfee fhe performonce
Surefy shouId be for fuII voIue of bond Surefy shouId be soIvenf fo fhe exfenf of bond omounf.
The deporfmenf is of Iiberfy fo enforce fhe recovery of dues eifher from fhe obIigor or from
fhe surefy. -
Security onds
Execufed where securify is offered insfeod of guoronfee
Securify con be in nofure of Posf Office soving deposif MSC 8onk Deposifs 0ovf. Securifies efc
8onk 0uoronfee con oIso be occepfed os surefy/securify
PurticuIurs of onds
Mome oddress regisfrofion no of ossessee
DecIorofion obouf compIionce of ruIes reguIofions
Surefy IiobiIify cIouse domoges efc.
8ond shouId be occepfed by CEO
Forms/ kinds of onds
8onds ore of differenf nofure ond for vorious purposes. Forms of bond efc. hove been
sfondordi;ed. The moin bonds ore os foIIows:
-1 generuI bond
The bond is for due dispofch of excisobIe goods removed for exporf wifhouf poymenf of dufy.
The bond con be wifh surefy or securify.
-Z ond
This is o 0eneroI 8ond for provisionoI ossessmenf.
If con be wifh securify or surefy.
-4 ond
The bond is for provisionoI reIeose of sei;ed goods.
If con be onIy securify bond.
8ond shouId be for whoIe voIue of sei;ed goods.
Amounf of securify wiII be os defermined by odjudicofing oufhorify foking info considerofion
of grovify of offence (normoIIy Zb7)
- ond
This bond is for obfoining goods of MiI or concessionoI rofe of dufy under CenfroI Excise
(PemovoI of 0oods of ConcessionoI Pofe of Dufy for Monufocfure of ExcisobIe 0oods) PuIes.
-11 ond
This is nof prescribed under new ruIes.
However if hos been cIorified fhof fhe oId 8-II form shouId be used fo cIeor sei;ed goods on
provisionoI bosis. -
-17 ond
This is o generoI surefy / securify bond fo be execufed by EOU EHTP/ STP unifs.
If is for provisionoI ossessmenf of goods for exporf of goods fo foreign counfries wifhouf
poymenf of dufy ond for occounf / disposoI of excisobIe goods procured wifhouf poymenf of
dufy.
ringing goods for repuirs re muking Pecondition etc ,PuIe 1
Assesses con foke Cenvof credif of dufy poid os if such goods ore received os inpufs under
Cenvof Credif PuIes.
AII such goods broughf bock shouId be occomponied by dufy poying documenf
If Mo such documenf Prior permission from Commissioner is required before bringing such
goods fo fhe focfory
PemovuI ufter repuirs / re-muking etc,
Af fhe fime of cIeoronce dufy shouId be poid under Invoice os foIIows -
If fhe process corried ouf on fhe goods broughf omounfs fo monufocfure ossessee shouId poy
dufy of fhe rofe oppIicobIe on dofe of removoI.
If fhe process does nof omounf fo monufocfure ond omounf' equoI fo Cenvof credif foken of
fhe fime of receipf of finoI producf is poyobIe.
The buyer con ovoiI Cenvof credif of fhis 'omounf'. [PuIe Io(Z)].
Credit on duty puid goods return to Fuctory PuIe 1
When buyer refurns goods or rejecf fhe goods os fhey fhe goods con be broughf bock.
There is no fime Iimif ond goods con be broughf ony fime.
Procedure to be foIIowed
0oods shouId occompony dufy poying documenf
Infimofion fo Superinfendenf wifh in Z4 hours of receipf
Assessee shouId woif 48 hours fo enobIe CEO fo verify
Such goods shouId be sfored seporofeIy from non dufy poid goods.
Cenvof credif con be ovoiIed.
At the time of cIeurunce
dufy poyobIe if ony process done which omounf fo monufocfure on AssessobIe voIue
If no process cenvof credif ovoiIed shouId be reversed
PemovuI of goods for Job Work PuIe 1 A
Any inpufs received in o focfory moy be removed for o job worker
0oods con be removed onIy under Job work choIIon
Permission of fhe Commissioner fo be obfoined
Monufocfurer hos fo underfoke dufy IiobiIify
If required 8ond fo be execufed
If goods nof refurned wifhin I80 doys cenvof credif shouId be reversed
Commissioner con impose ony resfricfions ond condifions.
PemovuI of ecisubIe semi finished goods for Certuin purposes PuIe 1
The Commissioner of CenfroI Excise moy by specioI order ond subjecf fo condifions
permif o monufocfurer fo remove semi finished excisobIe goods for corrying ouf cerfoin
monufocfuring processes fo some ofher premises
Affer fhe process fhe goods con be bring bock fo focfory
The monufocfurer con remove fhese goods for home consumpfion wifh poymenf or dufy
or for exporf wifhouf poymenf of dufy from such ofher regisfered premises.
PemovuI of ecisubIe goods for test or for uny process not umounting to
munufucturing PuIe 1 C
The Commissioner of CenfroI Excise moy by specioI order ond subjecf fo condifions
permif o monufocfurer fo remove semi finished excisobIe goods for corrying ouf cerfoin
monufocfuring processes fo some ofher premises
Affer fhe process fhe goods con be bring bock fo focfory
The monufocfurer con remove fhese goods for home consumpfion wifh poymenf or dufy
or for exporf wifhouf poymenf of dufy from such ofher regisfered premises.
This ruIe shoII nof oppIy fo fhe goods known os "profofypes" which ore senf ouf for frioI
or deveIopmenf fesf.
Procedure to be foIIowed for sending goods under PuIe 1 A 1 und 1 C
The goods con be removed oIong wifh prescribed ChoIIon or Consignmenf nofe
If fhe monufocfurer desires fo remove fhe goods from fhe pIoce where fhe goods ore
senf he shoII poy dufy on such excisobIe goods ond prepore on invoice os per ruIes 8
ond II ecept for mentioning the dute und time of removuI of goods on such invoice.
The originoI ond fhe dupIicofe copy of fhe invoice so prepored shoII be senf by him fo
ofher premises where goods infended fo cIeor.
The processor shoII fiII up fhe porficuIors of dofe ond fime of removoI of goods before
fhe cIeoronce of goods ond offer such cIeoronce fhe processor shoII infimofe fo fhe soid
person fhe dofe ond fime of fhe cIeoronce of goods for compIefion of fhe porficuIors by
fhe soid person in fhe fripIicofe copy of fhe invoice.
The processor shoII cIeor fhe goods offer fiIIing in invoice fhe fime ond dofe of removoI
ond oufhenficofion of such defoiIs. The rofe of dufy on such goods shoII be fhe rofe in
force on dofe of removoI of such goods from fhe premises of fhe processor ond no
excisobIe goods shoII be removed excepf under fhe invoice.
PemovuI of Soods by EOU to DTA {PuIe 17}

Procedure
Invoice is fo Prepored under PuIe II
The dufy is poid fhorough debifing PLA (b07 of oggregofed of cusfoms dufies ond CVD)
Cenvof credif con be ovoiIed (8osed on fhe resfricfed formuIo)
The MonfhIy poymenf of dufy fociIify nof ovoiIobIe
DoiIy Sfock Accounf shouId be moinfoined in Form AC I wifh fhe PorficuIors simiIor fo DSA
(ruIe I0 )
The unif shouId submif monfhIy refurn in EPZ by I0 of fhe foIIowing monfh.
Procedure for cIeurunce to wurehouse PuIe Z0

0oods ore removed from focfory on poymenf of dufy. However in respecf of cerfoin goods
provision hos been mode fo sfore fhe goods in worehouses wifhouf poymenf of dufy.
AppIicubIe to foIIowing goods,
PefroIeum producfs such os ben;ene foIuene ond xyIene
0oods fronsferred fo cusfoms bonded worehouse os 'Sfores'.
0oods removed by exporf houses or sfor froding houses for subsequenf exporfs under ruIe I8
or ruIe I9 of CenfroI Excise PuIes - Mofificofion Mo. 4o/Z00I-CE(MT) dofed Zo-o-Z00I
Procedures to be foIIowed
Consignor is required fo prepore oppIicofion in quodrupIicofe in form APE III
Worehouse shouId be regisfered under excise provisions
He is oIso required fo prepore invoice under ruIe II
Three copies of oppIicofion ond dupIicofe of invoice shouId be senf oIong wifh goods fo
consignee.
On orrivoI of desfinofion Consignee hos fo verify fhe goods nofify fhe discreponcy if ony.
Consignee wiII send originoI fo his ronge superinfendenf dupIicofe wifh endorsemenf
(reworehousing cerfificofe ) fo fhe consignor
Ponge superinfendenf of consignee wiII counfer sign APE II ond send his counferporf of
consignor.
If reworehousing cerfificofe is nof received wifhin 90 doys consignor shoII poy fhe dufy.
Proper occounfs shoII be moinfoined of fhe worehouse. He wiII be responsibIe for poymenf of
dufy penoIfy efc.
Pegisfered person con keep onIy goods beIonging fo him ond nof fo someone eIse. He con keep
ofher's goods onIy wifh permission of Commissioner.
Owner of worehouse con sorf pock or repock fhe goods in worehouse ond moke such
oIferofions os moy be necessory for preservofion soIe or disposoI fhereof.
Moximum period of sforoge in worehouse 90 doys
Peceipt of Soods ut concessionuI rute of duty
The provisions ore confoined in CenfroI Excise (PemovoI of 0oods of ConcessionoI Pofe of Dufy
for Monufocfure of ExcisobIe 0oods) PuIes Z00I.
Procedure
The monufocfurer infending fo procedure excisobIe goods fo ovoiI fhe benefif of nofificofion
u/s b A shouId oppIy fo AC / DC in quodrupIicofe in form specified of Annexure I fo ruIes
Seporofe oppIicofion shoII be fiIed for eoch suppIier.
8 8 8ond fo be execufed for dufy IiobiIify for fhe omounf prescribed by AC/DC
Copy of fhis oppIicofion duIy signed by AC/DC wiII be senf fo suppIier-monufocfurer.
The suppIier con cIeor goods on receipf of fhe cerfificofe duIy counfersigned by AC / DC
The removoI defoiIs wiII be recorded on fhe oppIicofion by fhe suppIier-monufocfurer.
Proper occounfs shouId be moinfoined for 0oods
AC/DC shouId endure fhof 0oods shouId be used onIy for infended purpose (mere infenfion is
nof sufficienf)
If fhe goods ore nof used for infended purpose fhe monufocfurer shoII be IiobIe fo poy fhe
omounf equoI fo fhe difference befween fhe dufy IeviobIe on such goods ond inferesf if ony
CIeoronce fo onofher unif under some procedure
Peturn of goods to suppIier
The SuppIier wiII odd fhis refurn fo his non-dufy poid sfock (in DoiIy Sfock Accounf) ond fhen
deoI wifh if.
MonfhIy refurn shouId be submiffed by procurer in prescribed form given in Annexure II by I0
of fhe foIIowing monfh. Pegording quonfify received used ond boIonce efc)
Soods Iost or destroyed during trunsport -
If wiII nof be freofed os 'used for infended purpose'. DifferenfioI dufy ond inferesf wiII
become poyobIe. -
S S I Units -- Motificution Mo /Z003
The ferm SSI is nof defined in fhe CenfroI excise Acf. The meoning of SSI con be undersfood
os per nofificofion Mo. 8/Z003 dofed I-3-Z003.
As per fhe nofificofion o unif is soid fo SSI where fhe previous yeor furnover is Iess fhon Ps.
4 crores. (400 Iokhs)
AII indusfries irrespecfive of fheir invesfmenf or number of empIoyees ore eIigibIe for
concession if ifs previous furnover is Iess fhon Ps. 4 crores. (400 Iokhs)
Concession for SSI-
Firsf Ib0 Iokhs furnover Mo dufy
Firsf Ib0 Iokhs furnover meons furnover sforfing from ApriI I
sf
of finoncioI yeor
8oIonce furnover MormoI dufy
Mo cenvof credif on firsf Ib0 Iokhs furnover
8oIonce furnover cenvof credif con be ovoiIed
Soods EIigibIe for SSI concession
SSI exempfion is ovoiIobIe onIy if fhe goods covered under nofificofion.
Mony of goods monufocfured by SSI ore eIigibIe for fhe concession.
However some ifems ore nof eIigibIe for exompIe goods Iike
Pon mosoIo mofches wofches some fexfiIe producfs
Tobocco producfs AufomobiIes primory iron ond sfeeI efc.
Other Concessions for SSI units
QuorferIy refurn
Mo regisfrofion fiII crossing Ib0 Lokhs
Dufy poymenf Ibfh insfeod of b
fh
(Excepf for Morch)
One ConsoIidofed enfry in PLA for oII doy removoIs
SSI premises inspecfion wifh Prior ApprovoI of C/CC
Audif Once in Z fo b yeors
Exempfion for poymenf of dufy if goods monufocfured under brond nome of ofhers in ruroI
oreo.
ObIigution of SSI
To fiIe o decIorofion wifh Superinfendenf when furnover crosses 90 Iokhs
Pegisfrofion ond moinfenonce of records when furnover crosses Ib0 Iokhs
CIubbing provisions of SSI
When coIcuIofing fhe Iimifs of Ib0 Iokhs ond 400 Iokhs fhe foIIowing wiII be cIubbed.
Turnover of fhe oII producfs monufocfured by ossessee
Turnover of oII fhe focfories / Unifs of Assessee
Turnover of focfory used by more fhon one monufocfurer in o finoncioI yeor
Turnover of CIeoronce in fhe nome of bogus /dummy/shom unifs
Turnover of fwo unifs where fhere is subsfonfioI funding befween fwo unifs.
Turnover of fwo unifs when chonge of ownership fokes pIoce during fhe previous yeor
Mo CIubbing of Turnover of
Turnover of unifs of reIofives
Turnover of some monogemenf unifs
Unifs hoving Seporofe regisfrofion
Unifs hoving Seporofe Assessmenf
Unifs hoving Common Porfners/Common Direcfors
SSI Other Provisions
AvoiImenf of concession of dufy is nof mondofory if is pureIy opfionoI
Assessee who does nof wonf fo ovoiI benefif shouId infimofe fo AC
He shouId inform in wrifing fo Assisfonf Commissioner wifh o copy fo Superinfendenf of
CenfroI Excise fhe foIIowing
Mome ond oddress of monufocfurer
Locofion / Iocofions of focfory / focfories
Descripfion of specified goods produced
Dofe from which opfion under fhe SSI exempfion nofificofion hos been exercised.
Aggregofe voIue of cIeoronces of specified goods
The opfion is ovoiIobIe ony fime during fhe yeor
Once opfion once ovoiIed connof be wifhdrown during fhe finoncioI yeor.
PeversoI of Cenvof Credif on sfock WIP ond finoI producf when ovoiIing benefif subsequenf
yeor is required.
CuIcuIution of turnover for Iimits
The cuIcuIution mode for Ps, 10 und 400 Iukhs is sume ecept few items,
EcIusions from totuI turnover
The foIIowing shuII not be considered/be ecIuded from the turnover cuIcuIution
Exporf Turnover Ofher fhon exporfs fo MepoI ond 8hufon
CIeoronce fo SEZ/STP/EHTP/EOU/FTZ/EPZ/Unifed Mofions orgonisofion
Exporf under bond fhrough merchonf exporfer
Turnover of 0oods Which ore exempf from dufy
Turnover of 0oods Which ore Chorged fo MiI rofe of dufy
Turnover of Mon ExcisobIe 0oods ie which ore nof incIuded in foriff
Turnover of 0oods monufocfured wifh ofher's brond nome in urbon oreo ( ExcIude for 400 Iokhs
coIcuIofion ond incIude for poymenf of dufy in Ib0 Iokhs )
Turnover of 0oods of pocking moferioI monufocfured wifh ofher's brond nome
Turnover of Inpufs/CopifoI goods boughf by ossessee ond cIeored os such
Job work furnover exempf under nofificofion ZI4/8o 83/94 ond 84/94
0oods moy be exempf under some ofher nofificofion i.e. ofher fhon SSI exempfion
nofificofion FinoI producf of such goods
VoIue of infermediofe producfs monufocfured whiIe producing finoI producfs which ore
eIigibIe for SSI exempfion
Job work of fesf repoirs recondifioning processing efc which is nof o monufocfure.
IncIusions
The foIIowing shuII be tuken in to uccount whiIe cuIcuIuting the turnover
Exporfs fo MepoI ond 8hufon
0oods monufocfured wifh ofher's brond nome in ruroI oreo (IncIudobIe in for 400 Iokhs Iimifs
ond excIude for Ib0 Iokhs .SSI need nof poy dufy on fhese goods)
0oods moy be exempf under some ofher nofificofion i.e. ofher fhon SSI exempfion
nofificofion Infermediofe producf of such goods
Assessment Procedure
Assessmenf meons deferminofion of dufy IiobiIify.
Assessmenf' incIudes seIf-ossessmenf of dufy mode by fhe ossessee ond provisionoI ossessmenf
mode under ruIe 7- ruIe Z(b)
Meuning of 'ussessee' - PuIe Z{c}
ony person who is IiobIe for poymenf of dufy ossessed
o producer or monufocfurer of excisobIe goods
o regisfered person of o privofe worehouse in which excisobIe goods ore sfored
IncIudes on oufhori;ed ogenf of obove persons.
Types of Assessments
SeIf Assessmenf- PuIe o
ProvisionoI Assessmenf- PuIe 7
8esf of Judgmenf Assessmenf
SeIf Assessment PuIe
Assessee defermines cIossificofion
Asessee defermines VoIuofion
Asessee poys dufy of oppropriofe rofe
Assesse fiIe MonfhIy/Qfy Pefurns
Assesse DecIore in SeIf Assessmenf memorondum in fhe refurn fhof
VoIue decIored correcfIy
Dufy poid correcfIy
0AP 7 ChoIIon is genuine.
Affer submission of refurn by ossessee CEO wiII scrufini;e fhe refurn
Inspecf ossessee premises if require
Verify fhe records ond documenf
Demond wiII be issued if necessory bosed on verificofion
ProvisionuI Assessment PuIe 7
Assessee con requesf for provisionoI ossessmenf in foIIowing circumsfonces
Assessee is unobIe fo defermine fhe voIue of excisobIe goods
Assessee is unobIe fo defermine rofe of dufy oppIicobIe.
Procedure:
AppIicofion shouId be mode fo Ac/DC requesfing for ProvisionoI Assessmenf sfofing reoson
AC/DC moy oIIow ProvisionoI ossessmenf ond sfofe fhe rofe of dufy poyobIe
8ond fo be execufed (8Z bond) for differenfioI rofe of dufy minus ProbobIe finoI rofe of dufy
ond provisionoI dufy.
Pefurns/records shouId be morked os ProvisionoI Assessed wide order no,,
Time Iimif fo compIefe finoI ossessmenf o monfhs from fhe dofe of P A order
Af ossessee requesf Commissioner con exfend furfher o monfhs by wrifing reosons
Chief Commissioner con exfend fime beyond fhe period of one yeor
Affer finoI ossessmenf difference dufy poid/refunded
If ossessee does nof poy dufy wifhin Ib doys 8ond wiII be enforced
Inferesf Assessee fo poy I37 deporfmenf on refunds o7 from fhe firsf doy of succeeding
monfh from fhe omounf defermined fiII fhe dofe of poymenf
Docfrine of unjusf enrichmenf is oppIicobIe in cose of refunds.
Assessee connof do on his own ProvisionoI Assessmenf. ProvisionoI ossessmenf is onIy of
express order of AC/DC
est gudgment ussessment
When 8 O J Assessmenf is mode
Where ossessee foiIs fo provide record /informofion for fhe purpose of ossessmenf
deporfmenf is unobIe fo issue demond
urden on Assessee
8urden fo provide informofion for re-deferminofion of dufy is on ossessee
Assessmenf done be bosed on ovoiIobIe informofion. Demond wiII be issued if necessory
Demunds of CentruI Ecise Duty Sec 11A
Demond of dufy meons excise deporfmenf osking ossessee fo poy excise dufy
MormoIIy excise dufy hos fo be ossessed of fhe fime of cIeoronce of goods ond fo be poid os
per ruIe 8
Some fimes if f is possibIe fhof fhe dufy poid moy be Iower fhon fhe dufy ocfuoIIy poyobIe or
Deporfmenf moy erroneousIy refund dufy fo ossessee.
In such coses need for demond for dufy wiII orise
MormuIIy the foIIowing ure Circumstunces resuIting demund
AssessobIe voIue decIored by ossessee is nof occepfobIe fo Excise oufhorifies.
CIossificofion ond/or exempfion nofificofions cIoimed by ossessee ore nof occepfobIe fo excise
oufhorifies.
Excise dufy poid of concessionoI rofe fhough concession wos nof ovoiIobIe.
Treofing dufiobIe goods os exempfed goods/goods chorged fo niI rofe of dufy
CIondesfine removoI non-occounfing of goods efc
CIeoronce in nome of dummy bogus unifs
Dufy erroneousIy refunded by deporfmenf
Any ofher reosons due fo which fhe excise officer is of fhe opinion fhof fhe dufy poid is nof
correcf
Issue of Show cuuse notice
When dufy is nof Ievied or Mof poid or
hos been shorf Ievied or shorf poid or
erroneousIy refunded
A nofice con be issued by C E O osking fhe person why he shouId nof poy fhe omounf specified in
fhe nofice- sec II A (I)
Who cun Issue of Show cuuse notice {SCM}
OnIy CEO con issue
SCM Confoin dofe nome ond oddress of osessee dufy poyobIe oIong wifh coIcuIofions
Serving of SCM
8y Pegisfer Posf AcknowIedgemenf Due fo Assessee Address
8Y offixing of nofobIe spoce of Assessee focfory
8Y offixing Mofice boord of Excise office of ossessee jurisdicfion
Time Iimit to issue SCM
One yeor from reIevonf dofe
b yeors from reIevonf dofe in cose of froud coIIusion wiIIfuI missfofemenf vioIofion of excise
Iow wifh infenfion fo evode dufy suppression of focfs
PeIevunt dute meuns
S Mo Circumstunce PeIevunt dute
I When osessee fiIe refurn Dofe of fiIIing refurn
Z When osessee does nof fiIe refurn
refurns
Due dofe for fiIing of refurn
3 In cose of ProvisionoI ossessmenf Dofe of odjusfmenf fo finoI
dufy
4 In cose of erroneous refund Dofe of refund
b In ony ofher cose Dofe of poymenf of dufy
Where fhe service of fhe nofice is sfoyed by on order of o courf fhe period of such sfoy
shoII be excIuded in compufing fhe oforesoid period of one yeor or five yeors os fhe cose
moy be.
Option to u person to puy duty with penuIty ufter receipt of SCM sec 11A {1A}
This opfion ovoiIobIe onIy fo ossessee invoIving froud coIIusion mis-sfofemenf
suppression of focfs infenfion fo evode dufy efc.,
Assessee con voIunforiIy poy dufy fuII or in porf os occepfed by him wifh inferesf ond
PenoIfy equoI fo Zb7 of dufy
Such poymenf shouId be mode wifh in 30 doys of receipf of SCM
This is on oddifionoI fociIify given fo seffIe fhe dispufe of on eorIy sfoge fo reduce
Iifigofion ond oIso oid in coIIecfion of fox dues more expedifiousIy
In cose of porf poymenf fhe remoining omounf wiII be subjecf fo reguIor proceedings os
per fhe Iow.
ObIigutions of CEO ufter issue of SCM {Adgudicution orders of CEO} sec 11 A {Z}
The CEO hos fo consider fhe represenfofion if ony by person whom nofice issued
CEO shouId defermine fhe dufy poyobIe not eceeding fhe omounf specified in nofice
If fhe dufy defermined in excess of SCM issued fresh SCM fo be issued for excess
omounf
Where it is possibIe to do so CEO shouId defermine fhe omounf of dufy poyobIe wifh
in six monfhs or wifh in one yeor in cose of froud coIIusion infenfion fo evode dufy
efc.from fhe dofe of service of nofice.
The fime Iimif of one yeor ond six monfhs for possing odjudicofion order ore nof
mondofory
EumpIe:
Sifuofion I- Pepresenfofion of Assessee fuIIy occepfobIe- SCM fo be dropped
Sifuofion Z- Pepresenfofion of Assessee fuIIy nof occepfobIe-dufy fo be defermined
Sifuofion 3- Pepresenfofion of Assessee porfIy occepfobIe ond porfIy nof occepfobIe
AccepfobIe porfion SCM fo be dropped ond non occepfobIe porfion dufy fo be
defermined
Puyment of duty by u person before receiving SCM Sec 11 {Z}
This fociIify ovoiIobIe onIy fo person who hos nof poid shorf poid dufy under normoI
circumsfonces. If is nof ovoiIobIe in cose of frouduIenf coses
Assessee con oIso poy dufy before receiving SCM
Such poymenf of dufy con be on fhe bosis on his own oscerfoinmenf or oscerfoinmenf by
CEO
Assessee shouId inform CEO obouf fhe poymenf in wrifing.
CEO connof issue show couse nofice offer receiving infimofion from Assessee.
If o person does nof poy fhe dufy os defermined by CEO CEO con proceed fo recover
fhe dufy from o person by issue SCM fhe fime Iimif of one yeor wiII be reckoned from
fhe dofe of receipf of informofion from o person
Interest for Iute puyment of duty Sec 11 A of CEA und Z of Customs Act
Where fhe dufy poyobIe os per SCM or os per dufy defermined by ossessee or by CEO
Inferesf is poyobIe on dufy I37 per onnum
Period of Interest
from fhe firsf doy of foIIowing monfh of due dofe of dufy poyobIe fo fiII fhe dofe of poymenf
Incose of erroneous refund from fhe dofe of refund
EumpIe
Situution 1. Sepfember monfh removoI- Due dofe for poymenf b
fh
Ocfober
- Inferesf poyobIe from I
sf
Movember
Situution Z, Morch monfh removoI- Due dofe for poymenf 3I
sf
Morch
- Inferesf poyobIe from ApriI I
sf
Situution 3, Dufy erroneousIy refunded on ApriI Io
fh
- Inferesf poyobIe from ApriI Io
fh
Other points
Inferesf poyobIe even during fhe period of sfoy or oppeoI
As per Sec 37 8 C8EC hos power fo issue insfrucfions fo Commissioners
If o person poys dufy voIunforiIy os per 8oord insfrucfion wifh in 4b doys from fhe dofe of
issue of boord circuIor wifhouf reserving righf fo oppeoI in fufure no interest puyubIe, In
oII ofher coses inferesf poyobIe on whoIe omounf incIuding omounf oIreody poid
Where fhe dufy defermined is increosed or decreosed inferesf is poyobIe on fhe increosed
or decreosed omounf.
PenuIty for short Ievy or non Ievy of duty in certuin cuses Sec 11AC
AppIicobIe onIy in cose of demond orising in cose of frouduIenf coses
Where fhe person poyobIe dufy os per odjudicofion order of CEO person is IiobIe fo poy
penoIfy equoI fo dufy so defermined.
If fhe dufy poid wifh in 30 duys from fhe dofe of communicofion of order of CEO
penoIfy wiII be reduced fo Zb7 of dufy.
Peducfion in penoIfy of 7b7 is ovoiIobIe onIy if dufy ond penoIfy of Zb7 poid wifh in 30
doys
If fhe dufy is increosed/decreosed by fhe order of oppeIIofe oufhorify penoIfy is oIso
increosed or decreosed.
Demund bused on estimuted production
AppIicobIe in cose of cIondesfine removoI
CIondesfine removoI meons removoIs in nome of dummy bogus unifs/removoI of goods wifhouf
invoice/wifh ouf enfry in DSA efc.
CE Officer cun fi normuI production bused on
insfoIIed copocify
row moferioI ufiIi;ofions
Iobour empIoyed
power consumed ond
such ofher reIevonf focfors os necessory
CEO wiII workouf producfion ond demond wiII be issued.
Pecovery of Duty Sec 11
When Assessee foiIs/ or refuses fo poy Dufy/ony sum due under CE ACT or PuIes / sum of dufy
recovered from buyer ond nof credif fo 0overnmenf/dufy defermined by SeffIemenf
Commission nof poid
Depurtment cun recover the ubove umount from uny of the foIIowing modes
8y sefoff ogoinsf refund due fo ossessee (ExompIe dufy inferesf rebofe drowbock)
Affochmenf of excisobIe goods beIonging fo Assessee
As Arreors of Lond revenue by issuing cerfificofe fo disfricf revenue coIIecfor (soIe by
oucfion oII properfy excepf cooking vesseIs ond cIofhs)
Pecovery from surefy in cose of surefy 8ond
Pecovery from soIe of securifies in securify bond
Pecovery from porfner of firm if firm foiIs fo poy
Pecovery from LegoI heirs/Pepresenfofive from fhe movobIe or immovobIe properfy inherifed
by fhe IegoI heirs
Pecovery from successor of business from oII ossefs ocquired in succession wifh fhe
permission of Commissioner of CenfroI excise
Defoin of movobIe ond immovobIe properfy of ossessee wifh permission of Commissioner if
dufy nof poid wifh in 30 doys .soIe of properfy (sec I4Z of cusfoms oppIicobIe fo Excise)
Chief Commissioner con gronf moximum 3o MonfhIy insfoIImenfs for dufy poymenf (CCE
Hyderobod frode nofice).Mondofory Inferesf is poyobIe
Puyment of Duty under Protest
Poymenf of dufy under profesf covered in Chopfer I3 Porf III Poro 4 of C8E&C's CE MonuoI
Z00I
Circumstunces:
If ossessee does nof ogree wifh cIossificofion of goods by Deporfmenf ond he fiIe oppeoI
Procedure
Infimofe Ac/DC ond Obfoin dofed ocknowIedgemenf.
Poymenf of dufy under profesf onIy fiII oppeoI is decided
AII Invoices refurnsPLA ChoIIon indicofe dufy poid under profesf
Affer oppeoI disposoI- difference dufy if ony fo be poid or cIoim refund.
If he does nof fiIe oppeoI he connof poy dufy under profesf offer period of oppeoI is over.
Advuntuge
The fime Iimif of one yeor for refund is nof oppIicobIe.
Pefund of Duty Sec 11
Assessee con cIoim refund when he hos poid higher dufy fhon required.
Such higher puyment of duty muy be due to
wrong cIossificofion of goods
freofing exempfed goods os dufiobIe goods
Poys higher dufy fo cIeor goods urgenfIy
Who Cum CIuim Pefund
Assessee
8uyer (FSD/SSD) if he does nof poss burden fo ofher
Procedure to cIuim refund of duty
AppIicofion in Form Mo P oIong wifh supporfing documenf os o proof for poymenf of dufy
pre sfomped receipf fo mode fo AC/DC
Pefund Iess fhon Ps. I00 wiII nof be enferfoined.
Time Iimit to cIuim for refund
One yeor from reIevonf dofe
PeIevunt dute meuns
I In cuse of Eport Pebute
Exporf fhrough oircroff/vesseI Dofe of Ieoving oircroff/VesseI
Exporf fhrough vehicIe Dofe of Ieoving cusfom fronfier
Exporf fhrough posf Dofe of dispofch of orficIe
Z In cose of Compound Ievy scheme Dofe of reducfion of dufy
3 In Cose of Exempfion u/s b A Dofe of exempfion order
4 In Cose of ProvisionoI Assessmenf Dofe of finoI odjusfmenf of dufy
b In cose of FSD/SSD Dofe of Purchose of goods
o In cose of Order of
courf/AppeIIofe oufhorify
Dofe of order
7 In ony ofher cose Dofe of poymenf of dufy
Mote: When dufy poid under profesf fhere is no fime Iimif fo cIoim refund.
Pefund cIoim is scrufini;ed by AC/DC ond wiII be soncfioned
Pefund to ussessee/buyer 11 {Z}
Pefund omounf insfeod of poymenf fo monufocfurer/buyer fhe omounf wiII be credifed fo
consumer weIfore fund.
Pefund of ecise duty cun be mude to ussessee /buyer onIy in foIIowing cuses:
Pebofe of dufy poid excisobIe goods exporfed ouf of Indio
Pebofe of excise on inpufs used in monufocfure of goods exporfed ouf of Indio (if he hos nof
ovoiIed Cenvof credif)
Pefund of dufy poid on inpufs (if poyobIe occording fo ony ruIe or nofificofion)
To Monufocfurer if he hos nof possed on incidence of fhe dufy fo onofher person
To 8uyer if he hos borne fhe dufy ond if he hos nof possed on incidence of fhe dufy fo
onofher person
Doctrine of Ungust Enrichment/Pefund credit to consumer weIfure fund
If is oIwoys ossumed unIess confrory proved by monufocfurer fhof excise Dufy burden
normoIIy fuIIy possed on fo buyer sec IZ 8
In such coses refund of excess dufy poid fo fhe monufocfurer wiII omounf fo excess ond un-
deserved profif fo him.
He wiII gef doubIe benefif - One from consumer ond ogoin from fhe 0overnmenf.
Af fhe some fime fhe dufy is iIIegoIIy coIIecfed ond hence connof be refoined by 0overnmenf.
In such coses fhe refund due shouId be fronsferred fo o Consumer WeIfore Fund insfeod of
poying if fo fhe monufocfurer.
The fund moy be used for ocfivifies of profecfion ond benefif of consumers.
Provisions of Unjusf enrichmenf wiII oppIy fo oII fypes of refund (ProvisionoI Assessmenf
Copfive consumpfion Dufy poid under profesf efc)
Mon AppIicubiIity of Doctrine of Ungust enrichment {Pefund puid to munufucturer /
buyer}
When dufy is poid under profesf ond onIy Iower omounf of dufy is chorged fo cusfomer
Pre-deposif of dufy pending oppeoI
When dufy is poid subsequenf fo cIeoronce
When confrocf is for price incIusive of oII dufies
When debif nofe is roised by buyer ond omounf deducfed from biII
When credif nofe issued fo buyer ond buyer occounf is credifed
Pefund of exporf rebofe/incenfive.
Deposif foken from buyer ogoinsf possibIe IiobiIify of excise dufy. And deposif refunded
Time Iimit to sunction und puy refund [section 11 of CEA/ section Z7A of
Customs Act
Pefund due musf be soncfioned wifhin fhree monfhs from dofe of oppIicofion.
DeIoy in soncfion refund beyond fhree monfhs inferesf o7 p.o. immediofeIy offer expiry
of fhree monfhs fiII fhe dofe of refund
Pefund in cuses where Ievy is decIured unconstitutionuI
If fhe Ievy hos been decIored os unconsfifufionoI refund cIoim con be mode by woy of suif or o
wrif pefifion. Such refund cIoim wiII oIso be subjecf fo provision of unjusf enrichmenf
Power not to recover duty of ecise not Ievied or short
Levied us u resuIt of generuI pructice,
Sec 11C/ Sec Z A
of customs
AppIicobIe in cose of misinferprefofion or wrong undersfonding of Iow bofh by fhe
monufocfurer ond CEO
Such wrong undersfonding wos occurred in ossessmenf resuIfing shorf Ievy of dufy
Wrong undersfonding wos becouse of 8onofide misfoke on eifher side
Such misfoke shouId be nof becouse of coIIusion/froud coses
In such coses C 0 is empowered fo moke on order not to recover/coIIect such shorf Ievy
If o monufocfurer poid differenfioI dufy despife C 0 nofificofion he is enfifIed fo
refund subjecf fo docfrine of unjusf enrichmenf
Time Iimif fo cIoim refund is months from fhe dofe of C 0 Mofificofion
Duties of ecise coIIected from the buyer to be deposited with the
CentruI Sovernment Sec 11D/ section Z of Customs Actj
Every person IiobIe fo poy dufy if he coIIecf excess dufy fhon ossessed/ defermined
poid/ he shouId poy such excess dufy fo credif of CenfroI 0overnmenf
If o person does nof poy fhe dufy CEO con issue SCM
CEO offer represenfofion if ony mode by person CEO shouId defermine dufy
DeIoy in poymenf fo credif of 0overnmenf inferesf I37 p.o. poyobIe from fhe firsf
doy of succeeding monfh which dufy poyobIe. (sec II DD)
The omounf of dufy poid by person wiII be odjusfed in fhe finoI ossessmenf
If o person poid excess ond if ony surpIus Ieff offer finoI ossessmenf fhe excess omounf
wiII be refunded subjecf fo docfrine of unjusf enrichmenf
ProvisionuI Attuchment of Property in certuin cuses Sec 11DDA
CEO con provisionoIIy offoch fhe properfy of ossesse fo profecf fhe inferesf of
revenue ond if if is necessory fo do so
Such provisionoI offochmenf con be mode in fhe course of proceedings where SCM wos
issued u/s II A ond IID
Such provisionoI offochmenf con be mode wifh fhe previous opprovoI of Commissioner
of excise by order in wrifing
Affochmenf order wiII be in force for o period of o monfhs from fhe dofe of order
Chief Commissioner hos gof power fo exfend fime os he fhink fif.
TofoI exfension period by CC wiII be moximum fwo yeors
Where fhe oppIicofion mode by ossessee fo SeffIemenf Commission fhe period befween
from where fhe oppIicofion mode ond order of seffIemenf commission wiII be excIuded
in coIcuIofing fhe fime Iimif of o monfhs/ fwo yeors.
SpeciuI uudit in certuin cuses Sec 14 A
Circumstunce under which speciuI uudit ordered
In cose of nofure ond compIexify of fhe cose
fhe inferesf of revenue
fhe voIue hos nof been correcfIy decIored or defermined
ApprovuI for ordering SpeciuI Audit
Ordered by AC/DC obove ronk previous opprovoI of fhe Chief Commissioner
Areus of Audit:
Focfory
office depofs disfribufors or
ony ofher pIoce os specified by fhe C E O
Period for compIetion
Moximum incIuding exfension I80 doys.
Who cun do the SpeciuI uudit?
Cosf occounfonf or Chorfered Accounfonf nominofed by fhe C C Excise./
Other Points
Order con be mode fo Audif of fhe occounfs even if fhe occounfs oudifed under ony ofher Iow
Audif reporf wiII be submiffed fo C E O.
Opporfunify fo be given fo ossessee if ony moferioI of oudif reporf proposed fo be ufiIi;ed
SpeciuI uudit in cuses where credit of duty uvuiIed utiIized is not
within the normuI Iimits
sec 14 AA
Circumstunce under which speciuI uudit ordered
Credif of dufy ovoiIed /ufiIi;ed nof wifhin Iimifs
UfiIi;ofion of credif wifh froud wiIIfuI missfofemenf coIIusion efc
ApprovuI for ordering SpeciuI Audit
Ordered by AC/DC obove ronk previous opprovoI of fhe Chief Commissioner
Areus of Audit:
Focfory
office depofs disfribufors or
ony ofher pIoce os specified by fhe C E O
Period for compIetion
Moximum incIuding exfension I80 doys.
Who cun do the SpeciuI uudit?
Cosf occounfonf/Chorfered Accounfonf nominofed by fhe C C Excise.
Other Points
Order con be mode fo Audif of fhe occounfs even if fhe occounfs oudifed under ony ofher Iow
Audif reporf wiII be submiffed fo C E O.
Ecise DepurtmentuI Checks
Visits of Officers
The Superinfendenf ond Excise Inspecfors working under him do occosionoIIy visif focfories.
And verify fhe records
Stock tuking
Mew CenfroI Excise PuIes moke no provision for 'sfore room' or 'sfock foking'. However if sfock
foking by excise oufhorifies sfock foking con be done of finished goods ond Cenvof goods.
Poud Checks
Surprise rood checks ore corried ouf fo see fhof oII goods moving ore occomponied by dufy
poying documenfs.
Ecise depurtmentuI uudit/ 'EA-Z000' [Ecise Audit Z000j
An Audif secfion is offoched fo eoch Commissionerofe. The Audif Porfy usuoIIy consisfs of
inspecfors ond o Depufy Office Superinfendenf heoded by o Excise Superinfendenf. AC/DC ond
senior officers ore oIso ossociofed wifh fhe oudif of Iorge unifs. These oudif porfies visif
focfories periodicoIIy.
Frequency of uudit
C8E&C hos specified frequency of oudif ond fime Iimif during which oudif shouId be compIefed
os foIIows -
The scheduIe shouId be -
All EOU units - mandatory audit every year
Units paying duty through PLA over Rs. one crore per annum - 10 working days - to be
audited every year
Units paying duty of Rs. 10 lakhs to one crore per annum through PLA - 7 working days - to
be audited at least once in two years
Units paying duty less than Rs. 10 lakhs through PLA per annum - 5 working days - to be
audited at least once in five years.
Duration of audit (5/7/10 working days as above) is the entire period spent on audit of a
particular assessee from desk review to preparation of audit results. In case of audit of units
paying less than Rs. 10 lakhs per annum through PLA, not more than three days should be
normally spent in assessees factory - CBE&C circular No. 731/47/2003-CX dated 1-8-2003.
EA-2000 AUDIT OF EOU - EOU in port cities are under administrative control of Commissioner
of Customs. Since customs have no system of internal audit, the audit should be conducted by
jurisdictional Commissioner of Central Excise.
Procedure of Ecise Audit Z000 - Procedure of EA-2000 is explained in CBE&Cs CE Manual,
2001, is as follows -
SeIection of ussessee
In each Commissionerate few units are selected based on risk factors, For example assessees
who have bad track record (like evasion cases, major audit objections, past duty dues etc.) are
given priority for conducting audit over those having clean record.
Desk review
Auditors assigned to assessee are required to gather advance information about assessee, from
departmental records, published documents like balance sheet, annual statements and through
market enquiries. This is done without interacting with assessee.
Suthering und Documenting ussessee Informution
At the stage of desk review, auditors will identify the areas which require closer examination.
The auditor gather evidence based on documents and by a questionnaire
Touring of premises
The auditor then visits the unit of assessee to see the actual running of the unit, the systems
that are followed for maintaining records in various sections, system of movement of goods and
related documents within the unit. This gives auditor overview of the procedure adopted by
assessee and the possible loopholes through which revenue leakage can take place.
Audit PIun
Based on the experience and the information, the auditor prepares an audit plan. Based on the
plan the auditor selects some of the documents/records maintained by assessee for actual
verification, as verifying all records is impossible. Plan can be alter the audit plan midway after
obtaining approval of the superior officers.
Verificution
This consists of verification of actual records with the returns submitted. Auditor may enquire
about vague entries. .
Audit Obgection und uudit puru
If auditor finds instances of short payment of duty, he is required to discuss the issue with
assessee. If he is not satisfied with the explanation of assessee, he will record the same as
audit objection or audit para in his draft audit report. If possible, quantification of duty short
paid should be made on the spot and incorporated in audit para. If this is not possible, a note
may be made in audit report.
Audit report
At the end of verification, auditor prepares a Draft Audit Report which incorporates all audit
objections/audit pars. It discusses the issue in brief, reply or explanation of assessee, reason
for auditor not being satisfied with the reply or explanations, amount of short payment (if
tabulated) and recoveries of same, it could be made on the spot. The draft audit report is
submitted to superior officers for review, and finalization.. If assessee has not paid duty on the
spot, demand notices are issued to assessee by department.
Form of uudit report
Report should be submitted in the as per prescribed form. Apart from other information, the
report should contain Risk Loss Analysis, Trend Analysis etc.
EA-Z000 is u purticiputive uudit
The assessee is given full opportunity to explain his stand in the audit findings so that matters
are resolved in full appreciation of legal position. Thus, EA-2000 is a participative audit.
CEC instructions for EA uudit Z000
Board has clarified that factories yielding annual revenue of Rs. 5 crores and above, or those
availing annually Cenvat credit of Rs. one crore and above should be visited by Addl
Commissioner/Jt Commissioner when the audit of factory is in progress. In addition, suspected
units manufacturing commodities with particularly intricate complexities etc. may also be visited
by Jt Commissioner (Audit) (that time - Dy Commissioner) -
The highlights of new system are as under -
15 days notice should be given before commencing audit.
Audit will normally be completed in 5 to 7 days. If required, two audit teams may be
deputed.
Additional/Jt Commissioner (Audit) should join the team for some days. He should
supervise audit notes/report and sign the same.
Audit party will not issue any summons and powers of search, seizure or interrogation will
not be exercised. If information is not supplied, they may refer the matter to Anti-
Evasion wing of Commissionerate.
Audit Wing will not issue show cause notices arising out of objections. The matter will be
referred to Proper Officer (Jurisdictional Superintendent/Assistant/Deputy
Commissioner).
Proper data base will be created. Specially trained staff will be used.
Workshop for trade and industry should also be organised
An EA-Monitoring Cell consisting of 4-5 officers will be constituted headed by
Commissioner. The cell will hold meetings once in fortnight and monitor the new audit
system.
Audit parties should check source documents/records connected with production,
manufacture, storage, delivery or disposal of goods, including raw materials; such as
ledgers, inventory records, income tax returns, sales tax returns, balance sheets etc. Only
relevant returns/records should be demanded.
Audit work must be clearly documented in working papers. Summary sheet will be prepared.
Assessee profile (database) shall be collected in standard prescribed format. Audit report
will also be in prescribed format. It should be prepared within 20/25 days from
commencement of audit. Scoring system has been evolved to evaluate audit report.
Director General (Audit) will monitor the work of EA-2000.
Audit of registered deuIers {FSD/SSD}
Selective audit of such registered dealers will be carried out with prior approval of Additional
commissioner. Advance intimation of 15 days will be given. However, preventive checks can be
carried out by surprise visits without any prior intimation to dealers. However, prior approval of
Jt Commissioner (Prev.) will be taken. - CCE, Mumbai IV TN 39/2000 dated 1-6-2000.
CEPA uudit
Comptroller and Auditor General of India also carry out audits of all assessees. These are called
CERA i.e. Central Revenue Audit. These audit parties audit accounts of excise as well as
customs assessees. These audits are conducted in addition regular audit under other laws.
Frequency of CERA Audits depends upon the importance and availability of time.
Assessee is required to produce to audit parties (i) Records (ii) cost audit report (iii) Income
Tax audit report.
PenuIties und Offences
CEA provides for penalties and punishments for violation of excise law. Penalties can be levied
for civil and criminal liability. Civil Liability includes fines, confiscation of goods, etc., where as
Criminal punishment is of imprisonment and fine; which can be granted only in a criminal court
after prosecution. Section 34A of CEA and section 127 of Customs Act specifically provide both
departmental penalties and criminal prosecution for same offence is permissible.
Offence under centruI Ecise PuIe Z of CentruI Ecise
PuIes
Under ruIe Z{1} of CentruI Ecise PuIes foIIowing ure offences:
Removing excisable goods in contravention of Excise Rules or notifications issued under
the rules.
Not accounting for excisable goods manufactured, produced or stored
Engaging in manufacture, production or storage of excisable goods without applying for
registration certificate u/s 6 of CE Act
Contravening any provision of Central Excise Rules or notifications issued under these
rules with intention to evade payment of duty.
PenuIties imposubIe under ruIe Z
(o) Confiscation of contravening goods
(b) Penalties up to duty payable on such contravening goods or Rs.2000 whichever is higher.
(c) Penalties can be imposed on Manufacturer, warehouse keeper, FSD/SSD
Mundutory penuIty in cuse of fruud suppression of fucts etc. - Provisions of Rule
25(1) are subject to section 11AC, which means that provisions of section 11AC prevail over
provisions of rule 25(1). The penalty u/s 11 AC is mandatory which is equal to duty evaded -
neither more nor Iess, However, if the duty, interest and penalty are paid within 30 days from
communication of order, penalty payable will be reduced to 25%.
PuIes of MuturuI Justice
Penalty can be levied only by giving opportunity being heard to assessee
PersonuI penuIty on director / purtner / empIoyee/ trunsporter / driver/Any
person etc: PuIe Z of CentruI Ecise ruIes
Rule 25 is applicable only to manufacturer, producer, and registered person of a warehouse or
registered dealer. Penalty on others like transporter, person concealing goods etc. can be levied
under rule 26
Any person who acquires possession of, or is in any way concerned in transporting, removing,
depositing, keeping, concealing, selling or purchasing, or in any other manner deals with any
excisable goods which he knows or has reason to believe are liable to confiscation under the Act
or rules, shall be liable to a penalty up to the duty payable on such goods or Rs 2,000 whichever
is greater.
A director or partner or an employee will be personally liable to penalty if he is personally
involved in clandestine removal etc.
PenuIty on uny person
Non issuance of excisable invoice, issuance of excise invoice without delivery of goods specified
therein or issuance of any documents whereon receiver takes any ineligible benefit of CENVAT
or refund. A penalty on such offence would be Rs.5000 or amount of benefits, whichever is
greater.
PesiduuI PenuIty - PuIe Z7 of CentruI Ecise PuIes:
For breach of excise rules, if no penalty has been prescribed under Act or rules, the penalty
would be Rs. 5,000 plus confiscation of goods in respect of which offence has been committed.
Confiscution of goods
Section 12 of CEA authorises Central Government to apply provisions of Customs Act These are
(o) section 105(1) - Powers of search (b) section 110 - seizure of goods, documents and things (c)
section 115 - confiscation of conveyances (d) section 118(a) - confiscation of packages containing
goods (e) section 119 - confiscation of goods for concealing goods (f) section 120 - confiscation
of goods even if form changes (g) section 121 - confiscation of sale proceeds of contravening
goods (h) section 124 - issue of show cause notice before confiscation of goods (i) section
142(1)(b) and 142(1)(c)(ii) - Recovery of duty (j) section 150 - procedure for sale of goods.
Contruvening goods IiubIe to confiscution
- Under ruIe Z of CE foIIowing goods ure IiubIe to confiscution -
Goods removed in contravention of Central Excise rules,
Goods not accounted for
Goods on which Cenvat credit is wrongfully taken
Goods manufactured without registration of the factory.
Confiscution of Conveyunce
Following conveyances are liable to confiscation under section 115(1) of Customs Act, as made
applicable to Central Excise:
any conveyance from which goods are thrown overboard or destroyed to prevent seizure
Conveyance which is required to land or stop for inspection but fails to do so.
Conveyance by which warehoused goods are cleared for export, but goods is unloaded
without permission.
Confiscution of puckuges
When the goods are liable for confiscation, the packages in which contravening excisable goods
are packed, such packages are also liable for confiscation.
Confiscution even form chunges
Contravening goods are liable for confiscation even if there is any change in its form for
example mixing with other.
Confiscution of suIe proceeds
If the contravening goods are found to have been sold, sale proceeds of such sale are liable to
confiscation
Pedemption fine in Iieu of confiscution
Whenever confiscation of goods is ordered, the adjudicating officer moy give option to owner
of goods to pay fine in lieu of confiscation. After payment of redemption fine; the goods are
returned to the owner of goods. Section 125(2) of Customs Act makes it clear that where any
fine in lieu of goods is imposed, the owner of goods or the person from whom the goods were
seized is liable to pay duty and charges in respect of such goods, in addition to the fine.
Limit for imposing redemption fine As per proviso to section 125(1) of Customs Act,
redemption fine up to market price of goods less duty chargeable thereon can be imposed.
Procedure ufter confiscution PuIe Z{1} of CentruI Ecise PuIes
After confiscation, the goods shall vest in Central Government. The Central Excise Officer
adjudging confiscation shall take and hold possession of things confiscated. Every Police Officer
is required to assist excise officer in taking and holding such possession. (Parallel provision in
Customs section 126.)
If the assessee does not pay fine in lieu of confiscation, the goods will be sold, destroyed or
otherwise disposed of in such manner as the Commissioner may direct. [Rule 29].
If the assessee exercises option to pay fine in lieu of confiscation, he may be asked to pay
storage charges as may be determined by adjudicating officer. [Rule 30]
Prosecution for Offences
Section 9 defines foIIowing us offences punishubIe:
Contravening provisions of restrictions of possession of goods in excess of prescribed
quantity as prescribed under section 8.
Contravening provisions of rules regarding transit of excisable goods
Contravening provisions of rules regarding registration of a unit
Evading payment of duty payable under CEA.
Removing excisable goods, in contravention of provisions of Central Excise Act and Rules.
Acquiring or in any way concerning himself with transporting, depositing, concealing,
selling, purchasing or otherwise dealing with excisable goods where he knows or has
reason to believe that the goods are liable to confiscation under Central Excise Act or
Rules.
Contravening any provision of Central Excise Act or rules in relation to Cenvat credit.
Failure to supply information or knowingly supplying false information.
Quuntum of Punishment thut cun be imposed
A, For first time Conviction
If the duty eceeds Ps, 1 Iukh: imprisonment up to seven years (minimum 6 months) and fine
(without limit) or bofh can be imposed.
If the duty does not eceeds Ps, 1 Iukh: imprisonment up to three years or fine (without
limit) or bofh can be imposed.
, For subsequent conviction:
Irrespective of vuIue of duty: imprisonment up to seven years (minimum 6 months) and fine
(without limit) or bofh can be imposed.
Imprisonment Iess thun months when
If there are special and adequate reasons for granting lesser punishment.
The following are shuII not be treuted as adequate reasons
First time offence
Age of the accused
Accused is not a principal offender
Punishment for second time for the same offence under CE Act
Further punishments Sec 9/sec 13 - Court has powers to order for further punishments
like revocation of offer of redemption of fine and Publication of names, place of business or
residence, nature of contravention etc in news paper.
urden of proof The burden of proof is on Excise department to prove the commitment of
offence by a person. Similarly accused has to prove that there was no culpable state of mind
like intention, knowledge, belief etc. Both proofs should be beyond reasonable doubt.
PeIevuncy of Stutement before Ecise / Customs Officer
[Section 9D of CEA - puruIIeI section 13 of Customs Actj, Statement made and signed
before any Central Excise Officer / customs officer of gazetted rank is allowed as evidence in
the prosecution as follows
(o) In case of a person who is dead or if he cannot be found or whose presence cannot be
obtained without undue delay or expenses, the statement wiII be allowed as evidence
(b) In case of person who is present before the Court and is examined as witness, Court moy
admit the statement if it is of the opinion that the statement should be admitted in the
interest of justice.
Discretion is given to Court in case of statements made before Excise Officer, only if such
person is examined as witness.
The provisions apply to adjudication and appeal proceedings also.
Presumption regurding Documents seized from u person
Any document seized from a person shall be presumed to be true about the contents therein.
Signature and other part of hand written document on such seized document, purporting to have
been of a person or reasonably assumed to be of that person shall be presumed to be of that
person. If such person claims that the document is not true or not signed by him, fhe burden of
proof is on him
Computer print outs
Statement printed by Computer is admissible if
Computer print out was produced during the period when the computer was used for
storing and processing the information
The information contained in the statement was regularly supplied to computer during
the period
computer was operating properly during the period or breakdowns were not significant
to affect accuracy of documents
The print out is reproduced in ordinary course of activities
CentruI ecise Offence is non-cognizubIe [Section 9A of CEAj, - As per section 2(c)
of Criminal Procedure Code, cognizable offence means an offence for which a police officer
may arrest without warrant. Offences under section 9 of CEA are non-cognizable. For offences
under excise action will be taken by police only at the instance of CEO.
Offences by Compunies Sec 9AA
For the offences committed by companies, Directors, officers are also responsible if they are
involved in committing of breach/offence.
Compounding of Offence Sec 9A{Z}
Any offence committed from sec 3 to Sec 12 of CE Act may, either before or after institution
of prosecution, be compounded by the Chief Commissioner of Central Excise on payment, by the
person accused of the offence to the Central Government, of such compounding amount as may
be prescribed.
Power of CentruI Sovernment to PubIish Mumes of persons {new section 37
E}
This section provides for publishing the name of any person and particulars of any
proceedings in relation to such person, in public interest.
The Central Government may publish name of any person and any other particulars
relating to any proceedings in the public interest. The Government can do the
publication in such manner as it thinks fit.
The publication in respect to penalty shall be only after appeal time limit is expired or
appeal is disposed of.
In the case of a firm, company or other association of persons, the names of the
partners of the firm, directors, managing agents, secretaries and treasurers or
managers of the company, or the members of the association, as the case may be, may
also be published if, in the opinion of the Central Government, circumstances of the case
justify it.
AppeuIs und Pevision

Excise Law as well as Customs Act makes elaborate provisions for departmental adjudication,
appeals and revision. The provisions are almost identical in both the Acts, as below
Orders of the Authority AppeuI cun be mude with
Superintendent, Assistant Commissioner, Dy Commissioner,
Jt. Commissioner, and Additional Commissioner)
Commissioner
Commissioner, Tribunal.
Tribunal. High Court
High Court Supreme Court
AppeuI to Commissioner {AppeuIs}
Appeal against order of Superintendent, Assistant Commissioner, Dy. Commissioner and
Additional Commissioner lies with Commissioner (Appeals), u/s 35(1) of CEA - parallel section
128(1) of Customs Act.
Time Iimit for fiIing uppeuI
Appeal must be filed within 60 days from date of communication of order. Commissioner
(Appeals) has powers to extend this period by further 30 days if sufficienf couse is shown.
Form of AppeuI to Commissioner {AppeuIs} -
Appeal should be in prescribed form No. EA-1 (CA-1 in case of Customs) in duplicates and should
be accompanied by a certified copy of the decision or order against which appeal is filed.
Stuy uppIicution - If duty demanded and penalty/fine imposed is not paid, separate
application for waiver of pre-deposit of duty and stay of recovery should be filed. If appeal is
filed but stay application is not filed, appeal may be dismissed without hearing-
Duty demanded includes, duty payable as per sec 3, duty collected from buyer as per sec 11 D,
duty erroneously refunded, amount payable as per cenvat credit rules and interest payable
under act or rules.
DepurtmentuI uppeuI
Departmental appeal should be in form EA-2 in duplicate (form CA-2 in case of Customs), with
two copies of decision or order passed by adjudicating authority and a copy of order passed by
Commissioner of CE directing the authority to apply to Commissioner (Appeals). The time limit
for this appeal is one month.
Affiing Court fee stumps
In case of appeal to Commissioner (Appeals), the memorandum of appeal should bear court fee
stamp of 50 Ps, while appeal to CESTAT should bear court fee stamp of Rs 2/-.
Order thut cun be pussed
The Commissioner (Appeals) shall, after making such further enquiry as may be necessary, pass
such order, as he thinks just and proper, confirming, modifying or annulling the decision or
order appealed against. [Section 35A(3) of Central Excise Act parallel section 128(3) of
Customs Act
Order of Commissioner {AppeuIs}
The order should be in writing, shall state all points for determination, give decision and
reasons for the same [section 35A (4)]. Copy of the order should be communicated to (i)
Appellant (ii) the adjudicating authority against whose order the appeal was filed and (iii)
Commissioner.
Pevision by CentruI Sovernment
In some cases appeal does not lie with CESTAT. In such cases, a revision application has to be
made with Central Government. [An officer of the rank of Joint Secretary hears the issue and
passes orders on behalf of Central Government].
AppeuI uguinst order of Commissioner or Commissioner {AppeuIs} lies with Tribunal against all
orders, ecept
(a) Loss of goods occurring in transit from factory to warehouse or to another factory
(b) Rebate of duty on goods exported outside India or excisable goods used in manufacture of
goods which are exported and
(c) Goods exported without payment of duty.
In the aforesaid matters, Tribunal has no jurisdiction, but revision application can be filed with
Central Government under section 35EE of CEA within three months. Central Government can
annul or modify the order. In all other matters, appeal lies with Tribunal. , Assessee or the
Commissioner of CE can file revision application.
In cuse of Customs CESTAT hus no gurisdiction in the mutters of
(o) baggage
(b) payment of duty drawback and
(c) Goods short landed in India. In these matters, revision application lies with Central
Government [section 129DD of Customs Act].
Time Iimit for fiIing uppIicution
Revision application must be filed in 3 months from communication of the order. This period can
be further extended by three months on sufficient cause being shown. - .
Pevision uppIicution by Commissioner
Application for revision can also be made by Commissioner of Central Excise, if he is of the
opinion that order of Commissioner (Appeals) is not proper. No fees are payable along with such
an application. No time limit has been prescribed for filing the application.
Mo provision of uppeuI uguinst revision order
There is no provision of appeal against decision of Central Government in such revision
applications (The only remedy is writ petition to High Court or SLP in Supreme Court).
AppeuI to TribunuI {CESTAT}
Tribunal is a quosi-judicioI body. This Tribunal hears appeals against orders of Commissioner as
adjudicating authority and Commissioner (Appeals). Tribunal orders are binding on lower
authorities. Tribunal is final fact finding authority. Finding of facts arrived at by Tribunal
cannot be upset by higher authority unless found to be based on no evidence or irrelevant
evidence or incorrect principles. Tribunal is creature of Statute and cannot traverse beyond
provisions of Statute.
Constitution of CESTAT
Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has been formed under section
129 of Customs Act. The Tribunal is empowered to hear appeals in cases of Customs, Excise and
Service Tax. CESTAT was known as CEGAT upto 14-5-2003]. The Tribunal consists of Judicial
Members and Technical members, which give the Tribunal a balanced overall view of legal
background and practical implementation of law.
enches of TribunuI - Tribunal sits in benches. The benches may be single member bench
and larger benches etc. Work among various benches will be allotted by President or in his
absence senior most Vice President by special or general order.
Procedure for AppeuI to CESTAT
Some procedures are prescribed in Central Excise Rules. Besides, Tribunal is empowered to
regulate its own procedure vide section 129 C(6) of Customs Act, which has been made
applicable to Excise Act. These procedures must be within the provisions of Act and Rules of
Central Excise. Under these powers, Tribunal has framed CESTAT (Procedure) Rules, 1982
FiIing of uppeuI - Appeal / application / cross objection should be filed within prescribed
period. In case of appeals, the period is three months from date of receipt of order to be
appealed against. In case of departmental appeal time limit is one month. Appeal / application /
cross objection can be personally presented to Registrar of Tribunal or sent by registered post.
Fees puyubIe for uppeuI - a fee must accompany the appeal. No fee is payable if appeal is
filed by department.
Affiing Court fee stumps - Court fee stamp of Rs 2/- is required to be affixed on
memorandum of appeal and 50 Ps on copy of order appealed against. However, non-affixing court
fee stamp is a curable defect.
Stuy uppIicutions und its immediute heuring - Application for stay of requirement of
making deposit of any duty or penalty shall be presented in triplicate. Contents of application
for stay must be supported by a verification regarding their correctness. The Bench may, in a
particular case, direct the filing of affidavit by the applicant/respondent. [Rule 28A (4) of
CESTAT Rules].
AppeuI in prescribed form - Appeal should be in prescribed form No. EA 3 (CA-3 in case of
Customs) in quadruplicate with copy of order appealed against also in quadruplicate.
Departmental appeal should be in form EA-5 (CA-5 in case of Customs) in quadruplicate with
equal number of copies of order appealed against and copy of order of CBE&C (Board) directing
Commissioner to file appeal to CESTAT. Rule 7(1) of Central Excise (Appeals) Rules [earlier
Rule 217].
One of the copies of order should be a certified copy. The appeal can be in triplicate if it is to
be heard by a single member bench. Further, if appeal is to be heard by larger bench, additional
copies have to be supplied
The prescribed form asks for details like name, address, details of order appealed against,
whether duty demanded has been deposited etc. Grounds of appeal, statement of facts and
reliefs claimed are also to be given. Grounds of appeal should be concise and without argument
or narrative and should be numbered consecutively.
Documents to be uttuched with AppeuI
The appeal must be accompanied by (a) Copies of order appealed against - one of the copies
must be a certified copy (b) Copies of original order appealed against, if appeal to CESTAT is a
second appeal - one copy must be a certified copy. [CESTAT Procedure Rule 9(1).]
Srounds of AppeuI - Applicant is expected to mention all grounds of appeal in the appeal
memorandum. A ground not mentioned in grounds of appeal can be accepted only with permission
of Tribunal.
Puper ook - A Paper Book containing copies of documents, statement of witnesses and other
papers on which appellant wants to rely at the hearing of appeal should be filed.
AIIocution of work - AppeIIunt und respondent - In appeal filed by person other than
Commissioner, Commissioner shall be respondent, while in case of appeal by Commissioner, other
party shall be respondent.
Inherent Powers of TribunuI
Srunting stuy for recovery of duty
Tribunal can grant stay for recovery of duty and penalty pending appeal -.
PecuII of order pussed e purte
Tribunal can recall an order passed ex porfe, if sufficient cause is shown for absence of the
party -
PecuII if deposit of duty us ordered puid Iute - Tribunal can dismiss appeal if duty is not
deposited. If assessee deposits duty though late, Tribunal can recall and restore order of
dismissal of appeal.
PecuII if gIuring mistuke - order was recalled when it was found that a different issue was
decided and issue in appeal was not decided in final order at all.
TribunuI cun quush its own order
Tribunal can recall and quash its own order in exceptional cases where it is shown that it was
obtained by fraud or palpable mistake or was made in utter disregard of statutory provision.
Correct un error so thut gustice is done
Tribunal can review on merits where the error is apparent on the face of record. It was held
that inadvertent error committed by Tribunal can be corrected.
Tribunal can recall an order to correct any error committed by itself so that justice is done to
assessee and the revenue. Tribunal can also recall its order if there has been a mistake of the
court prejudicing the party.
Limitutions on inherent powers
Tribunal cannot use its inherent powers when (a) Alternate remedy is available (b) If the order
can be appealed against (c) If the power would conflict with any specific provision of law which
prohibits such a remedy. However, it can exercise power if (a) Non-exercise of power may
result in abuse of the process of court (b) Non-exercise of power may result in failure of
justice.
TribunuI is FinuI fuct finding uuthority
Tribunal is the final fact finding authority. High Court cannot go behind the facts found by
Tribunal
Pectificution of mistukes
Tribunal has no powers to review its orders. -. However, Tribunal can pass order for rectifying a
mistake apparent from the records, within six months of passing of order. - Section 35C(2) of
CEA - similar section 129B(2) of Customs Act. The mistake can be corrected only if it is
apparent from records. The error could be of fact or an error in law
Limitutions of TribunuI
Tribunal has no inherent powers to review its order
Tribunal has to presume and accept legal validity of provisions of Central Excise Act and Rules.
The Tribunal is created by Statute and cannot challenge validity of any provision of the statute
itself. Tribunal cannot declare a provision of Statute as uIfro vires
Tribunal is not empowered to issue writs.
Tribunal is not a Court, though it has been granted various powers. A Tribunal is a Tribunal and
though exercises judicial powers; it cannot be equated to a court -
Tribunal is bound by judgments of High Court (and of course Supreme Court). In case of
conflicting decisions of High Courts, decision of High Court in which the appellant is situated
should be followed.
AppeuI to High Court
AppeuI to High Court on substuntiuI question of Iuw
Tribunal is final fact finding authority. However, if there is a substantial question of law arising
out of order of Tribunal (in cases other than relating to rate of duty and valuation); an appeal
can be made to High Court within 180 days. [Section 35G(1) of CEA] - parallel section 130(1) of
Customs Act] - In case of question relating to rate of duty and valuation, appeal lies with
Supreme Court.
The appeal can be made either by the Commissioner of CE/Customs or the other party. If other
party makes the appeal, the application should be accompanied by prescribed fee. The
memorandum of appeal shall clearly state the substantial question of law involved. [Section 35
G(2)(c) of CEA - parallel section 130(2)(c) of Customs Act]. Appeal to High Court can be made
against interim orders of Tribunal.
Heuring of uppeuI
High Court bench of at least two judges will hear the appeal. [Section 35G(7) of CEA parallel
section 130(7) of Customs Act]. Decision will be by majority. If the judges are equally divided
on the issue, matter will be referred to third judge. He will hear only on the point on which the
judges were differing. Majority, including those who had first heard the appeal, will then decide
the point. [Section 35G(8) of CEA - parallel section 130(8) of Customs Act]. Provisions of Code
of Civil Procedure relating to High Court will apply in case of such appeals.
AppeuI to Supreme Court
Appeal to Supreme Court can be made in following cases:
Judgment of High Court in appeal, if High Court certifies it to be a fit case for appeal to
Supreme Court
Order of Appellate Tribunal where it relates to question relating to rate of duty excise or
value for purpose of duty.
By Special Leave Petition (SLP) under Article 136 of Constitution i.e. permission of Supreme
Court, even in cases where High Court does not certify it to be a fit case for appeal to Supreme
Court.
Such appeal should be presented within 60 days from the date the order is communicated.
Appeal should be with seven extra sets and should recite all relevant facts and set forth
objections to the order and ground of appeal. An authenticated copy of order appealed against
should be attached. These are 'civil appeals'. Supreme Court passes orders after hearing
appeals.
SettIement Commission
Constitution of SettIement Commission
Settlement Commission has been constituted in June, 1999; The Commission consists of
Chairman, Vice Chairmen and members, functioning under Department of Revenue, Ministry of
Finance. The Chairman, Vice-Chairmen and other members of the Settlement Commission shall
be appointed from amongst persons of integrity and outstanding ability, having special
knowledge of, and experience in, administration of Customs and Central Excise laws.
The powers and authority of the Settlement Commission will be exercised by a principal Bench
sitting at Delhi and such additional Benches established by the Central Government at the
places as it considers necessary. Settlement Commission deals with Customs and Central Excise
matters. The purpose of constitution of settlement commission is for speedy completion of
assessments and settlement of pending cases at the earliest.
Conditions to be fuIfiIIed for muking un uppIicution
Assessee can make an application to settlement commission only when the case is
pending before the adjudicating authority as on the date of application. It can only be
approached when original adjudication is pending.
The assessee shall be eligible to file an application only in respect of the goods for
which he admits short levy on account of misclassification, undervaluation, and
inapplicability of exemption notification or CENVAT credit
the applicant has filed returns showing production, clearance and central excise duty
paid in the prescribed manner;
a show cause notice for recovery of duty issued by the Central Excise Officer has been
received by the applicant;
The additional amount of duty accepted by the applicant in his application exceeds Rs. 3
lakhs (before 01.06.2007 Rs.2 lakhs).
The applicant shall deposit the additional amount of excise duty accepted by him along
with interest due under section 11AB at the time of fiIing of applications
Where any excisable goods, books of account, other documents have been seized the
assessee entitled to make an application only after the expiry of 180 days from the date
of the seizure.
In respect of an application filed before 1st June, 2007, but pending issuance of an
order by the Commission, the applicant shall pay the accepted duty by 30th June, 2007,
failing which the application shall be rejected.
Once application is made to SC it cannot be withdrawn.
AppIicution to SettIement Commission cunnot be mude
Settlement Commission cunnot be approached when an appeal is pending before a
central excise officer or Central Government.
It can also not be approached when the matter is remanded for further adjudication.
Application for settlement cannot be made in respect of duty arise because of proper
records are not maintained in daily stock register or where there is clandestine removal
of goods
Procedure of SettIement Commission [Mew section 3ZFj
Assessee should make application giving full disclosures along with all relevant
documents should be submitted in quintuplicate in prescribed application along with
prescribed fees.
After receipt of application Settlement Commission shall issue a notice to the applicant
within 7 days from the date of receipt of the application, asking the reason why
application should be allowed
Settlement commission will take into consideration the explanation provided by the
applicant.
Settlement Commission shall, within a period of 14 days from the date of the notice to
assessee shall pass an order for allowing or rejecting the application.
Where no notice has been issued or no order has been passed within the aforesaid
period by the Settlement Commission, the application shall be deemed to have been
allowed.
In case of rejection of application, the proceedings before the Settlement Commission
shall abate on the date of rejection.
A copy of accepting /rejecting order shall be sent by settlement Commission to the
applicant and to the Commissioner of Central Excise having jurisdiction.
Settlement Commission shall, within 7 days from the date of acceptance order shall, call
for a report along with the relevant records from the Commissioner of Central Excise
having jurisdiction.
The Commissioner shall furnish the report within a period of 30 days from the date of
the receipt of communication from the Settlement Commission.
Where the Commissioner does not furnish the report within the aforesaid period of 30
days, the Settlement Commission shall proceed further in the matter without the report
of the Commissioner.
Settlement Commission is of the opinion that any further enquiry or investigation in the
matter is necessary and it may direct, the Commissioner (Investigation) within 15 days
of the receipt of the report, to make such further enquiry or investigation
The Commissioner (Investigation) should furnish the report of such enquiry within a
period of 90 days from the date of the receipt of the communication from the
Settlement Commission.
Where the Commissioner (Investigation) does not furnish the report within the
aforesaid period, the Settlement Commission shall proceed to pass an order without
such report.
The Settlement Commission may pass such order as it thinks fit on the matters covered
by the application and on the matters not covered by application as per report of
commissioner.
An opportunity of being heard either in person or through a representative duly
authorised in this behalf shall be given to the applicant and to the Commissioner of
Central Excise having jurisdiction before passing of such order
Time Limit for pussing order for SettIement commission
In respect of application received before 01.06.2007 order should be passed by
29.02.2008
In respect of application received on or after 01.06.2007, with in 9 months from the
last day of the month which application was made.
Consequences if SC not pussed order with in Time Iimit
The proceedings of SC shall abate.
The adjudicating authority under which the case is pending shall proceed, as if no
application is made to SC.
Order of SettIement Commissions
The amount of settlement ordered by the Settlement Commission shall not be less than
the duty liability admitted by the applicant
In case of rejection of application, the order shall contain the reasons therefor.
The order shall also provide that the settlement shall be void if it is subsequently found
by the Settlement Commission that it has been obtained by fraud or misrepresentation
of facts.
Where the order of Settlement is void, The Central Excise Officer complete such
proceedings at any time before the expiry of 2 years from the date of the receipt of
communication that the settlement became void
Assesse shouId puy the umount
The duty, interest, fine and penalty payable as per SC order shall be paid by the
assessee within 30 days of receipt of a copy of the order by him.
If the assessee fails to pay the amount which remains unpaid shall be recovered along
with interest due thereon, as per sec 11 of CE Act.
Powers of SettIement Commission
Settlement Commission has all powers of a Central Excise/Customs Officer.
It can attach property of applicant during pendency of proceedings, in the interest of
revenue.
It can regulate its own procedure and decide places where the bench will sit.
The proceedings before the Commission are judicial proceedings.
Every order of settlement is conclusive as to the matters covered by the order.
Sc has powers to grant immunity from prosecution penalty for an offence under Central
excise and Customs Act
SC has power to withdraw the immunity granted, if the payment is not made as per order,
SC has power to send back case to CEO if assessee not cooperated during proceedings,
SettIement Commission hus no power
To grant immunity from prosecution or offence under Indian Penal Code any other
Central Act
To grant immunity from payment of interest under Central excise and Customs Act.
To reopen completed Proceeding of Assessment in respect of cases where application
made on or after 01.06.2007.
To grant extension of time to pay the final sum specified in the settlement order.
AppIicution for settIement permissibIe onIy once during the Iifetime of the
ussessee
In respect of application made before 01.06.2007, Assessee cannot make subsequent application
when
Where the settlement commission imposed penalty in the order for concealment of duty
liability
After the Order Assessee convicted an offence under the Excise and customs Act
When case referred back to CEO due to non co-operation of assessee
In respect of application made on or ufter 01,0,Z007 and if application was allowed. assessee
cannot make subsequent application to settlement commission. He can make subsequent
application only in respect of cases involving identical recurring issue, provided his earlier
application is pending before the Settlement Commission.
AppeuI uguinst order of SettIement Commission
There is no specific provision for appeal against order of Settlement Commission; however writ
can be filed in High Court.
Authority for Advunce PuIing Sec Z3 A to Z3 H
Advance Ruling means determination of a question of law or fact specified in the application
submitted by applicant regarding the liability to pay duty in relation to activity (of
manufacture/production/import/export) proposed to be undertaken by the applicant.
Advance ruling brings certainty in determining duty/Service tax liability and it helps in avoiding
long drawn and expensive litigation at a later date.
Constitution of the Authority
The Central Government shall, by notification in the Official Gazette, constitute an Authority
for giving advance rulings, to be called as the Authority for Advance Rulings for Central
Excise, Customs and Service Tax.
The Authority shall consist of the following Members appointed by the Central Government,
namely:
A Chairperson, who is a retired Judge of the Supreme Court/High Court
An officer of the Indian Customs and Central Excise Service who is qualified to be a
Member of the Board;
An officer of the Indian Legal Service who is, or is qualified to be, an Additional
Secretary to the Government of India.
Who cun uppIy to the uuthority
Non-resident setting up a joint venture in India in collaboration with a non-resident or a
resident
A resident setting up a joint venture in India in collaboration with a non-resident or
A wholly owned subsidiary Indian company, of which the holding company is a foreign
company, where such holding company is undertake joint venture in India
A Public sector Indian Company
Joint venture in India means a contractual arrangement whereby two or more persons
undertake an economic activity which is subject to joint control and one or more of the
participants or partners or equity holders are a non-resident having substantial interest in such
arrangement. Thus, now in case of joint venture an application for advance ruling can be made
only when one of the partners is non-resident.
Application can be made in respect of activity of production or manufacture (in case of Central
Excise) or import and export (in case of customs) or liability to pay service tax in relation to
service provided or proposed to be provided (in case of service tax). Such person is called
applicant
AppIicution for Advunce ruIing
The uppIicution in the question cun be in respect of -
classification of goods (or services in case of service tax)
applicability of an exemption notification
principles to determine value of goods for purpose of assessment
notifications issued in respect of excise duty payable under CEA, CETA or any other law
where duty is chargeable in same manner as duty of excise or customs duty payable
under Customs Tariff Act or
Admissibility of Cenvat Credit (service tax credit in respect of service tax).
Whether a good is excisable goods or not or whether the process amounts to
manufacture or not?
The application shall be made in quadruplicate and be accompanied by prescribed fees.
An applicant may withdraw his application within thirty days from the date of the application.
Procedure on Peceipt of AppIicution
Authority send a copy thereof to be forwarded to the Commissioner and, if necessary,
call upon him to furnish the relevant records:
Authority may admit or reject the application.
Authority may reject the application if the case is already pending before appellate
authority or court. Or court /Tribunal already decided the case.
If application is admitted, authority will examine the material submitted by applicant or
obtained by authority.
On a request received from the applicant, personal hearing will be entertained.
Authority will then pronounce its advance ruling within 90 days of receipt of application.
Copy of the order, signed by members of Authority, will be sent to the party and
Commissioner.
AppIicubiIity of Advunce PuIing
The advance ruling will be applicable and binding only
On the applicant who had sought it;
In respect of any matter referred to it
On the Commissioner and authorities subordinate to him, in respect of the applicant.
Advance ruling not applicable if law changes.
Advunce ruIing to be void in certuin circumstunces,
If authority finds that the advance ruling was obtained by fraud or misrepresentation of facts,
the authority can declare the ruling as void ob inifio.
Powers of Authority
The authority will have powers of discovery and inspection, enforcing attendance of any person
and examining him on oath, issuing commissions and compelling production of books. The
Authority shall be deemed to be civil court and every proceeding before authority will be a
judicial proceeding. Procedures for authority will be determined by Authority itself.
End of CentruI Ecise
Indirect tues Customs SimpIified

M Pugu Sekhur Churtered Accountunt Chennui emuiI rugdhostyuhoo,com 2-1
Chupter Z Customs
Customs usics
Cusfoms dufy is on indirecf fox ond if is Ievied on imporf info Indio ond exporf ouf of
Indio os per enfry Iisf Mo. 83 Lisf I of Indion Consfifufion.
Customs is governed by
Cusfoms Acf
Cusfoms Toriff Acf
Cusfoms PuIes
Cusfoms Mofificofions ond CircuIors ond
Cusfoms MonuoI.
Purpose of Customs Act 19Z is
fo PeguIofe imporfs ond exporfs
fo Profecf Indion indusfry from dumping
To coIIecf revenue of cusfoms dufy.
Customs Turiff Act 197
Consisfs of Two scheduIes
ScheduIe I gives cIossificofion ond rofe of dufies for imporfs
ScheduIe Z gives cIossificofion ond rofes of dufies for exporfs.
In oddifion fhe CTA mokes cerfoin provisions for Ievy of dufies Iike oddifionoI dufy
(CVD) preferenfioI dufy onfi-dumping dufy profecfive dufies efc.
PuIes under Customs Act -
Secfion Ibo of Cusfoms Acf I9oZ provides C.0 hos been empowered fo moke ruIes
consisfenf wifh provisions of fhe Acf fo corry ouf fhe purposes of fhe Acf.
Mugor ruIes umong those ure
Cusfoms VoIuofion PuIes I988:
Cusfoms ond CenfroI Excise Dufies Drowbock PuIes I99b:
8oggoge PuIes I998:
PeguIofions under Cusfoms Acf -
Secfion Ib7 of Cusfoms Acf I9oZ provides 8oord (C8E&C) hos been empowered fo
moke reguIofions
Mugor PeguIutions umong these ure:
Projecf Imporf PeguIofions I98o:
Cusfoms House Agenfs Licensing PeguIofions I984:
Imporf exporf fhorough courier reguIofions
Customs MunuuI Z001
The MonuoI gives on overview of Cusfoms Low ond Procedures.
Insfrucfions in MonuoI shouId be foIIowed.
PubIic Motices
Commissioners of Cusfoms issue PubIic Mofices.
PubIic nofices for IocoI requiremenfs ore oIso issued.
Motificutions under Customs Act
CenfroI 0overnmenf hos gof power fo issue nofificofions. ExompIe
Secfion Zb(I) fo gronf porfioI or fuII exempfion from dufy
Secfion II fo prohibif imporf or exporf of goods.
ourd CircuIurs-
C8E&C is empowered u/s IbIA of cusfoms Acf fo issue circuIors C8E&C issues
circuIors giving vorious insfrucfions / prescribing vorious procedures efc.
These insfrucfions shouId be foIIowed.
SimiIurities in ecise und customs
8ofh ore cenfroI Acfs Derive from fhe consfifufion
8ofh ore fhe perform under C 8 E C
Orgoni;ofionoI hierorchy is some from fop fo AC/DC
8ofh foriffs ore bosed on HSM ond CIossificofion ruIes ore some.
PrincipIe of defermining AssessobIe voIue (Tronsocfion voIue) ore some
Provisions of Pefunds demond exempfion from dufy seorch confiscofion oufhorify
for odvonce ruIing seffIemenf commission AppeoIs ore some
Eport: section Z{1}
Toking ouf of Indio fo o pIoce oufside Indio.
Import: section Z{Z3}
8ringing info Indio from o pIoce oufside Indio.
Indiu: Section Z{Z7}
Indio os incIusive of ferriforioI wofers.
TerritoriuI Wuters of Indiu
A porfion of seo which is odjocenf fo fhe shores of o counfry IZ nouficoI miIes from
fhe bose Iine. (I nouficoI miIe ~ I.8b3 kms)
Imporf is compIefe os soon os goods enfer ferriforioI wofer. SimiIorIy exporf is
compIefe onIy when goods cross ferriforioI wofers.
Indiun Customs Wuters
Areo beyond IZ nouficoI miIes ond up fo Z4 nouficoI miIes from bose Iine of Indio'.
The C 0 hos gof powers fo foke meosures in fhis oreo for securify of Indio ond
immigrofion
Significunce und importunce of 'Indiun Customs Wuters'
Cusfoms officer hos power fo orresf o person in Indio or wifhin Indion cusfoms wofers.
To sfop ond seorch ony vesseI in Indio or wifhin fhe Indion Cusfoms wofers.
If such vesseI does nof sfop if con be/confiscofed/ fired upon.
EcIusive economic zone'
Areo exfends fo Z00 nouficoI miIes from fhe bose Iine.
In fhis ;one fhe coosfoI Sfofe hos excIusive righfs fo expIoif if for economic purposes
Iike consfrucfing orfificioI isIonds (for oiI expIorofion power generofion efc.)
fishing mineroI resources ond scienfific reseorch
8eyond Z00 nouficoI miIes fhe oreo is 'High Seos where oII counfries hove equoI
righfs.
These high seos ore reserved for peocefuI purposes.
Soods' Sec Z{ZZ}
'Soods' incIudes
vesseIs
oircroffs
vehicIes
Sfores
boggoge
currency
negofiobIe insfrumenfs ond
Any ofher kind of movobIe properfy.
The dufy is poyobIe on goods beIonging fo governmenf oIso
Imported Soods - Section Z{Z}
ony goods broughf in Indio from o pIoce oufside Indio
And does nof incIude goods which hove been cIeored for home consumpfion.
Eport Soods -Sec Z{19}
Any goods which ore fo be foken ouf of Indio fo o pIoce oufside Indio. &
0oods broughf neor cusfoms oreo for exporf purpose.
DutiubIe Soods - Section Z{14}
Any goods which ore chorgeobIe fo dufy ond on which dufy hos nof been poid.
0oods confinue fo be dufiobIe fiII fhey ore nof cIeored from fhe porf.
Once goods ore ossessed of MiI rofe of dufy fhey no more remoin dufiobIe goods.
Foreign-going vesseI or uircruft
VesseI/Aircroff engoged in fhe corrioge of goods or possengers befween ony porf or
oirporf in Indio ond oufside Indio whefher fouching ony infermediofe porf or oirporf
in Indio or nof ond incIudes
Any novoI vesseI of o foreign 0overnmenf foking porf in ony novoI exercises,
Any vesseI engoged in fishing/ ofher operofions oufside fhe ferriforioI wofers of Indio,
Any vesseI or oircroff proceeding fo o pIoce oufside Indio for ony purpose whofsoever,
Muture of Customs Duty und tuubIe event
Churging section Sec,1Z
Dufies of cusfoms shoII be Ievied of such rofes os moy be specified under 'The Cusfoms
Toriff Acf I97b on goods imporfed info or exporfed from Indio.
Thus 0oods become IiobIe fo imporf dufy or exporf dufy when fhere is 'imporf info or
exporf from Indio.
TuubIe event for imports
Imporf is compIefed onIy when goods cross fhe cusfoms borrier.
The foxobIe evenf is fhe doy of crossing of cusfoms borrier
The dofe when goods Ionded in Indio or hod enfered ferriforioI wofers is nof reIevonf
for foxobiIify
The foxobIe evenf is reoched of fhe fime when fhe goods reoch cusfoms borrier ond
biII of enfry for home consumpfion is fiIed.
This view wos heId in kiron Spinning MiIIs v. CC I999 (SC) / 0orden SiIk MiIIs Lfd. v.
UOI I999 (SC)
TuubIe event for eports
exporf commences when goods cross cusfoms borrier
exporf is compIefed onIy when if crosses ferriforioI wofers
ToxobIe evenf occurs onIy when goods cross ferriforioI wofers.
TuubIe event in cuse of wure house goods
In cose of worehoused goods fhe goods confinue fo be in cusfoms bond.
Imporf fokes pIoce onIy when goods ore cIeored from fhe worehouse.
Where if wos heId fhof foxobIe evenf occurs when goods cross cusfoms borrier ond nof
when goods Iond in Indio or enfer ferriforioI wofers.
Types of Customs Duty
usic Customs Duty
Levied under secfion IZ of Cusfoms Acf
Levied os o percenfoge of VoIue os defermined under secfion I4(I).
The rofes vory for differenf ifems ex b7 IZ.b7 Ib7 Zb7 ond 307
MormoI rofe (peok rofe) I07
AdditionuI Customs Duty {CVD} Sec 3{1}
AIso CoIIed 'CounfervoiIing Dufy (CVD).
Dufy is equoI fo excise dufy Ievied on o Iike producf monufocfured or produced in Indio.
If Iike orficIe is nof produced or monufocfured in Indio fhe excise dufy fhof wouId be
IeviobIe on fhof orficIe hod if been produced in Indio is fhe bose.
If fhe producf is IeviobIe wifh differenf rofes fhen highesf rofe omong fhose rofes is
fo be considered.
In fhe cose of on orficIe imporfed info Indio where fhe CenfroI 0overnmenf hos fixed
o foriff voIue for fhe Iike orficIe produced or monufocfured in Indio under secfion 3(Z)
of fhe CenfroI Excise Acf I944 fhe voIue of fhe imporfed orficIe shoII be deemed fo
be such foriff voIue. Finonce Acf Z009 (Effecfive from I9.08.Z009)
The dufy is IeviobIe on VoIue of goods pIus bosic cusfoms dufy ond MCCD poyobIe.
CVD PoyobIe of effecfive rofe of Excise dufy
CVD poyobIe even if simiIor goods nof produced in Indio
AdditionuI Customs duty u/s 3{3} C V D
To counfer 8oIonce excise dufy on row moferioI componenfs efc
Affer exfension of cenvof on inpufs fhere is no need fo counfer boIonce dufy on inpufs
CuIcuIution of CVD
CVD is poyobIe on Av+8osic Cusfoms Dufy+MCCD
ScheduIe I
Pofes for Imporf 0oods
ScheduIe II
Pofes for Exporf goods
Secfion 3(b) fo
Counfer 8oIonce
SoIes Tox Vof efc
Mox rofe 47 on
The VoIue of
ArficIes
Secfion 3(I) & 3(3) of
Cufo -Counfer 8oIonce
Excise On Imporf of
excisobIe goods (PM ond
F0)
Dufy fo Counfer
8oIonce
Excise dufy/SoIes fox
/Vof
Types of Customs duties
AddifionoI Cusfoms Dufy
(CounfervoiIing Dufy
8osic Cusfoms Dufy
MofionoI CoIomify
Confingenf
Dufy
Av wiII be os per Cusfoms Acf/ruIes
In cose of Where Excise poyobIe on MPP Av wiII be MPP Iess obofemenf
When goods ore subjecf fo differenf excise dufies CVD is oIso poyobIe for oII fhe
corresponding dufies.
EumpIe on CuIcuIution of CVD und Educution Cess
Mode of coIcuIofion of educofion cess hos been iIIusfrofed in Minisfry of Finonce Ieffer
Mo. D.O.F. 34/3/Z004-TPU dofed 8-7-Z004 os foIIows -
Assuming fhof voIue of on ifem is Ps. I000 cusfoms dufy is Z07 sond excise dufy (CVD)
is Io7 fhe coIcuIofion wiII be os foIIows - The dufy wiII be worked ouf os under:
(A) AssessobIe VoIue Ps. I000.00
(8) Cusfoms Dufy Z07 Ps. Z00.00
(C) Sub-TofoI for coIcuIofing CVD (A+8) Ps. IZ00.00
(D) CVD Io.48 7 of Ps IZ00 (Io7+37 E.Cess) Ps. I97.7o
(E) Sub-TofoI for coIcuIofing Cess (8+D) Ps. 397.7o
(F) Educofion Cess 37 of Ps 397.7o Ps II.94
However whiIe coIcuIofing CVD foIIowing dufies ore nof fo be considered - ^ SpecioI
AddifionoI Dufy poyobIe u/s 3A of Cusfoms Toriff Acf ^ Sofeguord dufy u/ss 88 ond 8C
of Cusfoms Toriff Acf ^ CounfervoiIing dufy if ony u/s 9 of Cusfoms Toriff Acf ^ Anfi-
dumping dufy poyobIe u/s 9A of Cusfoms Toriff Acf ^ CVD ifseIf which is poyobIe u/s
3(I). [Secfion 3(Z) of Cusfoms Toriff Acf].
CountervuiIing duty u/s 3{} of Customs turiff Act
If is dufy Ievied on imporfs fo counfer boIonce soIes fox ond vof in Indio
Moximum rofe IeviobIe is 47 on fhe fofoI voIue of orficIe
TofoI voIue incIudes CIF price pIus oII cusfoms dufy excIuding dufies fo profecf
Indion Indusfry.
MCCD of customs
Dufy imposed vide secfion IZ9 of Finonce Acf Z00I
This dufy is imposed on pon mosoIo chewing fobocco ond cigoreffes. PoIyesfer yorn
If vories from I7 fo 4b7. -
EumpIes
I7 wos imposed on PFY mofor cors muIfi ufiIify vehicIes ond fwo wheeIers
Ps b0 per fon on domesfic crude oiI
Eport duty -
Levied onIy on few producfs
Af presenf Exporf Dufy is Ievied onIy on
hides skins ond Ieofher
Snoke skins hides ond fur Iomb skins.
There is no exporf dufy on ony ofher producf.
Educution Cess
Z7 educofion cess ond I7 higher secondory educofion cess fofoI 37 on oII dufies wiII be
Ievied by governmenf ond shouId be poyobIe.
A secondory ond higher educofion cess I7 hos been imposed on imporfed goods. The
Proceeds from fhis cess wiII be ufiIi;ed fo finonce secondory ond higher educofion. If
shoII be chorgeobIe on fhe oggregofe dufies of cusfoms. However foIIowing dufies shoII
be excIuded for compufing fhis cess:-
(o) The oddifionoI dufy IeviobIe under secfion 3(b) of fhe Cusfoms Toriff Acf I97b,
Duties to Protect Indiun
Industry
Profecfive dufy
Sec o of CUTA
Sofe 0uord Dufy
Sec 88 of CUTA
C V D on
Subsidi;ed
ArficIes
Sec 9 of
CUTA
Anfi dumping
Dufy
Sec 9 A of
CUTA
(b) The sofeguord dufy referred fo in secfions 88 ond 8C of fhe Cusfoms Toriff Acf
I97b,
(c) The counfervoiIing dufy & onfi-dumping dufy IeviobIe under secfion 9 & 9 A of fhe
Cusfoms Toriff Acf I97b,
Import duties to protect Indiun Industry
Protective Duties Section CUTA
If C 0 is sofisfied fhof immediofe ocfion is necessory fo profecf inferesfs of Indion
indusfry,
Pofe of dufy is os per recommendofion of Toriff Commission
Mofificofion for Ievy shouId be infroduced in PorIiomenf
If PorIiomenf nof in session infroduced in nexf session by woy of o 8iII.
Mofificofion shouId Poss in porIiomenf wifh in o monfhs
If nof possed fhe nofificofion ceoses fo hove force buf ocfion oIreody foken remoins
voIid.
The profecfive dufy wiII be voIid fiII fhe dofe prescribed in fhe nofificofion.
The profecfive dufy con be rescinded reduced or increosed by o nofificofion.
Such nofificofion shouId oIso be pIoced before PorIiomenf for opprovoI in nexf session.
Sufeguurd duty Section of CUTA
Circumstunces to Impose
When fhe goods ore being imporfed in Iorge quonfifies
Thof fhey ore cousing or fhreofening fo couse serious injury fo domesfic indusfry.
Procedure for Levy
C0 is empowered fo impose sofeguord dufy on specified imporfed goods
Such dufy is permissibIe under WTO ogreemenf.
0overnmenf hos fo conducf on enquiry ond fhen issue o nofificofion.
In cose of imporfs from deveIoping counfries such sofeguord dufy con be imposed onIy
if imporf of fhof orficIe from fhof counfry is more fhon 37 of fofoI imporfs of fhof
orficIe in Indio. so Iong os fhe oggregofe of fhe imporfs from "deveIoping counfries
eoch wifh Iess fhon 37 imporf shore" foken fogefher does nof exceed 97 of fhe fofoI
imporfs of fhof orficIe info Indio.
CenfroI 0overnmenf con impose provisionoI sofeguord dufy pending finoI deferminofion
up fo Z00 doys.
The dufy is in oddifion fo ony ofher cusfoms dufy being imposed on fhe goods. .
The dufy once imposed is voIid for four yeors unIess revoked eorIier.
This con be exfended by CenfroI 0overnmenf
TofoI period of sofeguord dufy connof be more fhon fen yeors.
Mo sofe guord dufy in cose of EOU/SEZ unIess specified in nofificofion
SpecioI provision for imporfs from Chino in simiIor Iines obove provided in secfion 8 C
C V D on subsidized goods Sec 9 of CUTA
If o counfry poys ony subsidy (direcfIy or indirecfIy) fo ifs exporfers for exporfing
goods fo Indio
C0 con impose CounfervoiIing dufy up fo fhe omounf equoI fo such subsidy
If fhe omounf of subsidy connof be oscerfoined provisionoI dufy con be Ievied
Affer finoI deferminofion difference moy be refunded.
Such imposifion shouId be by woy of o nofificofion.
Anti dumping duty Sec 9 A of CUTA
Circumstunces to impose
When Iorge monufocfurer from obrood moy exporf goods fo Indio of very Iow prices
compored fo prices in his domesfic morkef.
Such dumping moy be wifh infenfion fo crippIe domesfic indusfry or fo dispose of fheir
excess sfock.
In order fo ovoid such dumping C 0 con impose onfi-dumping dufy up fo morgin of
dumping on such orficIes
Procedure
This dufy is permissibIe os per WTO ogreemenf
Dufy con be Ievied onIy when fhere is on Indion indusfry producing Iike orficIes.
If if is o pending in deferminofion of morgin of dumping dufy con be imposed on
provisionoI bosis.
Affer dumping dufy is finoIIy defermined C 0 con reduce such dufy ond refund dufy
exfro coIIecfed fhon fhof finoIIy coIcuIofed
Morgin of dumping meons fhe difference befween normoI voIue ond exporf price
'MormoI VoIue meons comporobIe price in fhe exporfing counfry
Morgin of dumping is defermined on bosis of records concerning normoI voIue ond
exporf voIue moinfoined ond informed by fhe exporfer or producer (WEF FA Z009)
Exporf Price meons fhe price of which goods ore exporfed.
Quuntum of dumping duty
The onfi-dumping dufy wiII be dumping morgin or injury morgin whichever is Iower.
Ingury murgin' meuns
Difference befween foir seIIing price of domesfic indusfry ond Ionded cosf of imporfed
producf.
AppIicubiIity of ruIes und PeguIutions to duties under Customs turiff Act {FA
Z009 }
The ruIes reguIofions mode under cusfoms Acf wifh regord fo demond refund
ossessmenf inferesf penoIfy Offences ond AppeoIs wiII oIso oppIicobIe fo dufies Ievied
under Cusfoms foriff Acf such os sofe guord dufy profecfive dufy dufy on subsidi;ed
orficIes ond onfidumping dufy (Amended by Finonce Acf Z009 refrospecfiveIy)
Prohibition of Importution/ eportution of goods sec 11
The C 0 hos powers fo prohibif
eifher obsoIufeIy or
subjecf fo such condifions (fo be fuIfiIIed before or offer cIeoronce)
fhe imporf or exporf of goods
Of ony specified descripfion.
OfficioI go;effe shouId nofify fhe prohibifions.
Purposes where prohibition shouId be mude,
The moinfenonce of pubIic order ond sfondords of decency or moroIify,
The prevenfion of smuggIing/ Shorfoge of goods,
The conservofion of foreign exchonge ond fhe sofeguording of boIonce of poymenfs,
The prevenfion of injury fo fhe economy of fhe counfry by fhe unconfroIIed imporf or
exporf of goId or siIver,
The prevenfion of surpIus of ony ogricuIfuroI producf or fhe producf of fisheries,
The moinfenonce of sfondords for fhe cIossificofion groding or morkefing of goods in
infernofionoI frode,
The esfobIishmenf of ony indusfry,
The prevenfion of serious injury fo domesfic producfion of goods of ony descripfion
The profecfion of humon onimoI or pIonf Iife or heoIfh,
The profecfion of nofionoI freosures of orfisfic hisforic or orchoeoIogicoI voIue ,
The conservofion of exhousfibIe nofuroI resources,
The profecfion of pofenfs frodemorks ond copyrighfs,
The prevenfion of decepfive procfices,
The fuIfiIImenf of obIigofions under fhe Chorfer of fhe Unifed Mofions for fhe
moinfenonce of infernofionoI peoce ond securify,
The impIemenfofion of ony freofy ogreemenf or convenfion wifh ony counfry
The compIionce of imporfed goods wifh ony Iows which ore oppIicobIe fo simiIor goods
produced or monufocfured in Indio,
The prevenfion of disseminofion of documenfs confoining ony moffer which is IikeIy fo
prejudicioIIy offecf friendIy reIofions wifh ony foreign Sfofe or is derogofory fo
nofionoI presfige,
The prevenfion of fhe confrovenfion of ony Iow for fhe fime being in force, ond
Any ofher purpose conducive fo fhe inferesfs of fhe generoI pubIic.
Duties of Person possessing specified goods
Dufies of Person who owns possesses or confroIs specified goods fhe voIue exceeds
Ps.Ib000
Inform fhe proper officer obouf fhe porficuIors of fhe pIoce where such goods ore
kepf.
8efore ocquires infimofe fo fhe proper officer confoining goods where such goods ore
fo be sfored offer such ocquisifion:
In cose of shiff infimofe fhe pIoce fo which such goods ore proposed fo be shiffed.
Mo person shoII offer fhe expiry of seven doys from fhe specified dofe keep or sfore
ony specified goods of ony pIoce ofher fhon fhe infimofed pIoce.
Other Points
Shiffing ond fronsporf of specified goods shouId be covered by voucher
Persons possessing specified goods fo moinfoin occounfs wifh regord fo ocquisifion
usoge ond boIonce.
Difference befween record ond physicoI sfock. if ony unIess proved confrory deemed
iIIegoIIy exporfed
Person seIIing or fronsferring ony specified goods For cosh exceeding Ps. Zb00/per
doy - shouId menfion fuII oddress of buyer
Customs CIussificution
SimiIor fo fhof of excise excepf Cusfoms Toriff confoins onIy fwo scheduIes ond foriff
confoins fwo rofes of dufy vi;. sfondord rofe ond preferenfioI rofe. If no rofe is
menfioned in fhe coIumn 'Pofe for PreferenfioI Areo fhen Sfondord rofe is oppIicobIe.
Customs VuIuution
Cusfoms dufy is poyobIe os o percenfoge of 'VoIue' coIIed 'AssessobIe VoIue'
The VoIue moy be eifher
Tronsocfion VoIue' os per SecfionI4 (I) or
Toriff voIue prescribed os per I4 (Z).
Turiff VuIue Sec 14 {Z}
Toriff VoIue con be fixed by C8E&C (8oord)
0overnmenf shouId consider frend of voIue of such or Iike goods
Once T V fixed dufy is poyobIe os percenfoge of fhis voIue.
The percenfoge oppIicobIe is os per Cusfoms Toriff Acf
ExompIe for foriff voIue fixed were crude poIm oiI, P8D PoImoIein ond poIm oiI
Trunsuction vuIue us per section 14 {1}
Trunsuction vuIue Pequirements
The price ocfuoIIy poid or poyobIe for fhe goods
The price shoII be for deIivery of fhe fime ond pIoce of imporfofion or exporfofion
fhe seIIer ond fhe buyer ore nof reIofed
price is fhe soIe considerofion for fhe soIe e:
Price shouId be for deIivery ut the pIuce of importution/eportution
In cuse of import
AII expenses up fo fhe desfinofion porf incIuding freighf fronsif insuronce unIooding
ond hondIing chorges ore fo be incIuded.
In cose of exporf oII expense up fo Indion porf/oirporf fo be incIuded
Price shouId be for deIivery ut the time of importution -
Time of imporfofion meons price ruIing when fhe goods were imporfed is reIevonf.
price prevoIenf on dofe of confrocf nof reIevonf
uyer or SeIIer shouId be treuted us reIutives in the foIIowing circumstunces
They ore officers or direcfors of one onofher's businesses,
fhey ore IegoIIy recogni;ed porfners in business,
fhey ore empIoyer ond empIoyee,
ony person direcfIy or indirecfIy owns confroIs or hoIds b per cenf or more of fhe
oufsfonding vofing sfock or shores of bofh of fhem,
one of fhem direcfIy or indirecfIy confroIs fhe ofher,
bofh of fhem ore direcfIy or indirecfIy confroIIed by o fhird person,
fogefher fhey direcfIy or indirecfIy confroI o fhird person, or
They ore members of fhe some fomiIy.
Person incIudes IegoI person
Persons who ore ossociofed in fhe business of one onofher in fhof one is fhe soIe ogenf
or soIe disfribufor or soIe concessionoire howsoever described of fhe ofher shoII be
deemed fo be reIofed for fhe purpose of fhese ruIes if fhey foII wifhin fhe criferio of
fhis sub-ruIe.
Price must be the soIe considerution
M Pugu Sekhur Churtered Accountunt Chennui emuiI rugdhostyuhoo,com2-10
Price shouId be soIe considerofion for soIe.
If fhere is ofher considerofion if shouId be odded fo fhe fronsocfion voIue.
For import goods price uIso incIude
commissions ond brokeroge
engineering design work
royoIfies ond Iicence fees
cosfs of fronsporfofion fo fhe pIoce of imporfofion
Insuronce
Iooding unIooding ond hondIing chorges
The price of goods for voIuofion shoII be coIcuIofed wifh reference fo fhe rofe of
exchonge os in force on fhe dofe on which o biII of enfry is presenfed in cose of
imporfed goods ond os o shipping biII or biII of exporf
The rofe of exchonge is nofified by C8EC is fo be considered for voIuofion.
The voIuofion ruIes provide fo defermine fhe voIue if fhe obove condifions ore nof
sofisfied. For ExompIe if fhere is no soIe buyer ond seIIer ore reIofives ond when price
is nof soIe considerofion.
Customs VuIuution PuIes
Eport goods vuIuution PuIes {new ruIes comes to effect from
10,10,Z007}
Trunsuction vuIue PuIe 3
The voIues wiII fronsocfion voIue os per sec I4. The fronsocfion voIue wiII be occepfed
even buyer ond seIIer ore reIofives if fhe price is nof infIuenced
Determinution of eport vuIue by compurison, PuIe 4
If fhe voIue connof be defermined os per ruIe 3 voIue con be defermined os per PuIe 4 os
beIow.
The voIue of fhe exporf goods shoII be bosed on fhe fronsocfion voIue of goods
of Iike kind ond quoIify goods
The price of such goods shouId be of fhe some fime ond some counfry ond some
monufocfurer.
If fhe obove ore nof fuIfiIIed fhe voIue fo be defermined by proper officer os if
oppeors reosonobIe by odjusfing wifh respecf fo
Difference in fhe dofes of exporfofion
Difference in commercioI IeveIs ond quonfify IeveIs
Difference in composifion quoIify ond design befween fhe goods fo be
ossessed ond fhe goods wifh which fhey ore being compored
Difference in domesfic freighf ond insuronce chorges depending on fhe pIoce
of exporfofion.
Computed vuIue method PuIe
If fhe voIue connof be defermined os per ruIe 4 fhe voIue wiII be defermined os per ruIe
b by compufed voIue mefhod which incIude foIIowing
cosf of producfion monufocfure or processing of exporf goods,
chorges if ony for fhe design or brond,
on omounf fowords profif.
Exporf goods
Imporf goods
PesiduuI method PuIe
Where fhe voIue of fhe exporf goods connof be defermined os per ruIe 4 ond b fhe
voIue shoII be defermined wifh respecf fo generoI provisions of fhese ruIes. The IocoI
morkef of exporf goods nof onIy fhe bosis ond ofher focfors wiII be considered
DecIurution of vuIue by eporter PuIe 7
The exporfer shoII furnish o decIorofion reIofing fo fhe voIue of exporf goods in fhe
specified monner.
Pegection of decIured vuIue PuIe
When fhe proper officer hos reoson fo doubf fhe frufh or occurocy of fhe voIue
decIored for exporf goods he moy osk fhe exporfer fo furnish informofion
documenfs or ofher evidence
Affer receiving such furfher informofion or in fhe obsence of o response of
such exporfer fhe proper officer sfiII hos reosonobIe doubf obouf fhe frufh or
occurocy of fhe voIue if is deemed fhof fronsocfion voIue nof defermined
properIy.
Af fhe requesf of on exporfer fhe proper officer shouId inform in wrifing ond
shouId give reosonobIe opporfunify fo exporfer before foking finoI decision.
EpIunution to ruIe
This ruIe by ifseIf does nof provide o mefhod for deferminofion of voIue.
This ruIe provide mechonism ond procedure for rejecfion of decIored voIue in fhe
cose of doubf on frufh ond occurocy
Where fhe voIue fronsocfion voIue rejecfed under fhis ruIe voIue wiII be
defermined sequenfioIIy foIIowing PuIe 4 fo o
DecIored voIue shoII be occepfed where fhe proper officer is sofisfied obouf fhe
frufh or occurocy offer fhe soid enquiry in consuIfofion wifh fhe exporfer,
Peusons where Proper officer wiII get doubt ubout truth und uccurucy
fhe significonf voriofion in voIue of which goods of Iike kind ond quoIify exporfed
of or obouf fhe some fime in comporobIe quonfifies in o comporobIe commercioI
fronsocfion were ossessed.
The significonfIy higher voIue compored fo fhe morkef voIue of goods of Iike
kind ond quoIify of fhe fime of exporf.
The misdecIorofion of goods in poromefers such os descripfion quoIify quonfify
yeor of monufocfure or producfion.
Import goods vuIuution PuIes {new ruIes comes to effect from
10,10,Z007}
Determinution of the method of vuIuution, PuIe 3
The voIue of fhe imporfed goods is fhe fronsocfion voIue os per sec I4 odjusfed wifh fhe
cosf ond services os per ruIe I0
The trunsuction vuIue wiII be uccepted under the foIIowing conditions
fhere ore no resfricfions os fo fhe disposifion or use of fhe goods by fhe buyer
ofher fhon resfricfions which -
(i) ore imposed or required by Iow or by fhe pubIic oufhorifies in Indio, or
(ii) Iimif fhe geogrophicoI oreo in which fhe goods moy be resoId, or
(iii) do nof subsfonfioIIy offecf fhe voIue of fhe goods,
fhe soIe or price is nof subjecf fo some condifion or considerofion for which o
voIue connof be defermined in respecf of fhe goods being voIued,
no porf of fhe proceeds of ony subsequenf resoIe disposoI or use of fhe goods
by fhe buyer wiII occrue direcfIy or indirecfIy fo fhe seIIer unIess on oppropriofe
odjusfmenf con be mode in occordonce wifh fhe provisions of ruIe I0 of fhese
ruIes, ond
fhe buyer ond seIIer ore nof reIofed
IncIusions of costs und services in trunsuction vuIue PuIe 10
The foIIowing wiII be incIuded if fhe foIIowing ore nof incIuded in fhe price
Commission ond 8rokeroge poid fo IocoI ogenf in Indio
Service chorges poid fo conoIi;ing ogency: when conoIi;ing ogency mokes imporfs
goods ore soId fo Indion buyer on 'high seo soIe' bosis. Indion buyer cIeors fhe imporfed
goods. In such coses 'service chorges' poyobIe fo fhe conoIi;ing ogency fo be incIuded
Pocking cosf Iobour ond moferioI
Cosf of confoiners
VoIue of 0oods suppIied by buyer of free/concessionoI rofe
Cosf of fooIing:
If purchosed fhe cosf of fooIing if monufocfured producfion cosf
If previousIy used fhe fooIing ifs originoI cosf Iess depreciofion.
Apporfioning of Cosf of TooIs fo fhe voIue - opporfioned over fhe quonfify
produced.
Such opporfionmenf shouId be mode on bosis of documenfofion provided by
imporfer.
engineering deveIopmenf orf work design work ond pIons ond skefches underfoken
work underfoken oufside Indio necessory for fhe producfion of fhe imporfed goods,
moferioIs componenfs porfs ond simiIor ifems incorporofed in fhe imporfed goods,
The voIue of ony porf of fhe proceeds of ony subsequenf resoIe disposoI or use of fhe
imporfed goods fhof occrues direcfIy or indirecfIy fo fhe seIIer,
AII ofher poymenfs ocfuoIIy mode or fo be mode os o condifion of soIe of fhe imporfed
goods by fhe buyer fo fhe seIIer or by fhe buyer fo o fhird porfy fo sofisfy on
obIigofion of fhe seIIer fo fhe exfenf fhof such poymenfs ore nof incIuded in fhe price
ocfuoIIy poid or poyobIe.
PoyuIty und Iicense fees
PoyoIfies ond Iicense fees reIofed fo imporfed goods fhof fhe buyer is required fo poy
direcfIy or indirecfIy os o condifion of soIe of fhe goods ore nof incIuded in fhe price
The foIIowing types of royuIty not incIudubIe
PoyoIfy poymenf fo coIIoborofors un-connecfed wifh imporfed goods
chorges for fhe righf fo reproduce fhe goods in Indio
poymenfs mode by buyer (imporfer) for righf fo disfribufe or resoIe fhe imporfed
goods
Chorges for reproducfion of soffwore in Indio
Other incIusions in VuIuutions
Freighf AcfuoI if ocfuoI dofo nof ovoiIobIe Z07 of FO8
In cose of Air. ocfuoI freighf or Z07 of FO8 w e I
Insuronce ocfuoI If ocfuoI dofo nof given I.IZb7 of FO8
HondIing/Londing Chorges I7 on CIF
EcIusions from Customs vuIuution
Chorges of purchosing ogenf obrood
Cosf of durobIe ond re-usobIe confoiners if imporfer ogrees fo execufe o bond fo re-
exporf fhe confoiners wifhin six monfhs.
Chorges for consfrucfion erecfion moinfenonce insfoIIofion efc offer imporfofion of
mochinery equipmenf
Tronsporf insuronce offer imporf (fronsporf from porf/oirporf fo focfory
LocoI foxes in Indio
Demurroge chorges for Iofer cIeoronce of goods.
8onk chorges poid fo bonker for services rendered by fhem
VuIuution when import from reIutive
Where fhe buyer ond seIIer ore reIofed fhe fronsocfion voIue shoII be occepfed when
Thof fhe reIofionship did nof infIuence fhe price.
fhe imporfer demonsfrofes fhof fhe decIored voIue of fhe goods being voIued cIoseIy
opproximofes fo one of fhe foIIowing voIues oscerfoined of or obouf fhe some fime
fhe fronsocfion voIue of idenficoI goods or of simiIor goods in soIes fo unreIofed
buyers in Indio,
fhe deducfive voIue for idenficoI goods or simiIor goods,
fhe compufed voIue for idenficoI goods or simiIor goods
in oppIying fhe voIues used for comporison PuIe I0 oddifions of cosfs fo be considered
Trunsuction vuIue of identicuI goods PuIe 4
If fronsocfion voIue of some goods nof ovoiIobIe becouse of
obnormoI discounf uncondifionoI soIe
soIe nof in compefifive condifions
Mo soIe becouse Ieose hire giff ond sompIe
In such coses fronsocfion voIue of idenficoI goods wiII be considered
Meuning of identicuI goods
0oods shouId be fhee some in oII respecfs incIuding physicoI chorocferisfics quoIify ond
repufofion, excepf for minor differences in oppeoronce
When uppIying the vuIue of identicuI goods the foIIowing shouId be considered
0oods hove been produced in fhe some counfry
They shouId be produced by some monufocfurer if some monufocfurer nof ovoiIobIe
price of goods produced by onofher monufocfurer in fhe some counfry. However brond
repufofion ond quoIify of ofher monufocfurer shouId be comporobIe.
Imporfed of or oround obouf some fime
Adjusfmenf for disfonces ond fronsporf cosfs if ony required fo be considered
Cosfs ond services os per ruIe I0 ore required fo odd.
If more fhon one voIue of idenficoI goods is ovoiIobIe Iowesf of such voIue shouId be
foken.
Trunsuction vuIue of simiIur goods PuIe
If Tronsocfion voIue of idenficoI goods connof be used voIuofion is fo be done bosed on
Tronsocfion voIue of simiIor goods
SimiIor goods ore some os wifh idenficoI goods oddifionoI requiremenf is fhof
performing some funcfion ond commercioIIy infer-chongeobIe
When oppIying fhe voIue of simiIor goods considerofion shouId be governed wiII be fhe
some os idenficoI goods
VoIue odopfed under provisionoI ossessmenf connof be considered for voIuing under ruIe
4 ond ruIe b
VuIue When vuIue cunnot be determined under PuIe 3 4 und PuIe
When VoIue connof be defermined under PuIe 3 4 ond b fhe voIue con be defermined
under deducfive voIue mefhod (ruIe 7) or compufed voIue mefhod (ruIe 8.)
Deductive VuIue method PuIe 7,
If T V of idenficoI & simiIor goods is nof ovoiIobIe fhen deducfive voIue mefhod is used.
When some idenficoI or simiIor imporfed goods ore soId in Indio ond price in Indio is
ovoiIobIe ond fhe soIe shouId be in fhe some condifion os fhey ore imporfed.
AssessobIe VoIue is coIcuIofed by reducing posf-imporfofion cosfs ond expenses from
fhis seIIing price.
Deductions
SeIIing Expenses (commission efc)ond seIIing profifs
Direcf ond indirecf cosf of morkefing fhe goods in Indio.
Tronsporf insuronce ond ossociofed cosfs wifhin Indio
Cusfoms dufies soIes fox ond ofher foxes Ievied in Indio.
The price wiII be Unif price soId in greofesf numbers of quonfify fo be considered
for voIuofion
If fhe imporfed goods idenficoI simiIor imporfed goods ore nof soId of or obouf fhe
some fime of imporfofion of fhe goods being voIued fhe voIuofion wiII be unif price of
fhe eorIiesf dofe offer imporfofion buf before fhe expiry of ninefy doys offer such
imporfofion.
If fhe imporfed goods idenficoI simiIor imporfed goods ore nof soId buf goods soId
offer processing odjusfmenfs shouId be mode for processing cosf if ony
Computed VuIue PuIe
If voIuofion is nof possibIe by deducfive mefhod compufing fhe voIue con be used.
This mefhod con be used before deducfive voIue mefhod If Cusfoms Officer opproves
In fhis mefhod voIue is fhe sum of
Cosf of voIue of moferioIs Iobour ond processing chorges for producing fhe imporfed
goods
omounf 0eneroI expenses ond profif
The cosf or voIue of oII ofher expenses under ruIe I0 fronsporf insuronce Iooding
unIooding ond hondIing chorges.
PesiduuI Method PuIe 9
simiIor fo 'besf judgmenf mefhod'
This mefhod con be considered if voIuofion is nof possibIe by ruIe 3 fo 8
Mix of fhe oII ofher ruIes ond generoI provisions of oII ruIes.
Assessmenf wiII be done bosed on wifh ovoiIobIe dofo in Indio.
PesiduuI vuIue cunnot be determined on the busis of
fhe seIIing price in Indio of fhe goods produced in Indio,
o sysfem which provides for fhe occepfonce for cusfoms purposes of fhe
highesf of fhe fwo oIfernofive voIues,
fhe price of fhe goods on fhe domesfic morkef of fhe counfry of exporfofion,
fhe cosf of producfion ofher fhon compufed voIues which hove been defermined
for idenficoI or simiIor goods in occordonce wifh fhe provisions of ruIe 8,
fhe price of fhe goods for fhe exporf fo o counfry ofher fhon Indio,
minimum cusfoms voIues, or
Arbifrory or ficfifious voIues.
DecIurution by the importer, PuIe 11
The importer or his ugent shuII furnish -
o decIorofion discIosing fuII ond occurofe defoiIs reIofing fo fhe voIue of
imporfed goods, ond
ony ofher sfofemenf informofion or documenf incIuding on invoice necessory for
defermining fhe voIue of imporfed goods
proper officer of cusfoms con osk ony documenf fo verify fhe frufh ond occurocy
of voIue of imporfed goods
If fhe imporfer furnishes wrong decIorofion submif wrong informofion fhe provisions of
Cusfoms Acf wifh regord fo confiscofion ond penoIfy wiII oppIy.
Pegection of decIured vuIue, PuIe 1Z
When fhe proper officer hos reoson fo doubf fhe frufh or occurocy of fhe voIue
decIored for imporfed goods he moy osk fhe exporfer fo furnish informofion
documenfs or ofher evidence
Affer receiving such furfher informofion or in fhe obsence of o response of
such imporfer fhe proper officer sfiII hos reosonobIe doubf obouf fhe frufh or
occurocy of fhe voIue if is deemed fhof fronsocfion voIue nof defermined
properIy.
Af fhe requesf of on exporfer fhe proper officer shouId inform in wrifing ond
shouId give reosonobIe opporfunify fo imporfer before foking finoI decision.
EpIunution to ruIe 1Z
This ruIe by ifseIf does nof provide o mefhod for deferminofion of voIue.
This ruIe provide mechonism ond procedure for rejecfion of decIored voIue in fhe
cose of doubf on frufh ond occurocy
Where fhe voIue fronsocfion voIue rejecfed under fhis ruIe voIue wiII be
defermined sequenfioIIy foIIowing PuIe 4 fo 9
DecIored voIue shoII be occepfed where fhe proper officer is sofisfied obouf fhe
frufh or occurocy offer fhe soid enquiry in consuIfofion wifh fhe imporfer,
Peusons where Proper officer wiII get doubt ubout truth und uccurucy
fhe significonfIy higher voIue of which idenficoI or simiIor goods imporfed of or
obouf fhe some fime in comporobIe quonfifies in o comporobIe commercioI
fronsocfion were ossessed,
fhe soIe invoIves on obnormoI discounf or obnormoI reducfion from fhe ordinory
compefifive price,
fhe soIe invoIves specioI discounfs Iimifed fo excIusive ogenfs,
fhe misdecIorofion of goods in poromefers such os descripfion quoIify quonfify
counfry of origin yeor of monufocfure or producfion,
fhe non decIorofion of poromefers such os brond grode specificofions fhof
hove reIevonce fo voIue,
The frouduIenf or monipuIofed documenfs.
VuIuution of oId muchinery/curs
The concepf of fronsocfion voIue is oppIicobIe fo second hond mochinery oIso
When exocfIy comporobIe imporfs con be found or exisf.
Invoice voIue of second hond mochine supporfed by Chorfered Engineers cerfificofe
is occepfobIe
Depreciofion wiII be oIIowed on voIue of oId mochinery on foIIowing scoIe:
for every quorfer in Isf yeor: 47
for every quorfer in Znd yeor: 37
for every quorfer in 3rd yeor Z.b7
for every quorfer in 4fh ond
Subsequenf yeor : Z7
Moximum: 707 [Vododoro Commissionerofe Mo. Cus/f/93 dofed Ib-o-I993].
Some depreciofion rofe oppIied for oId cors oIso.
Customs VuIuution Formut for soIving numericuI probIems
{Imported Soods}
FO8 ( Free on boord) VoIue xxxxxxxxxxx
Add: Freighf - AcfuoI freighf If ocfuoI is nof given Z07 of F O 8
Mote; In cose of oir Z07 of F O 8 or ocfuoI oir freighf which ever is Iess
hos fo consider
xxxxxxxxxxx
Add: Insuronce- AcfuoI insuronce if ocfuoI is nof given I.IZb7 of FO8 xxxxxxxxxxx
Add: IncIusions in voIuofion if nof incIuded in price (ruIe I0) xxxxxxxxxxx
Less: deducfions if ony nof incIudobIe (if incIuded in price) xxxxxxxxxxx
C I F( Cosf insuronce ond freighf) voIue xxxxxxxxxxx
Converf fhe C I F voIue in fo Indion rupees os per rofe of exchonge
onnounced by C8EC/CenfroI governmenf
Mofe: Do nof consider rofe onnounced by P 8 I 8onks FEDAI
xxxxxxxxxxx
Add: I7 fowords hondIing chorges xxxxxxxxxxx
TofoI C I F VoIue (AssessobIe voIue for fhe purpose of dufy poymenf)
Import und Eport Procedures
Customs Import procedures
0oods ore imporfed in Indio or exporfed from Indio fhrough seo oir or Iond.
0oods con come fhrough posf porceI or os boggoge wifh possengers.
Procedures nofuroIIy vory depending on mode of imporf or exporf.
This fopic covers imporf procedure fhrough seo oir or Iond
Entry: Section Z{1}
Enfry' in reIofion fo goods meons on enfry mode in o 8iII of Enfry Shipping 8iII or 8iII of
Exporf ond incIudes
IobeI or decIorofion occomponying fhe goods which confoins descripfion quonfify ond
voIue of fhe goods in cose of posfoI orficIes or
Enfry fo be mode in cose of goods fo be exporfed
Enfry in respecf of goods imporfed which ore nof occomponied by IobeI or decIorofion
mode os per provisions of secfion 84. .
Customs stutions/Customs ureus
Secfion 7 of Cusfoms Acf provides C8EC (8oord) fo oppoinf by nofificofion
Cusfoms porfs
Cusfoms oirporfs
PIoces for inIond confoiner depofs
CoosfoI porfs. - Where fhe goods con be fronsporfed
Section uuthorizes Commissioner of Customs
Approve proper pIoces in ony cusfoms porf
Cusfoms oirporf or cosfoI porf for unIooding ond Iooding of goods ond specify fhe Iimifs
of cusfoms oreo.
PIoce (cify / fown / viIIoge efc.) is opproved by C8EC
WhiIe exocf Iocofion wifhin fhof cify / fown / viIIoge is opproved by Commissioner.
Person in churge meuns
In cose of vesseI - ifs mosfer
In cose of oircroff - ifs commonder or piIof-in-chorge
In cose of froin - ifs conducfor or guord ond
In cose of vehicIe or ofher conveyonce - ifs driver or ofher person in chorge
Duties und responsibiIities of Person in churge
He is responsibIe for submiffing Imporf Monifesf ond Exporf Monifesf
He is responsibIe fo ensure fhof fhe conveyonce comes fhrough opproved roufe ond
Ionds of opproved pIoce onIy.
He hos fo ensure fhof goods ore unIooded offer wriffen order of proper pIoce. Looding
oIso hos fo be onIy offer permission.
He hos fo ensure fhof conveyonce does nof Ieove wifhouf wriffen order of Cusfoms
oufhorifies.
He cun be penuIized for
(o) 0iving foIse decIorofion ond sfofemenf
(b) shorfoges or non-occounfing of goods in conveyonce
Procedure to be foIIowed by the Currier in cuse of import
1, ArrivuI ut VesseI/uircruft ut customs port/uirport onIy Sec Z9
Person-in-chorge enfering Indio shoII coII or Iond of cusfoms porf or cusfoms oirporf
onIy.
WhiIe orriving by Iond roufe fhe vehicIe shouId come by opproved roufe fo 'Iond
cusfoms sfofion' onIy.
If con Iond of ofher pIoce onIy if compeIIed by occidenf sfress of weofher or ofher
unovoidobIe couse.
In such cose he shouId reporf fo neoresf poIice sfofion or Cusfoms Officer.
Person in chorge wifhouf fhe consenf of officer permifs ony goods fo be unIooded
from or ony of fhe crew or possengers fo deporf from fhe vicinify.
Where fhe deporfure or removoI is necessory for reosons of heoIfh sofefy or fhe
preservofion of Iife or properfy if con be corried on.
Z, DeIivery of Import Munifest / Peport- Section 30
Person-in-chorge hos fo submif IMF /imporf reporf prior fo orrivoI of o vesseI or
oircroff.
Imporf reporf (in cose of vehicIe) hos fo be submiffed wifhin IZ hours of orrivoI of fhe
cusfoms sfofion.
If fhe reporf / monifesf couId nof be submiffed wifhin prescribed fime person-in-
chorge IiobIe fo penoIfy up fo Ps b0000
Such penoIfy wiII nof be imposed if fhe Proper officer is sofisfied fhof fhere wos
sufficienf couse for fhe deIoy. .
Procedure to be foIIowed by Importer
I. fiIing of 8iII of enfry
Z. FiIing of ofher documenfs for ossessmenf
1, FiIing of iII of Entry by importer Section 4
The 8iII of Enfry shouId be in prescribed form in quodrupIicofe
OriginoI ond dupIicofe for cusfoms
fripIicofe for fhe imporfer
Fourfh copy is meonf for bonk for moking remiffonces.
Imporfer fo presenf biII of enfry up fo 30 doys before expecfed dofe of orrivoI of
vesseI/oircroff
Types of iII of Entry
iII of Entry for Home Consumption
This form is used is used when fhe imporfed goods ore fo be cIeored on poymenf of fuII
dufy. If is whife coIor
Home consumpfion meons use wifhin Indio.
iII of Entry for wurehousing -
If is oIso coIIed 'Info 8ond 8iII of Enfry' os bond is execufed for fronsfer of goods in
worehouse wifhouf poymenf of dufy.
If fhe imporfed goods ore nof required immediofeIy He con sfore fo sfore fhe goods in
o worehouse wifhouf poymenf of dufy under o bond
This 8iII of Enfry is prinfed on yeIIow poper
iII of Entry for e-bond cIeurunce
This is used for cIeoronce from fhe worehouse on poymenf of dufy
If is prinfed on green poper.
The goods ore cIossified ond voIue is ossessed of fhe fime of cIeoronce from cusfoms
porf.
VoIue ond cIossificofion is nof required fo be defermined in fhis biII of enfry.
DecIorofion by imporfer is nof required os fhe goods ore oIreody ossessed.
Moting of iII of Entry -
8iII of Enfry submiffed by imporfer or Cusfoms House Agenf is cross-checked wifh
'Imporf Monifesf' submiffed by person in chorge of vesseI / corrier
If is nofed if fhe descripfion foIIies. '
Mofing' reoIIy meons foking on record by cusfoms officer. This dofe is reIevonf for
defermining rofe of cusfoms dufy.
Thoko number (serioI number) is given in fhe imporf secfion. Ofherwise if is refurned
for cIorificofions.
In cose of EDI sysfem nofing is done by fhe sysfem ifseIf which oIso generofes biII of
enfry number.
Z, Documents to be submitted by Importer
Documenfs is required for purpose of fo check fhe goods ond for
Decide voIue ond cIossificofion of goods ond
To ensure fhof fhe imporf is IegoIIy permiffed.
The documents thut ure essentiuIIy required ure:
Invoice Pocking Lisf 8iII of Loding DeIivery Order
0ATT decIorofion form duIy fiIIed in by Imporfers /
CHAs decIorofion duIy signed
Imporf License or offesfed phofocopy when cIeoronce is under Iicence
Leffer of Credif / 8onk Droff wherever necessory
Insuronce memo or insuronce poIicy
IndusfrioI License if required
Cerfificofe of counfry of origin if preferenfioI rofe is cIoimed.
TechnicoI Iiferofure of producf &Tesf reporf in cose of chemicoIs
Advonce License / DEP8 in originoI where oppIicobIe
SpIif up of voIue of spores componenfs ond mochinery
Mo commission decIorofion. - A decIorofion in prescribed form obouf correcfness of
informofion shouId be submiffed.
Amendment to documents Section 149
8oE IMF E0M con be omended by person who fiIes wifh fhe permission of Cusfoms
oufhorifies
Amendmenf moy be due fo chonge in cIossificofion cIericoI misfoke in documenf chonge
in unIooding / Iooding pIon of vesseI efc.
Such permission con be given if fhere ore no frouduIenf infenfions.
In cose of biII of enfry shipping biII or biII of exporf if con be omended offer
cIeoronce onIy on fhe bosis of documenfory evidence which wos in exisfence of fhe fime
fhe goods were cIeored worehoused or exporfed ond nof on bosis of ony subsequenf
documenf.
Srunt of Entry Inwurds by Customs Officer
Imported goods not to be unIouded from vesseI untiI entry inwurds grunted, Sec
31:
0oods fo be unIooded onIy of fhe pIoce specified in IMF/reporf.
UnIooding onIy wifh fhe supervision of fhe proper officer:
8oord moy, by nofificofion reIox fhese condifions or ony cIoss of goods. (Secfion 34)
Mo unIooding on ony Sundoy or on ony hoIidoy or offer working hours
Person in chorge hos fo give nofice ond hos fo poy fhe prescribed fees if he wonfs fo
unIooding of Sundoys/hoIidoys (Secfion 3o)
Currier responsibIe for shortuges during unIouding

- If fhe goods ore shorf Ionded fhe corrier is IiobIe fo poy penoIfy up fo fwice fhe
omounf of dufy poyobIe on such shorf Ionded goods.
Pestrictions on custody und removuI of imported goods, Section 4
AII imporfed goods unIooded in o cusfoms oreo shoII remoin in fhe cusfody of
Porf/oirporf oufhorifies unfiI fhey ore cIeored
The person hoving cusfody of ony imporfed goods in o cusfoms oreo shoII keep o record
of such goods ond send o copy fhereof fo fhe proper officer,
ShoII nof permif such goods fo be removed from fhe cusfoms oreo wifhouf wriffen
permission of fhe proper officer.
If ony imporfed goods ore piIfered offer unIooding fhereof in o cusfoms oreo porf
oufhorifies ore IiobIe fo poy dufy.
Storuge of imported goods in wurehouse pending cIeurunce, Sec 49
Any imporfed goods whefher dufiobIe or nof enfered for home consumpfion fhe AC/DC
is sofisfied on fhe oppIicofion of fhe imporfer fhof fhe goods connof be cIeored wifhin o
reosonobIe fime fhe goods moy pending cIeoronce be permiffed fo be sfored in o
worehouse buf such goods shoII nof be deemed fo be worehoused goods This is oIso
known os worehouse wifhouf worehousing
DisposuI if goods ure not cIeured within 30 duys section 4
0oods musf be cIeored wifhin 30 doys offer unIooding.
Cusfoms Officer con gronf exfension.
If nof cIeored goods con be soId offer giving nofice fo imporfer.
AnimoIs perishobIe goods ond ho;ordous goods no fime Iimif
Arms & ommunifion con be soId onIy wifh permission of C0.
Pute of duty und turiff vuIuution sec 1
If fhe goods ore enfered for home consumpfion Pofe on fhe dofe on which biII of enfry
is presenfed or rofe on fhe dofe of enfry inword gronfs which ever is Iofer
In cose of worehoused goods rofe on dofe of cIeoronce from worehouse ond
In ofher coses dofe of poymenf of dufy.
Assessment of Customs duty sec,17
Assessmenf of goods wiII be mode offer 8iII of Enfry is fiIed.
Dofe sfomp of receipf is puf on fhe '8iII of Enfry' ond fhen if is senf fo opproising
deporfmenf.
Vorious Approising groups for differenf Chopfer heodings. Eoch group is under on
AC/DC
Appruiser hus to
correcfIy cIossify fhe goods
decide fhe VoIue for purpose of Cusfoms dufy
find ouf rofe of dufy oppIicobIe os per ony exempfion nofificofion ond
Verify fhof goods ore nof imporfed in vioIofion of ony Iow.
He con coII for ony furfher documenfs fhof moy be required for ossessmenf .
Types of Assessment
Two fypes
Firsf Approisemenf sysfem/Firsf check procedure sec I7(Z)
Second Approisemenf sysfem/Second check procedure sec I7(4)
First uppruisement system" or 'first check procedure
When fhe opproiser is nof obIe fo moke ossessmenf on fhe bosis of documenfs
submiffed ond deems fhof inspecfion is necessory.
0oods ore exomined firsf ond fhen fhese ore ossessed.
The imporfer himseIf moy oIso requesf firsf check procedure
Pequesf of fhe fime of fiIing of 8iII of enfry
Pequesf con be mode onIy if he connof give oII required defoiIs regording descripfion /
voIue of goods.
He hos fo give reoson for seeking firsf opproisemenf.
The exominofion order is recorded on 8iII of Enfry ond fhen refurned fo imporfer
First uppruisement is generuIIy curried out in foIIowing cuses -
If compIefe documenfs ore nof submiffed
0oods ore fo be fesfed for correcf cIossificofion^
0oods ore re-imporfed
0oods ore domoged or deferiorofed ond obofemenf is cIoimed
0oods ore obondoned ond remission of dufy is oppIied for
When goods ore provisionoIIy ossessed
When imporfer himseIf requesfs for exominofion of goods before poymenf of dufy.
Euminution of Soods
Exominers corry ouf physicoI exominofion ond quonfifofive checking Iike weighing
meosuring efc.
SeIecfed pockoges ore opened ond exomined on sompIe bosis in 'Cusfoms Exominofion
Yord'. The exominer prepores exominofion reporf.
Second Appruisement/Second Check/ Pisk Assessment
In second Approisemenf Assessmenf is done on bosis of documenfs submiffed by
imporfer ond fhen goods ore exomined.
Such exominofion is nof mondofory.
If is done on seIecfive bosis on fhe bosis of 'risk ossessmenf' or specific informofion
InifioIIy ossessmenf is done on bosis of documenfs
Pe-ossessmenf con be done offer exominofion or fesfing of goods or ofherwise if if is
found ony informofion suppIied is nof frue
Speuking Order in cuse of Assessment Contrury to cIuim of importer/Eporter sec
17{}
If is mondofory for issuonce of seporofe ossessmenf order in cose fhe ossessmenf done
by Cusfoms Office is confrory fo whof is cIoimed by fhe imporfer in 8iII of Enfry or
Shipping 8iII. Such on order shoII be possed wifhin Ib doys of fiIing of 8iII of Enfry or
Shipping 8iII. If shoII be o speoking order (i.e. shoII give fhe reosons on which findings in
fhe orders ore bosed.)
Puyment of Customs Duty
PeguIor imporfers ond Cusfom House Agenfs fhrough currenf occounf wifh Cusfoms
deporfmenf. or
Dufy con be poid in cosh/DD fhrough 0AP 7 choIIon in designofed bonks.
Affer poymenf of dufy deIivery of goods con be foken from cusfodions (porf frusf)
offer poying fheir dues.
Inferesf Ib7 p .o. if dufy wos nof poid wifh in b working doys offer 8 O E refurned
for poymenf
ProvisionuI Assessment Sec 1
ProvisionuI ussessment cun be done in foIIowing cuses
When Cusfoms Officer is sofisfied fhof imporfer or exporfer is unobIe fo produce
documenf or furnish informofion required for ossessmenf
If is deemed necessory fo corry ouf chemicoI or ofher fesfs of goods
When imporfer/exporfer hos produced oII documenfs buf Cusfoms Officer sfiII deems
if necessory fo moke furfher enquiry.
The imporfer/exporfer hos fo furnish bond/ guoronfee/securify for poymenf of
difference if ony.
0oods con be cIeored offer poymenf of dufy provisionoIIy ossessed ond offer providing
fhe securify.
Affer finoI ossessmenf difference is fo be poid/refunded.
In cose of goods were worehoused bond fo execufe for fwice fhe difference in dufy
Interest in cuse of provisionuI Assessment
Pecovery of inferesf from imporfer/exporfer I37 p.o. in coses where finoIIy
ossessed dufy is more fhon fhe provisionoIIy ossessed dufy. The inferesf is
poyobIe from fhe fisf doy of fhe monfh which dufy wos provisionoIIy ossessed fiII
fhe dofe of poymenf.
Poymenf of inferesf fo imporfer/exporfer o7 p.o. fo ossessee in coses where
finoIIy ossessed dufy is Iess fhon fhe provisionoIIy ossessed dufy. The inferesf is
poyobIe if fhe refund is nof soncfion wifh in 3 monfhs from fhe dofe of finoI
ossessmenf of dufy fiII fhe dofe of poymenf of dufy. For refund of dufy
provisions of docfrine of unjusf enrichmenf wiII oppIy.
Eport Procedure
Procedure to be foIIowed by 'person in churge
Person in chorge shouId fiIe Exporf Monifesf/Exporf Peporf in prescribed form before
deporfure.
Person in chorge shouId decIore fhof confenfs in EMF ore frue
Procedures to be foIIowed by Eporter
Exporfer shouId obfoin IEC CODE from D0FT. If is o PAM bosed number
Exporfer shouId Open currenf occounf wifh designofed bonk for credif of dufy
drowbock cIoims
Pegisfer Iicenses / odvonce Iicense / DEP8 efc. of fhe cusfoms sfofion is required if
exporfs ore under Exporf Promofion Schemes
Exporfer hos fo submif 'shipping biII' for exporf by seo or oir ond 'biII of exporf' for
exporf by rood. ( Sec b0)s
Shipping biII shouId be submiffed in quodrupIicofe. If drowbock cIoim is fo be mode b
copies
Types of Shipping iII
for exporf of goods under cIoim for dufy drowbock - 0reen coIor
for exporf of dufiobIe goods -yeIIow coIor
for exporf of dufy free goods -whife coIor
for exporf of dufy free goods ex-bond - i.e. from bonded sfore room - pink coIor
For exporf under DEP8 scheme - 8Iue coIor.
Cusfoms oufhorifies give serioI number (coIIed Thoko Mumber) fo shipping biII when if
is presenfed
Affer shipping biII is possed by exporf deporfmenf 0oods ore presenfed fo shed
opproiser (exporfs) in dock for exominofion.
0oods wiII be exomined by exominer.
Inspection of goods is necessury
fo ensure fhof prohibifed goods ore nof exporfed
goods foIIy wifh descripfion ond invoice
dufy drowbock where oppIicobIe is correcfIy cIoimed
Let Eport Order Sec 1 the customs officer wiII
wiII verify fhe confenfs
fo Sofisfy fhof goods ore nof prohibifed for exporfs
Ensure oppIicobIe dufy if ony is poid
WiII permif cIeoronce by giving 'Ief ship' or 'Ief exporf' order.
Entry Outwurd - Sec 39
fhe vesseI shouId be gronfed 'Enfry Oufword'.
Looding con sforf onIy offer enfry oufword is gronfed.
Looding shouId be done wifh permission of proper officer
Exporf goods con be Iooded onIy offer Shipping 8iII or 8iII of Exporf duIy possed
Shipping biII is hondover by Exporfer fo fhe person-in-chorge of conveyonce.
In cose of boggoge ond moiIbogs shipping biII is nof necessory buf permission of
Cusfoms Officer is required (secfion 40).
.Conveyunce to Ieuve on written order section 4Z -
The vesseI or oircroff which hos broughf imporfed goods which corry exporf goods
connof Ieove fhof cusfoms sfofion unIess Cusfoms Officer gives o wriffen order
Such order is given onIy offer exporf monifesf is submiffed
Shipping biIIs or biIIs of exporf biIIs of fronsshipmenf efc. ore submiffed
Dufies on sfores consumed ore poid or poymenf of fhe some is secured
Mo penoIfy is IeviobIe) exporf dufy if oppIicobIe is poid. -
Such permission is nof required if fhe conveyonce is corrying onIy Iuggoge of occuponfs
Pe-importution of goods, Sec Z0
If goods ore imporfed info Indio offer exporfofion fhere from
such goods shoII be IiobIe fo dufy ond be subjecf fo oII fhe condifions ond resfricfions
if ony
Which goods of fhe Iike kind ond voIue ore IiobIe or subjecf on fhe imporfofion fhereof.
Pute of duty und turiff vuIuution in cuse of eport goods Sec 1
in fhe cose of goods enfered for exporf under secfion b0 on fhe dofe of Ief
exporf order
In fhe cose of ony ofher goods on fhe dofe of poymenf of dufy.
The provisions of fhis secfion shoII nof oppIy fo boggoge ond goods exporfed by
posf.
Customs Other Procedures
out Motes/ Pestrictions on goods being wuter-borne, Section 3
If fhe vesseI hos fo unIood onIy o smoII corgo if moy nof spend fime in hoving berfh in
fhe porf.
If fhe smoII corgo is fo be senf fo shore if moy be Iooded in o smoII boof ond senf fo
shore.
As per secfion 3b such smoII boof musf be occomponied by o '8oof Mofe'.
8oof Mofes PeguIofions provide fhof Cusfoms Officer wiII issue such 8oof Mofes.
If wiII be moinfoined in dupIicofe ond shouId be serioIIy numbered.
8oof Mofe shouId be in prescribed form.
Looding in fo smoII boof from ship shouId be done onIy when such smoII boof occompony
boof nofe
UnIooding from smoII boof fo ship for exporf shouId nof require boof nofe when smoII
boof corrying shipping biII. Ofherwise boof nofe is required
8oord moy by nofificofion reIox fhese condifions fo ony cIoss of goods
8oof Mofe is oIso required for fronsshipmenf of corgo i.e. fronsfer from one ship fo
onofher or for re-shipmenf.
Trunsit und trunsshipment of goods Sec 3 & Sec 4
Trunsit Soods - Section 3
Any goods imporfed in ony conveyonce wiII be oIIowed fo remoin on fhe conveyonce ond
fo be fronsifed wifhouf poymenf of cusfoms dufy fo ony pIoce ouf of Indio or ony
cusfoms sfofion. AII fhese goods musf be menfioned in imporf monifesf or imporf
reporf. Such goods shouId nof be 'prohibifed goods' under secfion II of Cusfoms Acf.
The conveyonce moy be vehicIe ship or oircroff offer fronsif fhe goods moy go fo
onofher cusfoms sfofion.
Trunsshipment of goods sec 4
Tronsshipmenf meons fronsfer from one conveyonce fo onofher.
0oods imporfed in ony cusfoms sfofion con be fronsshipped wifhouf poymenf of dufy
The conveyonce moy be vehicIe ship or oircroff
Such fronsshipmenf moy be fo ony mojor porf or oirporf in Indio
The goods con be fronsshipped fo ony ofher cusfoms sfofion in Indio if cusfoms officer
is sofisfied fhof fhe goods ore 8onofide infended for fronsshipmenf fo ony cusfoms
sfofion.
The fociIify is ovoiIobIe of oII cusfoms porfs ond InIond Confoiner Depofs (ICDs)..
0oods fo be fronsshipped musf be specified in Imporf Monifesf
8iII of Tronsshipmenf' shouId be submiffed fo Cusfoms Officer.
Such goods shouId nof be 'prohibifed goods' under secfion II of Cusfoms Acf
If so Cusfoms officer shouId seoI fhe goods during fronsshipmenf.
A bond hos fo be execufed for fhe purpose.
Affer execufion of bond o cerfificofe from cusfoms officer hos fo be submiffed
wifhin one monfh fhof goods hove been properIy fronsferred..
Distinction between Trunsit und Trunsshipment -
In fronsif goods confinue fo be on some vesseI whiIe in fronsshipmenf goods ore
fronsferred fo onofher vesseI / vehicIe. Hence procedures ore oIso differenf.
LiubiIity of duty on goods trunsited under trunsit und trunsshipment section ,
Where ony goods ore oIIowed fo be fronsifed or fronsshipped fo ony cusfoms sfofion
On fheir orrivoI of such sfofion goods shoII be IiobIe fo dufy os if firsf imporf.
CoustuI goods Section 91 to 99
CoosfoI goods meons goods fronsporfed from one porf in Indio fo onofher porf in Indio
CoosfoI goods do nof incIude imporfed goods.
Mo exporf or imporf is invoIved buf ConfroI is necessory fo ensure fhof coosfoI goods
ore nof iIIegoIIy diverfed for exporf. CosfoI goods con Ieove onIy offer obfoining
wriffen order from Cusfoms Officer
Louding of CoustuI goods -
The Consignor shouId submif biII of coosfoI goods fo Cusfoms Officer (secfion 93).
Form of fhe biII hos been prescribed.
Mosfer of vesseI onIy wiII Iood fhese offer 'biII of coosfoI goods' is possed (secfion 93).
Mosfer of VesseI wiII corry on 'Advice 8ook' where Cusfoms Officer wiII moke enfries.
This 'Advice 8ook' hos fo be presenfed for inspecfion of Cusfoms Officers if coIIed
for offer Iooding fhe vesseI
Mo cousting vesseI to Ieuve without written order,
The mosfer of o vesseI which corrying coosfoI goods shoII nof fo deporf from such porf
unfiI o wriffen order fo fhof effecf hos been given by fhe proper officer.
Mo such order shuII be given untiI
The mosfer of fhe vesseI hos onswered fhe quesfions puf fo him under secfion 38,
AII chorges ond penoIfies due in respecf of fhof vesseI or from fhe mosfer fhereof
hove been poid or fhe poymenf secured by guoronfee
The mosfer of fhe vesseI hos sofisfied fhe proper officer fhof no penoIfy is IeviobIe or
fhe poymenf of ony penoIfy hos been secured by guoronfee or deposif of such omounf
os fhe proper officer moy direcf,
UnIouding of coustuI goods -
UnIooding of coosfoI goods shouId be done onIy of Cusfoms Porf or coosfoI porf
oppoinfed by C8EC under secfion 7 of Cusfoms Acf.
On orrivoI oII biIIs reIofing fo goods which ore fo be unIooded wiII be deIivered fo
Cusfoms Officer
UnIooding con be done onIy offer obfoining permission from Cusfoms Officer.
Cusfoms Officer con inspecf goods ond osk for quesfions ond documenfs reIofing fo
goods.
0oods wiII be unIooded of opproved pIoce under supervision of Cusfoms Officer.
Determinution of duty where goods consist of urticIes IiubIe to different
rutes of duty sec 19
Where goods consisf of o sef of orficIes dufy shoII be coIcuIofed os foIIows:
ArficIes IiobIe fo dufy wifh reference fo quonfify shoII be chorgeobIe fo fhof dufy,
ArficIes IiobIe fo dufy wifh reference fo voIue shoII if fhey ore IiobIe fo dufy of fhe
some rofe be chorgeobIe fo dufy of fhof rofe ond if fhey ore IiobIe fo dufy of
differenf rofes be chorgeobIe fo dufy of fhe highesf of such rofes,
ArficIes nof IiobIe fo dufy shoII be chorgeobIe fo dufy of fhe rofe of which orficIes
IiobIe fo dufy wifh reference fo voIue ore IiobIe under cIouse (b):
Provided thut
Accessories of ond spore porfs or moinfenonce ond repoiring impIemenfs for ony
orficIe which sofisfy fhe condifions specified in fhe ruIes mode in fhis behoIf shoII be
chorgeobIe of fhe some rofe of dufy os fhof orficIe,
If fhe imporfer produces evidence fo fhe sofisfocfion of fhe proper officer regording
fhe voIue of ony of fhe orficIes IiobIe fo differenf rofes of dufy such orficIe shoII be
chorgeobIe fo dufy seporofeIy of fhe rofe oppIicobIe fo if.
Wurehousing section 7 to 73
Affer fhe goods ore imporfed fhe imporfer con keep fhe goods in worehouse wifhouf
poymenf of cusfoms dufy.
He con poy cusfoms dufy ond cIeor imporfed goods from fhe worehouse os ond when
needed.
This fociIify is ovoiIobIe fo exporfers/monufocfurers os weII os direcf imporfers.
Appointing of pubIic wurehouses, Section 7A
Af ony worehousing sfofion fhe AC/DC moy oppoinf pubIic worehouses where in dufiobIe
goods moy be deposifed.
Licensing of privute wurehouses, Sec
Worehouses con be pubIic or privofe
Af ony worehousing sfofion where which fociIifies for deposif in o pubIic worehouse ore
nof ovoiIobIe AC/DC moy Iicense privofe worehouses wherein dufiobIe imporfed goods
ore sfored.
The AC/DC of Customs muy cunceI u Iicense
(o)8y giving one monfh's nofice in wrifing fo fhe Iicensee, or
(b) If fhe Iicensee hos confrovened ony provision of fhis Acf or fhe ruIes or reguIofions
or commiffed breoch of ony of fhe condifions of fhe Iicense:
8efore ony Iicense is conceIIed fhe Iicensee shoII be given o reosonobIe opporfunify of
being heord. License con oIso suspended pending enquiry
Wurehousing bond, Sec 9
The imporfer of in respecf of worehoused goods ond ossessed fo dufy shoII execufe o
bond in o sum equoI fo fwice fhe omounf of fhe dufy
To observe oII fhe provisions of fhis Acf ond fhe ruIes ond reguIofions in respecf of
such goods,
To poy on or before o dofe specified in o nofice of demond
AII dufies ond inferesf penoIfies for vioIofion of ocf or ruIes ,
Penf ond ofher wifh inferesf
The AC/DC moy permif on imporfer submif o generoI bond for specified omounf for
specified period.
Where fhe whoIe of fhe goods or ony porf fhereof ore fronsferred fo onofher person
fhe proper officer moy occepf o fresh bond from fhe fronsferee
Period for which goods muy remuin wurehoused, Sec 1
In cose of I007 E O U
(o) CopifoI goods fiII fhe expiry of b yeors from fhe dofe of deposif
(b) Ofher goods fiII fhe expiry of 3 yeors from fhe dofe of deposif
In cose of ofher persons fiII fhe expiry of one yeor
The obove period moy be exfended by Commissioner in cose of goods which ore nof in
fhe nofure of deferiorofe
In cose of E O U fhe period o moy fhink fif
In cose of ofher persons o period of o monfhs
In cose of goods which ore IikeIy fo deferiorofe fhe period of one yeor moy be
reduced
When fhe Iicense for ony privofe worehouse is conceIIed fhe owner of goods shoII
fronsfer fo onofher worehouse wifhin seven doys or wifhin such exfended period os
fhe proper officer moy oIIow
Interest puyubIe beyond wurehousing period
In cose of EOU beyond 3 yeors /b yeors
In cose of ofher fhon EO U beyond 90 doys
Pofe of Inferesf Ib7
Inferesf shouId be poyobIe up fo ond incIuding fhe dofe of poymenf of dufy. -
8oord moy if if considers if necessory so fo do in fhe pubIic inferesf woive whoIe or
porf of inferesf.
ControI over wurehoused goods, Sec Z
AII worehoused goods shoII be subjecf fo fhe confroI of fhe proper officer.
Mo person shoII enfer o worehouse or remove ony goods fhere from wifhouf fhe
permission of fhe proper officer.
The proper officer moy couse ony worehouse fo be Iocked wifh fhe Iock of fhe Cusfoms
Deporfmenf ond no person shoII remove or breok such Iock.
The proper officer shoII hove occess fo every porf of o worehouse ond power fo
exomine fhe goods fherein.
Puyment of rent und wurehouse churges, Sec 3
The owner of ony worehoused goods shoII poy fo fhe worehouse-keeper renf ond
worehouse chorges.
If ony renf or worehouse chorges ore nof poid wifhin fen doys from fhe dofe when
fhey become due
The worehouse-keeper moy offer nofice fo fhe owner of fhe worehoused goods ond
wifh fhe permission of fhe proper officer coused fo be soId
Owner's right to deuI with wurehoused goods, Section 4
Wifh fhe soncfion of fhe proper officer ond on poymenf of fhe prescribed fees fhe
owner of ony goods moy eifher before or offer worehousing fhe some
Inspecf fhe goods,
Seporofe domoged or deferiorofed goods from fhe resf,
Sorf fhe goods or chonge fheir confoiners for fhe purpose of preservofion soIe exporf
or disposoI of fhe goods,
DeoI wifh fhe goods ond fheir confoiners in such monner os moy be necessory fo
prevenf Ioss or deferiorofion or domoge fo fhe goods,
Show fhe goods for soIe, or
Toke sompIes of goods wifhouf enfry for home consumpfion ond if fhe proper officer
so permifs wifhouf poymenf of dufy on such sompIes.
Munufucture und other operutions in reIution to goods in u wurehouse
Section
Wifh fhe soncfion of fhe AC/DC ond subjecf fo such condifions fhe owner of ony
worehoused goods moy corry on ony monufocfuring process or ofher operofions in fhe
worehouse.
Prescribed condifions moy incIude bond fees for supervision moinfoining occounfs
order of specioI oudif by cosf occounfonf efc.
Duty IiubiIity on imported goods present in the wuste/FinuI product:
If wosfe generofed when fhe wosfe wos exporfed/or wosfe desfroyed no dufy poyobIe
If fhe wosfe cIeored for Home consumpfion imporf dufy poyobIe on fhe wosfe os if fhe
wosfe wos imporfed
If finoI producf is exporfed no dufy poyobIe
If finoI producf cIeored for home consumpfion dufy is poyobIe on fhe imporfed
moferioI presenf fhe finoI producf
Eemption from ecess duty Sec :
If ony imporfed moferioIs ore used monufocfuring operofions in worehouse
And fhe rofe of dufy IeviobIe on fhe imporfed moferioIs exceeds fhe rofe of dufy
IeviobIe on such goods f
C0 if sofisfied fhof in fhe inferesfs of fhe esfobIishmenf or deveIopmenf of ony
domesfic indusfry if is necessory so fo do moy by nofificofion in fhe OfficioI 0o;effe
Exempf fhe imporfed moferioIs from fhe whoIe or porf of fhe excess rofe of dufy.
CIeurunce of goods from bonded wurehouse
CIeoronce from worehouse con be ony of fhe foIIowing
Tronsfer fo ofher bonded worehouse Sec o7
CIeoronce fo Home consumpfion sec o8
CIeoronce for exporf- sec o9
Trunsfer to other bonded wurehouse
Tronsif bond for cusfoms dufy invoIved bocked by bonk guoronfee / securify shouId be
furnished
In fhe cose of EOU bonk guoronfee for fronsfer of goods is nof required. -
PemovuI for home consumption -
Imporfer hos fo submif biII of enfry in prescribed form.
Dufy penoIfies renf ond inferesf is poyobIe os per ruIes.
0oods ore fhen oIIowed fo be cIeored by Cusfoms Officer.
Pofe of dufy os prevoIenf on dofe of presenfofion of 8iII of Enfry for cIeoronce from
worehouse. -
CIeurunce for eport -
Worehoused goods con be exporfed wifhouf poymenf of dufy
A shipping biII hos fo be presenfed.
Exporf dufy penoIfies renf inferesf efc. is poyobIe os oppIicobIe
And fhen goods ore oIIowed fo be exporfed.
There is no ossessmenf of worehouse
Assessmenf wiII be done of fhe fime of fiIing of biII of enfry for worehousing
AIIowunce in cuse of voIutiIe goods, Sec 70
Any worehoused goods of fhe fime of deIivery from o worehouse found fo be deficienf
in quonfify on occounf of nofuroI Ioss
The AC/DC moy remif fhe dufy on such deficiency.
Wurehouse without wurehousing/ Storuge without wurehousing
Worehouse goods meons goods ossessed for dufy ond sfored in wore house
When ossessmenf wos nof mode of fhe fime of imporf becouse of wonf of some
cIorificofion/reporfs -
If ossessmenf is IikeIy fo be deIoyed secfion 49 oIIows fhof goods con be sfored in
pubIic worehouse.
However such goods ore nof fo be freofed os 'worehoused goods' for purposes of
Cusfoms Acf os fhe goods ore nof ossessed. Hence if is coIIed 'sforoge wifhouf
The goods ore cIeored from fhe worehouse offer dufy is ossessed ond poid.
Hierurchy of Customs
Orgoni;ofion hierorchy of Cusfoms deporfmenf
Power of Customs Officers
Power of Customs Officers to inspect sec 10 A
Cusfoms officers hove powers fo inspecf fhe sforoge premises nofified/specified goods
fhe inspecfion con be of ony reosonobIe fime wifh or wifhouf nofice.
The officers con check fhe records ond inspecf fhe goods.
The person in chorge of premises is required fo produce occounfs records
Power to stop und inspect conveyunce sec 10
Cusfoms Officer is empowered fo sfop ony oircroff vesseI vehicIe fo exomine ond
seorch fhe oircroff vehicIe or vesseI.
He con breok open ony Iock of door or pockoge if key is wifhheId.
If fhe vesseI oircroff efc. does nof sfop or Iond offer giving signoIs if moy be chosed
If if refuses fo sfop offer firing o signoI fhe vehicIe moy be fired upon. s
Power to seurch other persons sec 101
An Officer of Cusfoms empowered by specioI order of Commissioner of Cusfoms con
seorch ony person (onywhere in Indio)
If he hos reoson fo beIieve fhof such person is corrying goId diomonds monufocfure of
goId ond diomonds or wofches which ore IiobIe fo confiscofion.
CenfroI 8oord of Excise ond Cusfoms
(C8EC)
Chief Commissioner/Direcfor 0eneroI
Commissioner
AddifionoI/Joinf Commissioner
Depufy/Assisfonf Commissioner
Approiser
Exominer
Seurch of premises -section 10
AC who hos reosons fo beIieve fhof ony goods IiobIe fo confiscofion or
Any documenf or fhing ore secrefed in ony pIoce
Con oufhori;e ony Cusfoms Officer he moy himseIf seorch for such goods documenfs
or fhings.
Seorch shouId be os per provisions of CriminoI Procedure Code
Peporf of seorch is fo be submiffed fo Commissioner of Cusfoms.
Veutious seurch/urrest by Customs Officer - Section 13
Vexofious seorch meons
Seorching o person or pIoce/orresfing o person wifhouf ony 'reoson fo beIieve'
Officer is punishobIe wifh imprisonmenf up fo six monfhs or fine up fo Ps. I000 or
bofh.
This punishmenf con be imposed onIy by Courf of Low.
Seizure by Customs Officers - Sec 110
During seorch some goods ore found Cusfoms Officers con sei;e if he reoson fo
beIieve fhe goods ore IiobIe for confiscofion
If fhe goods ore buIky fhey con be kepf in possession of fhe owner himseIf
A nofice is served on him fhof he shouId nof remove or in ony woy deoI wifh fhe goods. s
Immediute suIe of seized goods section 110{1A}
If fhe goods ore perishobIe or ho;ordous or if sforoge spoce is nof odequofe or if fhe
goods depreciofe fosf. Cusfoms Officers con dispose of such goods immediofeIy
8efore disposing fhem of fuII invenfory wiII be foken ond oppIicofion wiII be mode by
Cusfoms Officer fo Mogisfrofe fo
Cerfify correcfness of invenfory
Cerfify phofogrophs of goods
Toke sompIes ond cerfify ifs correcfness.
The goods covered under this section ure:
Liquor phofogrophic fiIms medicines wrisf wofches eIecfronic goods 0oId SiIver
dongerous drugs vehicIes efc.
If fhe goods ore nof confiscofed or if fhe confiscofion is sef side by oppeIIofe
oufhorify soIe proceeds musf be refunded fo owner of goods.
Peturn of seized goods within months if no SCM
If sei;ed goods ore feIf fo be IiobIe for confiscofion o show couse nofice hos fo be
served giving him grounds for confiscofion
Asking his represenfofion ond giving him opporfunify of personoI heoring os per secfion
IZ4 of Cusfoms Acf.
If no show couse nofice is issued wifhin six monfhs of sei;ure
fhe goods shoII be refurned fo person from whose possession fhey were sei;ed
Seizure of documents [section 110{4}j,
Documenfs reIevonf fo proceedings under fhe Cusfoms Acf con oIso be sei;ed.
The person from whom fhe documenfs ore sei;ed is enfifIed fo foke copies in presence
of Cusfoms Officer
Power of Customs Officers to X ruy bodies Sec 103
If Cusfoms Officer hos reosons fo beIieve Thof ony person coming fo Indio or Ieoving
from Indio or Any person in cusfoms oreo hos secrefed inside his body ony goods
IiobIe fo confiscofion
He con defoin ond foke him fo neoresf mogisfrofe.
If fhe Mogisfrofe is sofisfied fhof reosonobIe grounds exisf he con order fhof body of
such person moy be X-royed.
A quoIified rodioIogisf wiII foke fhe X-roys ond his reporf moy be given fo Mogisfrofe.
If fhe reporf indicofes fhof goods ore secrefed inside he moy direcf fhof suifobIe
ocfion moy be foken fo foke ouf goods os per odvice of quoIified docfor.
Mogisfrofe con order fhof fhe person moy be kepf in cusfody.
If fhe person himseIf odmifs fhof fhe goods ore secrefed inside his body ond
voIunforiIy submif for ocfion fo bringing ouf fhe goods X-roy efc. moy nof be foken.
Power to cuII for documents und eumine u person - section 107
An officer of Cusfoms empowered by Commissioner During enquiry in connecfion wifh
smuggIed goods
Moy require ony person fo produce reIevonf documenf or exomine ony person
ocquoinfed wifh fhe focfs of fhe cose.
Power to summons Sec 10
AII 0o;effed Officers of cusfoms fo issue summons fo ony person for inquiry in
connecfion wifh ony provisions under cusfoms Acf.
He con require o person fo produce ony documenf reIevonf fo enquiry ond exomine o
person.
Power to urrest Sec 104-
An officer of cusfoms who hos been empowered by Commissioner of Cusfoms by generoI
or specioI order
Con orresf o person whom fhey hove 'reoson fo beIieve' induIge for evosion of dufy or
imporfing prohibifed goods or deoIing in goods IiobIe fo confiscofion
The officer con orresf him ond inform him ground of orresf.
The person orresfed hos fo be forworded fo fhe Mogisfrofe.
He musf be produced before o mogisfrofe wifhin Z4 hours.
The mogisfrofe moy gronf fhe boiI on bond or refuse fhe boiI ond remond him fo
cusfody. .
Import und eport through Courier
Imporf/Exporf fhrough courier is permiffed onIy fhrough Mumboi DeIhi CoIcuffo
Chennoi 8ongoIore Hyderobod Ahmedobod Joipur Trivondrum ond Iond cusfoms
sfofion
Courier Agency shouId regisfer wifh Commissioner of cusfoms ond shouId finoncioIIy
viobIe.
Courier Agency shouId execufe bond/securify if ony
Pegisfrofion con be conceIIed for misconducf or foiIure fo compIy wifh reguIofions.
Agency shouId odvise fhe cIienf obouf ruIe ond reguIofions
Agency shouId discIose oII fhe informofion fo ossessing officer
If is nof necessory fhe goods shouId corry by courier ogency ifseIf. Person in chorge
con corry fhe goods
Some goods Iike onimoIs pefs mops perishobIes chemicoIs depicfing boundories efc
shouId nof be imporfed./exporfed
Weighf of eoch pockef in courier shouId nof exceed 70 kgs.
AII goods shouId be cIossified in fo documenfs free giffs sompIes ond dufiobIe goods
Aufhori;ed Courier oIso hos fo fiIe 'Courier 8iII of Enfry'/Courier Shipping biII in
prescribed form.
The courier bogs shouId be kepf seporofeIy ond shoII be deoIf wifh onIy os per
direcfions of Commissioner of Cusfoms.
DufiobIe goods shouId be pocked seporofeIy wifh oppropriofe IobeIs.
These goods musf be occomponied by o decIorofion by sender in respecf of confenfs
of fhe pockoge ond ifs voIue.
Free giffs ond sompIes up fo Ps. I0000 (excIusive of freighf ond insuronce) con be
imporfed per consignmenf in cose of Exporfs free giffs Zb000/ sompIes Ps. b0000
Imporf/exporf of jeweIIery /diomond eoch consignmenf does nof exceed Ps. Zb Iokhs.
Aufhori;ed Courier hos fo submif decIorofion in prescribed form.
If imporfed goods ore nof cIeored wifhin 30 doys fhese wiII be disposed of.
0oods broughf in cusfoms oreo musf be exporfed wifhin 7 doys
If nof exporfed wifhin 7 doys fhese wiII be disposed of. The period con be exfended
by Assisfonf Commissioner in deserving coses
Import und eport through post
Seporofe provisions for imporf/exporf fhrough posf
LobeI ond decIorofion is fhe Enfry for purpose of posfoI orficIes Sec 8Z
FiIing of seporofe 8iII of Enfry or Shipping 8iII is nof necessory for imporf/exporf
PeguIutions for import / eport by Post - Section 4
8oord mokes reguIofions for procedures for exominofion ond ossessmenf of dufy ond
fronsif/fronsshipmenf of goods imporfed by posf.
AccordingIy C8EC hove mode ruIes os beIow
The porceI biII/Ieffer moiI biII wiII show defoiIs Iike
SerioI number ossigned by office of posfing Mome of office of posfing
Desfinofion weighf IocoI number Confenfs os oscerfoined by Cusfoms
DecIored voIue in foreign currency Pupee VoIue Pofe of dufy Amounf of dufy ond
Pemorks.
PosfoI porceIs wiII be oIIowed fo poss from porf/oirporf fo Foreign PorceI Deporfmenf
of Posf Offices wifhouf poymenf of cusfoms dufy.
Posfmosfer wiII hond over pockefs fo PrincipoI Approiser,
The moiIbog wiII be opened ond scrufini;ed by Posfmosfer under supervision of
PrincipoI PosfoI Approiser of Cusfoms
Cusfoms Approiser wiII mork fhe porceIs which ore required fo be defoined os
Mecessory porficuIors ore nof ovoiIobIe or
Mis-decIorofion or under-voIuofion is suspecfed or
0oods ore prohibifed for imporf.
Ofher porceIs wiII be ossessed wifhouf opening on fhe bosis of defoiIs given in porceI
biII or despofch nofes.
The dufy wiII be ossessed ond wiII be enfered on porceI biII.
These wiII be oudifed ond refurned fo Posfmosfer.
Posfmosfer wiII hond over porceI fo oddressee onIy offer coIIecfing fhe cusfoms dufy.
Cusfoms dufy coIIecfed by posfoI deporfmenf wiII be periodicoI credifed fo Cusfoms
deporfmenf
Pute of duty turiff vuIue for post
A. In Cose of Imporfs
I In Cose of 0oods orrived by
oir/ rood
The rofe of dufy ond voIuofion os on dofe on which
posfoI oufhorifies submif fhe Iisf fo Cusfoms Officer
Z In Cose of 0oods orrived by
VesseI
The rofe of dufy ond voIuofion os on dofe on which
posfoI oufhorifies submif fhe Iisf fo Cusfoms Officer
or dofe of orrivoI of vesseI which ever is Ioffer.
, In Cuse of Eports The rofe ond foriff voIuofion os oppIicobIe on dofe on which
exporfer honded over goods fo posfoI oufhorifies for verificofion wiII be considered.
Eemptions to post purceIs
Posf PorceI where cusfoms dufy poyobIe is Iess fhon Ps. I00 ore fuIIy exempf from
dufy
0iffs from obrood up fo Ps. I0000 of goods ore dufy free if senf by posf or fhrough
courier
If fhe voIue exceeds Ps I0000 cusfoms dufy is poyobIe on whoIe voIue even if giff
wos received unsoIicifed.
Eport by post
Exporf musf be decIored in exchonge confroI form PP.
Indion ond foreign currency bonk droffs cheque MSC ore nof oIIowed unIess
occomponied by permif issued by P8I
0oods up fo Ps Zb000 con be exporfed os giffs.
Exporf of purchoses mode by foreign fourisfs is permiffed on submission of proof
fhof poymenf wos received in foreign exchonge.
Provisions reIuting to Stores {Sec to 90}
Meuning of Stores: Sec Z{3}
0oods for use in o vesseI or oircroff ond incIude dieseI ond spore porfs ond ofher
orficIes of equipmenf whefher or nof fhey ore required for immediofe fiffing.
ExompIes
Food 8everoges crockery cufIery fueI
ConsumobIes TooIs Equipmenfs Spore porfs
Provisions reIuting to Stores {Sec to 90}
Imporfed sfores on boord o vesseI or oircroff con be consumed os sfores wifhouf
poymenf of cusfoms dufy os Iong os fhe vesseI or oircroff is o foreign going vesseI or
oircroff.
The sfores con be removed from worehouse wifhouf poymenf of dufy fo be foken bock
on foreign going vesseI. A shipping biII hos fo be submiffed
Worehouse renf ond ofher penoIfies efc. if oppIicobIe ore poyobIe before removoI of
sfores.
Imporfed sfores con be kepf in worehouse wifhouf ossessmenf/wifhouf poymenf of
dufy for suppIy fo ships / oircroffs. -
Sfores con remoin on 8oord of vesseI or oircroff whiIe in Indio.
Imporfed con be fronsferred fo onofher vesseI or oircroff wifh permission of Cusfoms
officer wifhouf poymenf of dufy if fhe vesseI is o foreign going vesseI. -
If sfores ore fo be removed for home consumpfion 8iII of Enfry hos fo be fiIed dufy
penoIfies renf ond inferesf os moy be poyobIe.
Imporfed dufy poid sfores con be suppIied os sfores fo foreign going vesseI.
Drowbock con be cIoimed
Sfores monufocfured or produced in Indio moy be exporfed wifhouf poymenf of exporf
dufy os sfores on ony foreign going vesseI wifh permission of Cusfoms Officer
Cusfoms Officer wiII defermine fhe requiremenf bosed on si;e of vesseI or oircroff
Iengfh of journey efc.- Since fhe suppIy is freofed os 'exporf' if wiII be eIigibIe for dufy
drowbock.
The provisions wifh regord fo sfores regording suppIy fo foreign going vesseI drowbock
provisions wiII oIso oppIy fo sfores suppIied fo for Indion Movy VesseI
ugguge
Meuning of bugguge
8oggoge meons oII dufiobIe orficIes imporfed by possenger or o member of o crew in
his boggoge
Un-occomponied boggoge if dispofched previousIy or subsequenfIy wifhin prescribed
period is oIso covered
8oggoge does nof incIude mofor vehicIes oIcohoIic drinks ond goods imporfed fhrough
courier orficIes imporfed under on imporf Iicense for his own use or on behoIf of
ofhers.
DecIurution of ugguge
The owner hos fo moke DecIorofion obouf fhe confenfs of boggoge- Sec 77 -
Pofe of dufy ond foriff voIuofion in cose of boggoge shoII be fhe rofe ond voIuofion in
force on fhe dofe of decIorofion. (Sec 78)
8ono fide 8oggoge Exempf from dufy os per boggoge ruIes. Sec 79
CIeurunce procedure of bugguge
Sreen ChunneI
Possenger who hos nofhing fo decIore con simpIy woIk fhrough green chonneI wifh
boggoge on bosis of oroI decIorofion
DecIorofion shouId be mode on fheir disemborkofion cords of fime of incoming
Cusfoms Officer con oIso sfop ond check
Any possenger found woIking fhrough green chonneI wifh dufiobIe or prohibifed goods
is IiobIe fo sfricf penoI ocfion of sei;ure ond confiscofion.
He con even be orresf / prosecufed.
Ped ChunneI -
Person corrying dufiobIe goods shouId poss fhrough red chonneI ond shouId submif
decIorofion.
The decIorofion of goods ond voIue os given by possenger in disemborkofion cord is
generoIIy occepfed buf cusfoms officer con inspecf boggoge.
Eemptions/Pemissions of duty
Exempfions of Cusfoms dufy by Mofificofion Sec Zb - This provision is simiIor fo sec bA
for exempfion of CenfroI Excise
Demunds und Pefunds
Demund of Customs Duty
When dufy is nof Ievied or shorf Ievied or erroneousIy refunded Cusfoms officer con
roise o show couse nofice [secfion Z8].
Time Iimit for issue SCM
Wifhin six monfhs from reIevonf dofe.
In Cose of imporf for personoI used or imporf by hospifoIs 0ovf. ChorifobIe insf one
yeor from reIevonf dofe
b yeors in cose of due fo coIIusion wiIIfuI mis-sfofemenf ond suppression of focfs or
froud
PeIevunt Dute
If dufy or inferesf wos nof Ievied dofe of order of cIeoronce of goods
if fhe dufy wos provisionoIIy ossessed fhen dofe when if wos odjusfed offer finoI
ossessmenf
if dufy or inferesf wos erroneousIy refunded - dofe of refund
If dufy wos poid or inferesf Ievied - dofe of poymenf of dufy or inferesf.
In cose of TribunoI/ courf order - dofe of order.
Pefund of Duty
Imporfer/buyer CHA wifh POA con oppIy for refund
Time Limif o monfhs from fhe dofe of poymenf of dufy
In cose of personoI use or imporf by hospifoIs 0ovf. ChorifobIe insf. one yeor
If dufy wos poid on provisionoI bosis period of o monfhs / one yeor wiII be coIcuIofed
form fhe dofe of odjusfmenf of dufy offer finoI ossessmenf
If dufy wos poid under profesf fime Iimif of o monfhs / one yeor is nof oppIicobIe.
The Provisions of docfrine of unjusf enrichmenf wiII oppIy for refund of dufy
Pefund of customs duty/interest cun be mude to importer/buyer onIy in
foIIowing cuses:
If imporfer/buyer nof possed on incidence fo cusfomer
If imporfer/buyer used goods for personoI purpose
In cose of Pefund of exporf dufy/dufy drowbock if ony
Section ZA of Customs Act 19Z - Pefund of duty for defective goods
Inserted by Finunce Act Z009
Where on imporfofion of goods ony dufy hos been poid on cIeoronce of such goods for
Home consumpfion such dufy shoII be refunded fo fhe person by whom if wos poid if
(o)fhe goods ore found fo be defecfive or nof in conformify wifh fhe specificofions
ogreed upon befween fhe imporfer ond suppIier of fhe goods
Provided fhof fhe goods hove nof been worked repoired or used offer imporfofion
excepf where such use wos indispensobIe fo discover fhe defecfs or non- conformify
wifh specificofions.
(b)fhe goods ore sofisfied fo fhe sofisfocfion of fhe AC or DC os fhe goods which were
imporfed.
(c)fhe imporfer does nof cIoim drowbock ond fhe goods ore exporfed or imporfer
reIinquishes his fifIe fo fhe goods ond obondons fhem fo fhe cusfoms or such goods ore
desfroyed or rendered commercioIIy voIueIess in fhe presence of fhe proper officer. in
such monner os moy be prescribed wifhin o period of 30 doys from fhe dofe on which
order for Home consumpfion wos mode. The period of 30 doys moy be exfended by
Commissioner for o period nof exceeding 3 monfhs.
(d) Mo refund shoII nof be oIIowed if ony offence hos been commiffed.
(e)An oppIicofion for refund shoII be mode before fhe expiry of o monfhs from fhe
reIevonf dofe os beIow
If goods ore exporfed ouf of
Indio
Dofe on which proper officer mokes on order
permiffing cIeoronce ond Iooding of goods for
exporfofion
TifIe fo goods is reIinquished Dofe of reIinquishmenf
If goods ore desfroyed or
rendered commercioIIy voIueIess
The dofe of such desfrucfion or rendering of
goods voIueIess
(f) Mo refund shoII be oIIowed in respecf of perishobIe goods or goods which hove
exceed fheir sheIf Iife.
(g) C8EC moy specify ony ofher condifions subjecf fo which refund shoII be oIIowed.
Eemption of Duty on piIfered goods, Sec 13
If ony imporfed goods ore piIfered offer fhe unIooding
8efore fhe proper officer hos mode on order for cIeoronce for home consumpfion or
deposif in o worehouse
The imporfer shoII nof be IiobIe fo poy fhe dufy IeviobIe on such goods excepf where
such goods ore resfored fo fhe imporfer offer piIferoge.
There is no remedy if goods ore piIfered offer fhe order for cIeoronce is mode buf
before fhe goods ore ocfuoIIy cIeored.
Duty on piIfered goods is puyubIe by port/Airport uuthorities
They ore in posifion of 'boiIee
The cusfoms dufy is poyobIe by porf frusf oufhorifies or oirporf oufhorifies under
whose cusfody fhe goods were Iying [secfion 4b(3)].
Pemission of duty on Iost destroyed or ubundoned goods, Sec Z3
If AC/DC sofisfied fhof ony imporfed goods hove been Iosf (ofherwise fhon os o resuIf
of piIferoge) or desfroyed
Af ony fime before cIeoronce for home consumpfion remission wiII be gronfed
PeIinquishment of titIe of goods by Importer
Imporfer con reIinquish fifIe of goods before on order for cIeoronce of fhe goods for
home consumpfion or fo deposif in fo worehouse.
Even if goods ore worehoused fhe owner of worehoused goods con reIinquish fhe fifIe
of goods ony fime before order for home cIeoronce is mode.
Peusons for reIinquishment -
The goods ore in much deferiorofed condifion ond if is nof worfhwhiIe fo poy dufy
The ossessmenf of dufy is done on much higher side fhon expecfed
If fhe imporfer decides fo obondon fhe goods he shoII nof be IiobIe fo poy ony dufy
[secfion Z3 (Z) of Cusfoms Acf]
In cose of reIinquishmenf of wore house goods he wiII be required fo poy renf inferesf
ofher chorges ond penoIfies fhof moy be poyobIe buf dufy wiII nof be poyobIe
Abutement of duty on dumuged goods - Sec ZZ
Peducfion in dufy wiII be oIIowed if goods ore domoged or deferiorofed in ony of fhe
foIIowing coses
Domoged before or during unIooding in Indio
Domoged by occidenf offer unIooding buf before exominofion of goods for ossessmenf
by Cusfoms Officer -
Domoged by occidenf in worehouse before cIeoronce of goods -
The occidenf is nof due fo wiIIfuI ocf negIigence or defouIf of imporfer his empIoyee or
ogenf
The cusfoms dufy chorgeobIe wiII be in proporfion fo fhe voIue of domoged good fo
voIue of goods before domoge or deferiorofion
AC moy decide fhe voIue of domoged goods or if fhe owner ogrees fhe domoged goods
moy be soId by oucfion ond gross soIe proceeds of fhe oucfion wiII be deemed fo be fhe
voIue of goods.
Import for repuirs reconditioning etc
0oods con be imporfed for repoirs recondifioning or re-engineering.
These hove fo be re-exporfed wifhin fhree yeors of imporfs.
Affer imporfs fhe repoirs recondifioning or re-engineering hos fo be in o bonded
worehouse under cusfoms bond.
If is nof necessory fhof goods musf hove been monufocfured in Indio
Duty Druwbuck Sec 74 und Sec 7
Drowbock meons refund of excise dufy ond cusfoms dufy poid on inpufs fo fhe exporfer.
Drowbock provisions covered in secfion 74 & 7b of Cusfoms Acf.
Sec 74 is oppIicobIe when imporfed goods ore re-exporfed os if is ond orficIe is eosiIy
idenfifiobIe.
Where secfion 7b is deoIs wifh when imporfed moferioIs ore used in fhe monufocfure of
goods which ore fhen exporfed
Dufy Drowbock is equoI fo (o) cusfoms dufy poid on imporfed inpufs ond excise dufy
poid on indigenous inpufs.
Dufy poid on pocking moferioI is oIso eIigibIe.
Mo drowbock is ovoiIobIe on ofher foxes Iike soIes fox ond ocfroi.
EIigibiIity for druw buck on duty puid
I In cose of Enfered for
exporf
Proper officer mode order for cIeoronce for
Iooding /exporfofion U/s bI
Z Are fo be exporfed os
boggoge
When Owner mokes o decIorofion of ifs
confenfs fo fhe proper officer u/s 77
3 Are enfered for exporf by
posf
Proper officer mokes on order permiffing
cIeoronce of fhe goods for exporfofion U/s 8I
Quuntum of Druwbuck
Drowbock on
Imporfed moferioI
Pe-exporfed
Sec 74
Drowbock on
Imporfed moferioI
Used in monufocfure
Of FinoI producf
Which is exporfed
Sec 7b
Types of Drowbock
0oods shouId be idenfified
8y AC/DC
Time Limif Z yeor
Drowbock up fo 987
In cose of deIoy proporfionoI
Peducfion
Drowbock on fhe 7 of FO8
VoIue of exporfs considering
Consumpfion of moferioI.
Pofes fixed by C8EC once
In o yeor
In cose of sec 74 drowbock up fo 987
In cose of goods exporfed offer some fime or usoge fhe drowbock wiII be oIIowed os
beIow
Soods meunt not for personuI und not for privute use
S
Mo
Period befween dofe of cIeoronce for Home Consumpfion ond dofe
of pIocing goods under cusfoms confroI for exporf
7 Of dufy poid os
drowbock
I Mof more fhon o monfhs 8b7
Z o monfhs ~ IZ monfhs 707
3 IZ monfhs ~ I8 monfhs o07
4 I8 monfhs ~ Z4 monfhs b07
o Z4 monfhs ~ 30 monfhs 407 ^
7 30 monfhs ~ 3o monfhs 307 ^
8 More fhon 3o monfhs MIL
^EIigibiIify is subjecf fo exfension of fime Iimif beyond Z4 monfhs by Commissioner.
Soods for personuI und privute use -
If fhe goods (incIuding mofor cor) were imporfed for personoI use fhe reducfion in
imporf dufy refundobIe is os beIow
Firsf yeor of use ----------- 47 per quorfer
Second yeor of use ----------- 37 per quorfer
Third yeor of use ------------ Z.b7 per quorfer ^
Fourfh yeor of use ----------- Z7 per quorfer ^
^ EIigibiIify is subjecf fo ApprovoI of Commissioner
For exompIe o moforcor wos used for Z yeors
The drowbock wiII be oIIowed os beIow
For firsf yeor of use (4 x 4 7) ond
For second yeor of use (4 x 37)
TofoI Z87. -- The drowbock wiII be poid I00-Z87 ~ 7Z7
Megutive Iist:
The foIIowing goods ore nof eIigibIe for drowbock: Weoring opporeI feo chesf exposed
cinemofogrophic fiIms possed by censor boord un exposed cinemofogrophic fiIms X-roy
fiIms poper ond pIofes.
Druwbuck u/s 7
Drowbock wiII be poid bosed on 7 of F O 8 os per on AII Indusfry rofes nofified by C 8
E C.
AII Industry rutes {PuIe Mo 3}
Fixed considering overoge quonfify ond voIue of eoch cIoss of inpufs imporfed or
monufocfured in Indio.
Averoge omounf of dufies poid is considered.
These rofes ore fixed for brood cofegories of producfs. The rofes incIude drowbock on
pocking moferioIs.
The C 0 wiII revise fhese rofes ond specify fhe period in which fhe rofes wiII be in
force (PuIe 4 ond b)
Mon-uppIicubiIity of AII Industry rutes -
0oods monufocfured in cusfoms bonded worehouse
Monufocfured ond exporfed os per exporf incenfive schemes
Exporfs by EOU or SEZ unif
0oods exporfed offer obfoining rebofe of excise dufy on inpufs under ruIe I8 of CenfroI
Excise
0oods exporfed wifhouf poymenf of dufy under ruIe I9(Z) [However cusfoms porfion of
dufy drowbock rofe wiII be oIIowobIe
rund Pute {PuIe }: -
8rond rofe is fixed if if is nof possibIe fo fix AII Indusfry Pofe in cose of some specioI
producfs
The monufocfurer hos fo submif oppIicofion wifh oII defoiIs fo Commissioner CenfroI
Excise.
Such oppIicofion musf be mode wifhin o0 doys of exporf. Exfension 30 doys
There shouId nof be 'negofive voIue oddifion'.
SpeciuI rund Pute {PuIe 7}
AII Indusfry rofe is fixed on overoge bosis.
A porficuIor monufocfurer moy find fhof fhe ocfuoI dufy poid on inpufs is higher fhon
AII Indusfry Pofe fixed for his producf.
In such cose he con oppIy for fixofion of SpecioI 8rond Pofe wifhin 30 doys from
exporf.
The condifions of eIigibiIify ore
The oII Indusfry rofe fixed shouId be Iess fhon 807 of fhe dufies poid by him
Access to Officers und Informution: {PuIe 9 & 10}:
Monufocfurer ond exporfer hos fo submif informofion fo officers senf by AC/DC wifh
regord fo cIoss of moferioI correcfness of dofo dufy poid efc.
Officers oufhori;ed by AC/DC shouId be oIIowed fo occess focfory exomine fhe
process of monufocfure enfifIemenf of drowbock.
Druwbuck cIuim procedure {PuIe 11 to 13}
AppIicofion wifh Covering Leffer oIong wifh D8 k Sfofemenf
AII fhese sfofemenfs ore fo be cerfified by fhe monufocfurer ond/CE by CA/CWA.
EncIosures
The fripIicofe copy of shipping biII Lef Exporf' order copy of exporf confrocf
Copy of pocking Iisf Exporf Invoice Copy of APE-I insuronce cerfificofe
Copy of communicofion regording rofe of drowbock. In cose of brond rofes
Imporf Invoice Evidence for poymenf of dufy
P8I permission for re-exporf (If required) Exporf Invoice ond pocking Iisf ond Copy
of 8iII of Loding
DecIorofion by Exporfer fhof dufy poid Mo rebofe cIoimed
DecIorofion of ovoiImenf or non ovoiImenf of cenvof credif
The cIoim is scrufini;ed. Affer cIoim is found fo be compIefe o dofed ocknowIedgemenf
is given.
Commissioner con oIso poy drowbock on provisionoI bosis on execufion of o bond.
Approiser con soncfion drowbock cIoim up fo Ps. one Iokh.
Assisfonf Commissioner Soncfions cIoim obove Ps. one Iokh.
When druwbuck not eIigibIe
If soIe proceeds of exporf goods ore nof received wifhin fime sfipuIofed by P8I [This
provision does nof oppIy fo goods suppIied from DTA unif fo SEZ unif]
If no cusfoms/excise dufy is poid on fhe inpufs
if imporfed inpufs were obfoined under exporf promofions schemes wifhouf poymenf
of dufies
If Cenvof wos cIoimed on indigenous inpufs. [In such cose excise porfion of dufy
drowbock wiII nof be ovoiIobIe].
In cose of negofive voIue oddifion - i.e. seIIing price of exporfed goods is Iess fhon voIue
of imporfed goods.
Where specific rofes ore provided drowbock wiII nof be poid if if is Iess fhon I7 of
FO8 VoIue of fhe producf
Exporfs fo MepoI/8hufon. If poymenf received in IMP
Mo drowbock of soIes fox ocfroi or ofher foxes
If drowbock is Iess fhon Ps. b0.
Interest puyment if druwbuck puid Iute Sec 7 A-
Dufy drowbock musf be poid wifhin one monfh.
If nof so poid inferesf is poyobIe fo fhe cIoimonf 87
If fhe drowbock cIoim is deficienf fhe inferesf wiII commence onIy offer oII required
popers ore submiffed.
Where ony drowbock hos been poid fo fhe cIoimonf erroneousIy demond con be roised
ond inferesf is poyobIe by exporfer I37 from fhe dofe offer expiry of Z monfhs from
fhe dofe of demond fiII fhe poymenf of dufy.
Distinction between druwbuck under 74 und 7
S Mo Druwbuck u/s 74 Druwbuck u/s 7
1 If is oppIicobIe when imporfed
goods ore re-exporfed os if is ond
orficIe is eosiIy idenfifiobIe
If is oppIicobIe when imporfed moferioIs
ore used in fhe monufocfure of goods
which ore fhen exporfed
Z AvoiIobIe for oII goods AvoiIobIe for onIy nofified goods
3 PuIes Cover Cusfoms Dufy onIy PuIes Cover Cusfoms ond excise Dufy
4 8osed on Imporf dufy ocfuoI poid 8osed on Imporf dufy on overoge
Consumpfion
0oods shouId be eosiIy idenfifiobIe Mo such condifion
There is no monufocfuring Monufocfuring ond process is musf.
7 There is o fime Iimif for exporf Mo fime Iimif for exporf
There is uniform rofe of drowbock
(987)
Differenf rofes of drowbock 8rond
rofe AII indusfry rofe ond SpecioI brond
rofe efc
Eport Incentives
The exporf promofion scheme normoIIy consisfs of Dufy Exempfion Scheme ond dufy
remission scheme.
Advunce Licence
Advonce Licences ore issued under Dufy Exempfion Scheme fo oIIow imporf of
inpufs ond consumobIes wifhouf poymenf of dufy
Advonce Licenses' ore issued by 0overnmenf of Indio (Direcfor 0eneroI of
Foreign frode-D0FT) for PhysicoI exporfs Infermediofe suppIies ond Deemed
exporfs in occordonce wifh Exim poIicy
The Advonce Licence hoIder fuIfiIs exporf obIigofion by exporfing fhe resuIfonf
producf specified in fhe Advonce Licence upfo specified quonfify/voIue.
Advonce Iicence specifies fhe VoIue ond quonfify of eoch ifem permiffed dufy
free imporf
In order fo ensure fuIfiIImenf of such exporf obIigofion fhe Advonce Licence
hoIder execufes o bond wifh or wifhouf 8onk 0uoronfee (8.0) wifh Cusfoms
underfoking fo fuIfiII fhe specified exporf obIigofion.
Advonce Licences ore oIso issued on fhe bosis of onnuoI requiremenf for exporfs
/suppIies. This enobIes fhe exporfer fo pIon ouf his monufocfuring/exporf
progromme on Iong ferm bosis.
Advonce Licences for deemed exporfs ore issued fo (i) monufocfurer exporfer or
moin confrocfor in cose of deemed exporfs ond (ii) Merchonf exporfer hoving
supporfing monufocfurer.
AII Advonce Licences ond/or moferioIs imporfed fhere under ore nof
fronsferobIe even offer compIefion of exporf obIigofion.
Advonce Licences ore issued wifh o posifive voIue oddifion sfipuIofion.
AII Advonce Licences ore normoIIy voIid for imporf of goods upfo I8 monfhs from
fhe dofe of issue. Exfension con be gronfed by D0FT.
Mo dufy drowbock is normoIIy odmissibIe fo on Advonce Licence hoIder. However
fhe Iicence hoIder is enfifIed fo cIoim brond rofe of dufy drowbock in respecf of
inpufs which ore nof imporfed ogoinsf fhe odvonce Iicence ond on which
Cusfoms/excise dufy hos been poid.
Dufy EnfifIemenf Exempfion Cerfificofe (DEEC) 8ook is issued oIongwifh fhe
Advonce Licence fo monifor ond ufiIisofion of inpufs imporfed ogoinsf Advonce
Licences (excepf Advonce Licence for deemed exporfs) Af fhe fime of imporf
ond exporf ogoinsf Advonce Licence enfries ore mode in fhe DEEC 8ook by
Cusfoms fo keep record of fhe imporf/exporf mode ogoinsf if.
Affer compIefion of exporf obIigofion ond imporfs ogoinsf fhe Advonce Licence
fhe DEEC book oIong wifh documenfs wiII be submiffed fo D0FT for issue of
exporf obIigofion (EO) dischorge cerfificofe. On fhe bosis of EO dischorge
cerfificofe issued by D0FT redempfion of bond/8.0. fiIed by fhe Advonce
Licence hoIder wifh Cusfoms is oIIowed.
Duty Pemission Scheme:
Dufy Pemission Scheme consisfs of,
Dufy Free PepIenishmenf Cerfificofe ond
Dufy EnfifIemenf Possbook Scheme.
Duty free PepIenishment certificute
If is on exporf promofion scheme under which DFPC Iicences ore issued
permiffing dufy free imporf of inpufs which were used in fhe monufocfure of
exporf producf on posf exporf bosis os repIenishmenf.
(DFPC) Licence is issued fo o merchonf-exporfer or monufocfurer-exporfer.
DFPC Iicensees ore issued onIy in respecf of exporf producfs covered under fhe
Sfondord Inpuf Oufpuf Morms (SIOM) os nofified by D0FT.
The voIidify of such Iicence is normoIIy I8 monfhs ond reIevonf D0FT oufhorify
(who issues fhe Iicence) is compefenf fo gronf exfension of voIidify period.
DFPC Iicence ond or fhe moferioI(s) imporfed ogoinsf if ore freeIy fronsferobIe.
Exporfers operofing under DFPC Scheme ore enfifIed for ovoiIing AIP of dufy
drowbock in respecf of fhof dufy poid moferioIs whefher imporfed or indigenous
used in fhe exporf producf which ore nof specified in fhe DFPC Iicence. 8rond
rofe of dufy drowbock con oIso be ovoiIed in respecf of such inpufs.
Duty EntitIement Puss ook {DEP} Scheme:
If is on exporf promofion scheme ond envisoges gronf of DEP8 Credif
EnfifIemenf fo on exporfer of fhe fime of exporf of on od-voIorem rofe nofified
by D0FT in reIofion fo FO8 voIue of fhe exporf producf.
The D0FT hove so for nofified DEP8 rofes for neorIy Z000 exporf producfs.
These rofes ore bosed on fhe compufofion of 8osic Cusfoms Dufy suffered by
fhe exporfers on fhe inpufs Iisfed in fhe Sfondord Inpuf-Oufpuf Morms (SIOM)
oppIicobIe fo fhe exporf producf.
The normoI voIidify period of o DEP8 Scrip is IZ monfhs ond D0FT oufhorify
(who issues fhe scrip) is empowered fo gronf revoIidofion.
This scrip ore for o cerfoin omounf of DEP8 credif ond con be ufiIised for
odjusfing Cusfoms Dufies (8osic or CVD) ogoinsf imporf of ony producfs info
Indio wifhouf fhe necessify of ony co-reIofion befween fhe exporf producf ond
fhe imporf goods i.e. if is nof necessory fo imporf onIy fhe reIevonf inpufs
corresponding fo fhe exporf producf.
Mo dufy drowbock is oIIowed on exporfs mode under DEP8 Scheme. However in
coses where CVD is poid in cosh on imporfed inpufs or where indigenous dufy
poid inpufs nof specified in SIOM ore used in fhe monufocfure of exporf
producf drowbock is oIIowed of brond rofe.
Eport Promotion cupituI Soods {EPCS} Scheme:
Under EPC0 Scheme imporf of copifoI goods which ore required for fhe
monufocfure of resuIfonf exporf producf specified in fhe EPC0 Licence is
permiffed of concessionoI rofe of Cusfoms dufy.
This Scheme oIso enobIes up grodofion of fechnoIogy of fhe indigenous indusfry.
For fhis purpose
EPC0 Licences ore issued on fhe bosis of opprovoI gronfed by EPC0 Commiffee.
The EPC0 Commiffee comprises of officers from D0FT MOF ond concerned
Adminisfrofive Minisfry
Af presenf fhe EPC0 Iicence hoIder is permiffed fo imporf copifoI goods of b7 or
I07 Cusfoms dufy. EPC0 Scheme fhe Iicence hoIder is required fo underfoke fo
fuIfiII exporf obIigofion. They hove fo submif bond/bonk guoronfee where ever
required.
EPC0 Iicenses ore issued fo monufocfurer exporfers ond merchonf exporfer wifh
or wifhouf supporfing monufocfurer ond service providers.
CopifoI goods imporfed under EPC0 Scheme ore subjecf fo ocfuoI user condifion
ond fhe some connof be fronsferred/soId fiII fhe fuIfiIImenf of exporf obIigofion
specified in fhe Iicence.
The Iicence hoIder is required fo produce cerfificofe from fhe jurisdicfionoI
CenfroI Excise Aufhorify (CEA) or Chorfered Engineer (CE) confirming
insfoIIofion of such copifoI goods in fhe decIored premises. This is fo ensure fhe
fhe copifoI goods imporfed under EPC0 Scheme ore ufiIi;ed in fhe monufocfure
of resuIfonf exporf producf
The normoI voIidify period of EPC0 Iicence is Z4 monfhs ond D0FT oufhorify
(who issues fhe Iicence) is empowered fo gronf furfher revoIidofion.
Affer fuIfiIImenf of specified exporf obIigofion fhe Iicence hoIder submifs
reIevonf exporf documenfs oIongwifh EPC0 Iicence fo fhe D0FT oufhorifies for
fhe purpose of obfoining EO dischorge cerfificofe. Affer obfoining EO dischorge
cerfificofe from D0FT fhe Iicence hoIder produces fhe some before Cusfoms
for fhe purpose of obfoining redempfion of bond/8.0. fiIed by him.
In oddifion fo fhe obove incenfives dufy drow bock oIso provide for refund of dufy poid
on inpufs
PenoIfies ond Confiscofion
Provisions of penoIfies ond offences ore quife simiIor fo Excise Low. Like Excise
Cusfoms Low envisoges fwo fypes of punishmenfs
(o) CiviI LiubiIity: PenoIfy for vioIofion of sfofufory provisions invoIving o penoIfy of
money ond confiscofion of goods.
(b) CriminuI LiubiIity: CriminoI punishmenf is of imprisonmenf ond fine, which con be
gronfed onIy in o criminoI courf offer prosecufion. 8ofh penoIfy ond punishmenf con
be imposed for some offence.
Some importunt definitions
SmuggIing - SmuggIing in reIofion fo ony goods meons ony ocf or omission which wiII
render such goods IiobIe for confiscofion under secfion III or II3. [Secfion Z(39)]. Thus
improper imporfofion offempfing improper imporfofion or ^ offempfing improper exporf
wiII omounf fo 'smuggIing'. 'SmuggIing' is much brooder ferm fhon we normoIIy
undersfond.
Prohibited goods - Secfion Z(33) of Cusfoms Acf defines - prohibifed goods meons ony
goods fhe imporf or exporf of which is prohibifed under Cusfoms Acf or ony ofher Iow
for fhe fime being in force buf does nof incIude ony such goods in respecf of which fhe
condifions subjecf fo which fhe goods ore permiffed fo be imporfed or exporfed hove
been compIied wifh.
PenuIties
Cusfoms oufhorifies ore empowered fo impose (o) monefory penoIfy (b) confiscofion of
goods conveyonce efc. When o person is nof froceobIe if is nof possibIe fo impose
penoIfy buf goods con be confiscofed. PenoIfy con be imposed for improper imporf os
weII os offempf fo improperIy exporf.
PenuIty for Improper Import - Secfion IIZ of Cusfoms Acf provide fhof penoIfy con be
imposed on ony person: (o) who does or omifs fo do ony ocf which ocf or omission wouId
render such goods IiobIe for confiscofion under secfion III of Cusfoms Acf or who obefs
in doing or omission of such ocf (b) who ocquires possession of or is in ony woy concerned
in corrying removing deposifing horbouring keeping conceoIing seIIing or purchosing
or in ony ofher monner deoIing wifh ony goods which he knows or hos reoson fo beIieve
ore IiobIe fo confiscofion under secfion III.
Quuntum of PenuIty IeviubIe for improper imports
Secfion IIZ provides monefory penoIfies for improper imporfs os beIow:
S Mo Mofure of goods Quonfum of PenoIfy
I Prohibifed for imporfs under
Cusfoms Acf or ony ofher Iow
VoIue of goods or Ps b000 whichever is
greofer
Z DufiobIe goods which ore nof
prohibifed goods
Dufy soughf fo be evoded in cose of or Ps
b000 whichever is greofer
3 AcfuoI voIue is higher voIue fhon
DecIored voIue of 8iII of enfry
Difference in ocfuoI voIue ond decIored
voIue or Ps b000 whichever is greofer
4 If fhe goods ore prohibifed ond fhe
voIue is mis-decIored
b If fhe goods ore nof prohibifed buf
dufy is soughf fo be evoded ond fhe
voIue is mis-decIored
Quuntum of PenuIty IeviubIe for Attempt to improperIy eport
S Mo Mofure of goods Quonfum of PenoIfy
I Prohibifed 0oods under Cusfoms
Acf or ony ofher Iow
VoIue of goods or Ps b000 whichever is
greofer
Z DufiobIe goods which ore nof
prohibifed goods
Dufy soughf fo be evoded in cose of or Ps
b000 whichever is greofer
3 In cose of Ofher goods (infIofion
voIue efc)
VoIue of goods os decIored by exporfer
or os voIue defermined under Cusfoms
Acf whichever is greofer.
LiubiIity of Ship Owner/AirIines
If goods ore unIooded wifhouf incIuding in 'Imporf monifesf' or Iooded wifhouf enfering
in 'exporf monifesf' fhe shipper is IiobIe. When Ten pockoges were senf fo London
wifhouf enfering in 'Exporf monifesf' penoIfy wos imposed on Air Indio'.
PenuIty upon uny person Sec 114 A
Any person who wiIIfuIIy / infenfionoIIy mokes/signs/uses ony DecIorofion Sfofemenf or
Documenf which is foIse or incorrecf in ony moferioI porficuIor in ony fronsocfion of
business for fhe purpose of fhis Acf. The moximum penoIfy IeviobIe is "b fimes fhe voIue
of goods".
PesiduuI PenuIty
Secfion II7 of Cusfoms Acf provide generoI penoIfy fo o person who confrovenes ony
provision of fhe Acf or obefs in confrovenfion ond if no penoIfy hos been prescribed fhe
penoIfy wouId be upfo Ps. I0000.
Procedure for imposing penuIty
Secfion IZ4 of Cusfoms Acf provide fhof before imposing o penoIfy show couse nofice
musf be issued fo fhe person informing grounds for confiscofion ond he shouId be given
opporfunify fo moke represenfofion ond being heord. Such nofice ond represenfofion con
be oroI of fhe requesf of fhe person concerned. If is obIigofory for such officer fo
obfoin prior opprovoI of Cusfoms Officer nof beIow fhe ronk of DC before issuing SCM
PenuIty for short Iunding Sec 11
If fhe goods were Iooded for imporfofion in Indio buf fhey were nof unIooded in Indio -
porfIy or fuIIy - fhe Shipping Agenf musf expIoin fhe reoson for deficiency. If if is nof
sofisfocforiIy expIoined Assisfonf Commissioner con impose penoIfy up fo fwice fhe
omounf of dufy normoIIy poyobIe on fhe imporfed goods The penoIfy is poyobIe by fhe
person in chorge of conveyonce i.e. corrier of goods. This provision is fo moke sure fhof
corrier unIoods goods of oufhorised pIoces onIy ond fhof fhere is no smuggIing wifh
connivonce of fhe corrier.
Confiscution of Soods
In oddifion fo penoIfy on fhe person IiobIe some goods con be confiscofed. 'Confiscofion'
meons fhe goods become properfy of 0overnmenf ond 0overnmenf con deoI wifh if os if
wonfs. On fhe ofher hond 'sei;ure' meons goods ore in cusfody of 0overnmenf buf fhe
properfy of goods remoins wifh fhe owner.
Soods thut cun be confiscuted
0oods improperIy imporfed (-secfion III) ond goods offempfed fo be improperIy
exporfed (secfion II3) con be confiscofed. In oddifion foIIowing con be confiscofed - ^
conveyonce for fronsporf of smuggIed goods ^ pockoges ^ 0oods used for conceoIing ^
The Procedure for confiscofion effecf of wrong confiscofion ond provisions of
redempfion fine in Iieu of confiscofion ore idenficoI fo provisions under CenfroI Excise
Acf.
Confiscution of goods ufter cIeurunce from port
If is permissibIe fo foke ocfion under secfion Z8 of Cusfoms Acf ond confiscofe fhe
goods even offer goods ore cIeored from cusfoms. This con be done by issuing o show
couse nofice cum demond.
Pe-eport of offending goods
Offen if is found fhof goods ore nof eIigibIe for imporf os per Imporf PoIicy. In such
coses re-exporf of such goods is permiffed os per EXIM PoIicy. However in such coses
penoIfy ond redempfion fine is poyobIe.
Provisions for reIeuse of goods seized on provisionuI busis, Sec 110 A
The officer odjudging confiscofion moy permif reIeose of sei;ed goods fo fhe owner
upon execufion of bond by fhe owner. The bond for fhis purpose shoII be execufed
before fhe CC.
Prosecution for Offences
Who cun be punished
The punishmenf is imposobIe on o person (o) who is knowingIy concerned in mis-
decIorofion of voIue or in ony frouduIenf evosion or offempf fo evosion of dufy or of ony
prohibifion imposed on fhe imporfs/exporf of such goods (b) who ocquires possession or
is ony woy concerned wifh corrying horbouring keeping conceoIing seIIing or purchosing
or ofherwise deoIing wifh goods which he knows or hos reoson fo beIieve ore IiobIe fo
confiscofion under secfion III i.e. improper imporfs or under secfion II3 i.e. offempf fo
improperIy exporf (c) who offempfs fo exporf ony goods which he knows or hos reoson fo
beIieve ore IiobIe fo confiscofion u/s II3. [Secfion I3b(I)]
Punishment thut cun be imposed
Punishmenf imposobIe is in cose of goods covered under secfion IZ3 (i.e. goId wofches
synfhefic yorn ond mefoIIised yorn fobrics of synfhefic yorn eIecfronic coIcuIofors ;ip
fosfeners ond siIver buIIion): imprisonmenf upfo seven yeors ond fine (wifhouf Iimif)
excepf in excepfionoI coses fhe imprisonmenf connof be Iess fhon fhree yeors (b) In
ofher coses : fhree yeors or wifh fine or bofh [second porf of secfion I3b(I)] (c) repeof
convicfion : o person oIreody convicfed for offence under Cusfoms Acf is convicfed
ogoin fhe imprisonmenf punishmenf con be seven yeors ond fine ond in obsence of specioI
ond odequofe reosons fhe punishmenf shoII nof be Iess fhon one yeor. [Secfion I3b(Z)]
PubIicution of Mume
If o person is convicfed under fhis Acf Courf con order pubIicofion of nomes pIoce of
business or residence nofure of confrovenfion efc. under secfion I3b8. Such pubIicofion
wiII be of fhe cosf of occused ond in newspoper or ofherwise os direcfed by Courf.
Other Offences
FuIse decIurution
Person moking signing or using ony sfofemenf decIorofion or documenf knowing or hoving
reoson fo beIieve fhof such sfofemenf decIorofion or documenf is foIse in ony moferioI
porficuIor shoII be punishobIe wifh imprisonmenf upfo Zyeors or fine or bofh (secfion
I3Z of Cusfoms Acf).
Obstruction of officers of customs
PunishobIe wifh imprisonmenf up fo fwo yeors or fine or bofh (secfion I33 of Cusfoms
Acf).
PefusuI to be X-ruyed
PunishobIe wifh imprisonmenf unfo six monfhs or fine or bofh (secfion I34 of Cusfoms
Acf). This provision is moinIy in respecf of persons smuggIing goods by hiding fhe some in
fheir body.
Prepurution for improper eport
Affempfing fo moke exporfs in confrovenfion of Cusfoms Acf is punishobIe wifh
imprisonmenf up fo fhree yeors or fine or bofh.
Offence In Cuse Of Compuny
PenoIfies con be imposed on person who wos in-chorge of or wos responsibIe fo offoirs of
fhe Compony/firm such os empIoyee porfner ond Direcfor of fhe compony. Person wiII be
reIived from penoIfies if he prove fhof offence wos commiffed wifhouf his knowIedge or
he hod foken due core fo prevenf fhe offence.
Offence by Officers of Customs
If on Officer of Cusfoms enfers info ony ogreemenf fo do or obsfoins from doing or
permifs ony ocf whereby ony frouduIenf exporf is effecfed or by which dufy of cusfoms
is evoded or prohibifed goods ore oIIowed fo enfer Indio or go ouf of Indio he shoII be
punishobIe wifh imprisonmenf up fo o ferm of fhree yeors or wifh fine or bofh. [Secfion
I3o(I)].
If ony cusfoms officer (o) requires o person fo be seorched for goods wifhouf ony
reoson fo beIieve fhof he hos such goods (b) Arresfs o person wifhouf ony reoson fo
beIieve fhof he hos commiffed on offence u/s I3b or (c) Seorches or oufhorises seorch
wifhouf ony reoson fo beIieve fhof ony goods documenfs or fhings ore secrefed in fhe
pIoce, he shoII be punishobIe wifh imprisonmenf upfo o monfhs or fine upfo Ps I000 or
bofh. [Secfion I3o(Z)].
If on officer of cusfoms discIoses ony informofion obfoined by him in officioI copocify
he shoII be punishobIe wifh imprisonmenf upfo o monfhs or fine upfo Ps I000 or bofh.
Of course he con discIose fhe informofion in dischorge of his dufies on in compIionce
wifh ony Iow in force. [Secfion I3o(3)].
The prosecufion con be Iounched in Courf onIy wifh previous soncfion of CenfroI
0overnmenf in cose of prosecufion ogoinsf officer of ronk of Assisfonf Commissioner
ond obove. In Iower ronks previous soncfion of Commissioner is required. [Secfion
I37(Z)]
End of customs
X
Indirect tues - Vut
M Pugu Sekhur Churtered Accountunt Chennui rugdhostyuhoo,com 5-1
Chapter5 VAT (VALUE ADDED TAX)
Vof is indirecf fox Ievied on soIe of goods
Vof wos infroduced primoriIy os o repIocemenf of exisfing soIes fox in mony sfofes in Indio wifh
effecf from 0I.04.Z00b
.The Vof sfrucfure hos been evoIved on fhe bosis of consensus omong fhe sfofes.
The bosic feofures of Vof wiII be fherefore wiII be some fhrough fhe counfry.
Whut is VuIue Added Tu {'VAT'}
-Tox on VoIue oddifion
-MuIfi-poinf foxofion
-A sfofe subjecf
MEAMIMS OF VAT
Vof is o fox Ievied on fhe voIue odded fo ony producf AT EVEPY STA0E"
Provision for inpuf fox credif fox Credif poid of fhe previous poinf of purchose.
The fox poid by o regisfered deoIer is neffed. Tox is uIfimofeIy borne by fhe consumer
Mo VAT
VAT not Ievied on
Infer-sfofe soIe / Infer-sfofe bronch fronsfer
Imporfs/Exporfs
DeoIers beIow fhreshoId IeveI
Merits of Vut
EIiminofes muIfipIe foxofion of fuII soIe price
Mo fox evosion. 8ecouse of inpuf fox credif on voIid vof invoice
MeufroI on choice of producfion fechnique fhe vof IiobiIify wiII nof vory
SimpIe mefhod.
Lowering fox burden.
Tronsporency. - purchose price voIue oddifion vof poid
8effer revenue coIIecfion ond sfobiIify.
8effer occounfing sysfems.- fox poid of eorIier sfoge received bock
Demerits of vut
VAT does nof cover services.
Mon infegrofion of cenfroI VAT wifh sfofe VAT. Discouroge in purchosing oufside sfofe
Accounfing burden.
Cosf of odminisfrofion for governmenf os fhe number of deoIers wiII increose
Exempfions on good Mon oppIicobiIify of vof moke more coscoding effecf
METHODS FOP VAT TAXATIOM {Computution of vuIue udded}
Addifion mefhod
Invoice Mefhod
Subfrocfion Mefhod
Indirect tues - Vut
Addition Method
This mefhod oggregofes oII fhe focfor poymenfs incIuding profifs fo orrive of fhe
fofoI voIue oddifion on which fhe rofe is oppIied fo coIcuIofe fhe fox. This fype of
coIcuIofion is moinIy used wifh income vorionf of VAT. Addifion mefhod does nof eosiIy
occommodofe exempfions of infermediofe deoIers.
A drowbock of fhis mefhod is fhof if does nof fociIifofe mofching of invoices for
defecfing evosion.
Invoice Method
This is fhe mosf common ond popuIor mefhod for compufing fhe fox IiobiIify under
VAT sysfem.
Under fhis mefhod fox is imposed of eoch sfoge of soIes on fhe enfire soIe voIue ond
fhe fox poid of fhe eorIier sfoge is oIIowed os sef-off. In ofher words ouf of fox so
coIcuIofed fox poid of fhe eorIier sfoge i.e. of fhe sfoge of purchoses is sef-off ond
of every sfoge fhe differenfioI fox is being poid.
The mosf imporfonf ospecf of fhis mefhod is fhof of eoch sfoge fox is fo be chorged
seporofeIy in fhe invoice.
This mefhod is oIso coIIed fhe Tox Credif Mefhod or Voucher Mefhod. From fhe
foIIowing iIIusfrofion fhe mode of coIcuIofion of fox under fhis mefhod wiII become
cIeor:
Subtruction Method
Under fhis mefhod fhe fox is chorged onIy on fhe voIue odded of eoch sfoge of fhe soIe
of goods. Since fhe fofoI voIue of goods soId is nof foken info occounf fhe quesfion of
gronf of cIoim for sef-off or fox credif does nof orise. This mefhod is normoIIy oppIied
where fhe fox is nof chorged seporofeIy. Under fhis mefhod for imposing fox voIue
odded is simpIy foken os fhe difference befween soIes ond purchoses.
Vuriunts of Vut
The gross product vuriunt
The gross producf vorionf oIIows deducfions for foxes on oII purchoses of row moferioIs ond
componenfs buf no deducfion is oIIowed for foxes on copifoI inpufs. Thof is foxes on copifoI
goods such os pIonf ond mochinery ore nof deducfibIe from fhe fox bose in fhe yeor of
purchose ond fox on fhe depreciofed porf of fhe pIonf ond mochinery is nof deducfibIe
in fhe subsequenf yeors. CopifoI goods corry o heovier fox burden os fhey ore foxed fwice.
Moderni;ofion ond upgroding of pIonf ond mochinery is deIoyed due fo fhis doubIe fox
freofmenf.
The income vuriunt
Income vorionf of VAT on fhe ofher hond oIIows for deducfions on purchoses of row moferioIs
ond componenfs os weII os depreciofion on copifoI goods. This mefhod provides incenfives fo
cIossify purchoses os currenf expendifure fo cIoim sef-off. In procfice however fhere
ore mony difficuIfies connecfed wifh fhe specificofion of ony mefhod of meosuring depreciofion
which bosicoIIy depends on fhe Iife of on ossef os weII os on fhe rofe of infIofion.
Consumption vuriunt
Consumpfion of VAT oIIows for deducfion on oII business purchoses incIuding copifoI
ossefs. Thus gross invesfmenf is deducfibIe in coIcuIofing voIue odded. If neifher disfinguishes
befween copifoI ond currenf expendifures nor specifies fhe Iife of ossefs or depreciofion
oIIowonces for differenf ossefs. This form is neufroI befween fhe mefhods of producfion, fhere
wiII be no effecf on fox IiobiIify due fo fhe mefhod of producfion (i.e. subsfifufing copifoI for
Iobour or vice verso). The fox is oIso neufroI befween fhe decision fo sove or consume.
Indirect tues - Vut
Among fhe fhree vorionfs of VAT fhe consumpfion vorionf is wideIy used The reosons
for preference of fhis vorionf ore:
Advuntuges of Consumption vuriunt
FirsfIy if does nof offecf decisions regording invesfmenf becouse fhe fox on copifoI goods
is oIso sef-off ogoinsf fhe VAT IiobiIify. Hence fhe sysfem is fox neufroI in respecf of
fechniques of producfion (Iobour or copifoI-infensive).
SecondIy fhe consumpfion vorionf is convenienf from fhe poinf of odminisfrofive
expediency os if simpIifies fox odminisfrofion by obviofing fhe need fo disfinguish befween
purchoses of infermediofe ond copifoI goods on fhe one hond ond consumpfion goods on fhe
ofher hond.
In procfice mosf counfries use fhe consumpfion vorionf. AIso mosf VAT counfries incIude
mony services in fhe fox bose. Since fhe business gefs sef-off for fhe fox on services if does
nof couse ony coscoding effecf.
Input und Output Tu
Input Tu
VAT poid by o regisfered business deoIer on foxobIe inpuf purchoses for business such os row
moferioI froding goods copifoI goods ond ConsumobIes
Output Tu
VAT chorged by o regisfered business deoIer on soIes mode by fhe business fo ifs cusfomers
Input Tu Credit {ITC}
Inpuf fox credif meons credif ovoiIobIe on fhe Purchoses mode by deoIer. Credif of VAT poid
wiII be ovoiIobIe onIy on purchoses mode wifhin fhe Sfofe. ITC ovoiIobIe onIy fo VAT regisfered
deuIer on purchoses mode from onofher VAT regisfered deoIer ogoinsf o voIid VAT invoice
Purchoses incIude row moferioI consumobIes pocking moferioI copifoI goods.
Input Tu Credit on CupituI goods
AvoiIobIe ond fo be odjusfed over o period of 3o monfhIy insfoImenfs (3 yeors)
Sfofes con reduce fhis period
Mo inpuf fox credif on CopifoI 0oods specified in negofive Iisf
Use of inputs to uvuiI credit
The purchused inputs cun be used for
For soIe/resoIe wifh in sfofe or oufside sfofe
As row moferioI for monufocfure of goods for soIe inside sfofe or oufside sfofe
As o pocking moferioI/consumobIes in soIe of goods
As goods in execufion of works confrocf.
For exporf of goods ouf of Indio
The Purchused CupituI goods cun be used for
For monufocfure of foxobIe goods
Curry forwurd of Input Tu Credit
UnufiIised Credif wiII be corried over fiII fhe end of fhe succeeding finoncioI yeor ond if if
remoins unufiIised wiII be refunded.
VAT Credif wiII be refunded wifhin fhree monfhs in cose of exporfs
Indirect tues - Vut
Units in SEZ und EOU huve un option of either
Mof poying VAT on inpufs, or
CIoim fuII refund wifhin fhree monfhs
Mo input tu credit in cuse of
Inpufs used in fhe monufocfure of exempfed goods
Purchoses for ofher fhon monufocfure/re-soIe (Copfive Consumpfion)
Purchoses mode infer Sfofe/in-fronsif
if VAT regisfered deoIer purchoses from Unregisfered deoIer (Oufpuf fox poyobIe on fuII soIe
price)
Purchose from o regisfered deoIer who opfs of composifion scheme.
Purchosed from regisfered deoIer where invoice does nof show fox omounf seporofeIy.
Purchoses of goods of negofive Iisf for exompIe
DeIhi - FueI in fhe form of PefroI DieseI ond kerosene LP0 CM0 CooI
AP - FueI CooI ond MofuroI 0os used for power generofion
Jhorkhond - ConsumobIes
Tripuro - Credif ovoiIobIe in excess of 47 on pefroIeum producfs (ofher fhon pefroI ATF ond
dieseI) ond ofher fueIs
Input tu credit on stock trunsfers
Inpufs used in fhe monufocfure of finished goods which ore sfock fronsferred, or purchoses of
goods which ore sfock fronsferred Inpuf fox credif ovoiIobIe fo fhe exfenf of 47 of vof poid
on such purchoses. Ie excess of 47 if ovoiIed if shouId be reversed
UtiIizution of vut Credit
Credit cun be utiIized towurds
VAT poyobIe on Finished 0oods
CST poyobIe on Infer Sfofe SoIes
Any inferesf or penoIfy under VAT
Common inputs for eempted suIe und tuubIe suIe
Opfion I- moinfoin seporofe records for inpufs used in exempfed soIe ond foxobIe soIe
Opfion Z- Proporfionofe inpuf fox credif on inpufs used in foxobIe soIe
Vut puyubIe
Vof poyobIe ~ Oufpuf fox - Inpuf Tox credif.
In ofher words ouf of fhe fox chorged on your soIes you wiII firsf deducf fhe fox chorged on
your purchoses ond poy boIonce fo fhe deporfmenf.
For exompIe inpuf worfh Ps. I00000/- is purchosed ond soIes ore worfh Ps. Z00000/- in o
monfh inpuf fox rofe ond oufpuf fox rofe ore 47 ond IZ.b7 respecfiveIy fhen inpuf fox
credif/sef-off ond coIcuIofion of VAT wiII be os shown beIow:
(o) Inpuf purchosed wifhin fhe monfh Ps. I00000/-
(b) Oufpuf soId in fhe monfh Ps. Z00000/-
(c) Inpuf fox poid Ps. 4000/-
(d) Oufpuf fox poyobIe Ps. Zb000/-
(e) VAT poyobIe during fhe monfh Ps. ZI000/-
offer sef-off/inpuf fox credif
[(d) - (c)]
Indirect tues - Vut
Composition scheme under vut
AppIicobIe fo Every regisfered deoIer who is IiobIe fo poy vof ond whose furnover does nof
exceed Ps.b0 Iokhs in fhe Iosf finoncioI yeor
The scheme is opfionoI. Infimofion fo Commissioner fo exercise opfion in ony whoIe yeor or porf
of yeor
DeoIer need nof moinfoin ony sfofufory records os prescribed under fhe Acf. The records for
purchose soIes invenfory shouId be moinfoined
Turnover wiII be foxed of Iow rofe os 0.Zb7
Mo inpuf fox credif on purchoses
Connof issue fox invoice fhe buyer from composifion scheme deoIer connof ovoiI inpuf fox
credif
Mon eIigibiIity of composition scheme
For fhe foIIowing deoIers composifion scheme nof oppIicobIe. They connof ovoiI
DeoIers of imporfers ond exporfers
DeoIers hoving infersfofe soIes
DeoIers hoving infersfofe bronch /depof/works confrocf fronsfers
Putes of VAT
07 -3o commodifies -AgricuIfuroI Producfs. seo producfs
I7- 3 commodifies (0oId SiIver Precious mefoIs & Sfone efc.)
47-Abouf 340 commodifies IndusfrioI Pocking ond IT producfs
IZ.b7 (PMP) AII ofher goods
PATES OF VAT MOT APPLICALE
Mon AppIicobiIify of VAT on PefroI DieseI Aviofion Turbine FueI Liquor Loffery Tickefs
These goods moy be foxed under VAT Acf or ony ofher Acf of higher rofes.
Zero ruted suIe/Eempted suIe- Cerfoin soIes ore ';ero rofed' i.e. fox is nof poyobIe on finoI
producf in cerfoin specified circumsfonces. In such coses credif wiII be ovoiIobIe on fhe inpufs
i.e. credif wiII nof hove fo be reversed. Disfincfion befween ';ero rofed soIe' ond 'exempf soIe' is
fhof in cose of ';ero rofed soIe' credif is ovoiIobIe on fox poid on inpufs whiIe in cose of exempf
goods credif of fox poid on inpufs is nof ovoiIobIe. As per poro Z.b of Whife Poper on Sfofe-
LeveI VAT exporf soIes ore ;ero rofed i.e. fhough soIes fox is nof poyobIe on exporf soIes
credif wiII be ovoiIobIe of fox poid on inpufs.
Procedures under Vut
ThreshoId Iimit on Vut
0-b Locs Mo Vof- Mof IiobIe for Pegisfrofion
b-b0 Locs - con opf for composifion of Iower rofe up fo 0.Zb7 (OnIy for refoiIers)
b0 Locs Above - CompuIsory VAT
Some sfofes fhe Iimif is Ps. I0 Iokhs insfeod of b Iocs
Pegistrution under Vut
Aufomofic regisfrofion under fhe VAT Acf of oII fhe exisfing deoIers
Mew deuIers require to register ufter vut come in to eistence
DeoIers who 'Cross fhe bosic fhreshoId Iimif
Indirect tues - Vut
Composifion scheme deoIers
Time Iimif- wifh in 30 doys from fhe dofe of commencemenf of business
TIM wiII be oIIoffed oII deoIers. If wiII be o II digif numericoI code. Firsf fwo digifs wiII indicofe
Sfofe Code. TIM wiII hove fo be indicofed on eoch invoice issued
CunceIIution of registrution
disconfinuonce of business, or disposoI of business
fronsfer of business fo o new Iocofion
onnuoI furnover of deoIer foIIing beIow fhe specified omounf.
DeuIer obIigution : Inform surrender originoI PC poy fox up fo dofe
Pecords under vut
Purchose records
soIes records
VAT occounf (Inpuf fox credif ufiIi;ofion boIonce)
Seporofe record of ony exempf soIe
Ofher documenfs such os fox invoice deIivery nofe biIIs credif nofes debif nofes
DecIurution forms under vut
Mo decIorofion forms
OId decIorofion forms under soIes fox Iow dispensed wifh.
Mo concessionoI soIe under vof Hence no need of forms.
Vut Invoice
Invoices ore imporfonf documenfs for odminisfering VAT.
In fhe obsence of invoices VAT poid by fhe deoIer eorIier connof be cIoimed os sef off
Every regisfered deoIer whose furnover of soIes exceeds fhe specified omounf shoII issue fo
fhe purchoser o serioIIy numbered fox invoice .
The fox invoice shoII be dofed ond signed showing fhe required porficuIors.
The deoIer shoII keep o counferfoiI or dupIicofe of such fox invoice duIy signed ond dofed.
PurticuIurs of Vut Invoice
fhe words 'fox invoice' in o prominenf pIoce
nome ond oddress of fhe seIIing deoIer,
regisfrofion number of fhe seIIing deoIer,
nome ond oddress of fhe purchosing deoIer,
regisfrofion number of fhe purchosing deoIer (nof under oII VAT IegisIofions),
pre-prinfed or seIf-generofed serioI number,
dofe of issue,
descripfion quonfify ond voIue of goods soId,
Pofe ond omounf of fox chorged in respecf of foxobIe goods,
signofure of fhe seIIing deoIer or his reguIor empIoyee duIy oufhori;ed by him for such purpose.
The provisions reIofing fo fox invoice do nof oppIy fo o seIIing deoIer who hos opfed fo ovoiI fhe
composifion scheme '.
ExompIe on Vof poymenf
Indirect tues - Vut
Vut Peturn
Pefurns wiII be fiIed monfhIy/quorferIy os prescribed oIong wifh choIIons. Pefurns wiII be
scrufini;ed ond if fhere is fechnicoI misfoke if wiII hove fo be recfified by deoIer
Peturn normuIIy contuins the foIIowing purticuIurs
Mome Address ond Pegisfrofion Mumber of deoIer.
Period of Pefurn.
Turnover of soIes ond purchose.
CIoim of Sef-off.
Amounf of sef-off corried forword.
Amounf of sef-off cIoimed os refund.
CoIcuIofion of Tox
DecIorofion fhof porficuIors given in refurn ore frue ond correcf
Assessments under Vut
Mosf ore fhe seIf ossessmenf where deoIer coIcuIofe vof IiobiIify ond poy vof os per Iow ond
fiIes monfhIy refurns
Cross checking by deporfmenf of fhe end of yeor fo ensure vof poid correcfIy.
Audif under vof
Some sfofes provide vof oudif by CA
Ofher coses deporfmenf do oudif on specific seIecfed criferio
Vut in cuse of speciuI trunsuctions
Vut on Works Contruct
The works confrocf is o deemed soIe
Vof is Ievied on goods invoIved in works confrocf (SfeeI. Cemenf poinfs fiffings efc)
SoIe price of goods fronsferred in works confrocf is fhe furnover for fhe purpose of Vof
The omounf represenfing Iobour ond ofher service chorges incurred for such execufion shouId
be excIuded from vof purview.
Where such Iobour ond ofher service chorges ore nof quonfifiobIe fhe soIe price shoII be fhe
cosf of ocquisifion of fhe goods ond fhe morgin of profif + oII ofher expenses in fronsferring fhe
properfy
Tox rofes on works Confrocf
Opfion I- MormoI vof scheduIe rofe on goods invoIved in works confrocf. Pofe oppIicobIe for
eoch ifems is considered Inpuf fox credif is ovoiIobIe on Purchoses
Opfion Z- Composifion scheme rofe on fhe fofoI voIue of works confrocf incIuding Iobour ond
overheods. Mo inpuf fox credif is ovoiIobIe on Purchoses
Inpuf credif on CopifoI goods purchosed in works Confrocf is nof ovoiIobIe os fhe works
confrocf execufion is nof monufocfuring ond processing of goods.
Vut on Leuse trunsuctions
Consfifufion provides power fo Ievy fox on fhe fronsfer of fhe righf fo use ony goods (Ieose)
Leose is o deemed soIe ond vof con be Ievied
ToxobIe evenf is fhe fronsfer of fhe righf fo use ony goods
Leose renfoIs coIIecfed by Iessor is considerofion ond freofed os furnover. Some sfofes
provide deducfion of inferesf ond finonce chorge from Ieose renfoIs
Tox rofe oppIicobIe on fhe goods given on Ieose
Sub Ieose is oIso foxobIe
Indirect tues - Vut
Lessor con gef inpuf fox credif on fhe fox poid on purchose of Ieosed ossef
Vut on hire Purchuse trunsuctions
DeIivery of goods under hire-purchose or insfoIImenf soIe wiII be foxobIe evenf for vof. And nof
fhe compIefion of soIe on exercise of opfion by hirer or Iosf insfoIImenf poid by buyer
VAT Iows os oppIicobIe fo normoI soIes ore equoIIy oppIicobIe fo hire-purchose ond insfoIImenf
soIes.
Hire chorges/ InsfoIImenf omounf wiII be foxed
When oII fhe hire chorges ond insfoIImenfs ore foxed no vof fox on when fhe soIe wos concIuded
on Iosf insfoIImenf/when hirer exercise opfion fo buy.
Vut & CST
CST Ievied on Infersfofe soIes where vof Ievied on IocoI sfofe soIes.
CST poid on oufside sfofe purchoses is nof vofobIe hence CST hove fhe coscoding effecf.
CST is on origin-bosed fox coIIecfed by fhe exporfing Sfofe whereos VAT is o desfinofion
bosed consumpfion fox bofh connof go fogefher
Affer vof wos infroduced if is decided fo phosed ouf CST sIowIy by Z0I0-Z0II. Mow Z008-09
if is Z7 ond in Z009-I0 if is proposed fo I7 ond in Z0I0-Z0II- 07
AMEMDMEMTS IM CST ACT TO FACILITATE IMTPODUCTIOM OF VAT
CST ocf sec Ib omended fo fox decIored goods of more fhon one sfoge ond Mofificofion u/s 8
fo reduce CST fo Z7 wef 0I.0o.Z008
End of chupter
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Chapter 6 Service tax
Service fox is on indirecf fox Ievied on Services
Services fox wos imposed by chopfer V of Finonce Acf I994
Mo seporofe "Service Tox Acf".
Service fox is imposed every yeor by moking omendmenf fo fhe Finonce Acf I994
CenfroI excise deporfmenf hos been enfrusfed fo Iook offer fhe odminisfrofion of
service fox
Service fox is o desfinofion bosed consumpfion fox os per C8E&C CircuIor Mo.
bo/b/Z003
dofed Zb-4-Z003.
Service impIies eistenceof two purties - Service fox is offrocfed when
fhere ore fwo porfies. One connof give service fo himseIf.
Coveruge of Service tu -
The foIIowing is vurious IegisIutures to cover Service tu
Finonce Acf I994 [ Secfions o4 fo 9o]
Service Tox PuIes I994
Service Tox (Pegisfrofion of SpecioI Cofegory of Persons) PuIes Z00b.
Exporf of Services PuIes Z00b.
Service Tox (Advonce PuIings) PuIesZ003
Toxofion of Services (Provided from Oufside Indio ond Peceived in Indio) PuIes Z00o
Service Tox (Deferminofion of VoIue) PuIes Z00o.
Aufhorify for Advonce PuIings( Cusfoms CenfroI Excise ond Service Tox) Procedure
PeguIofionsZ00b
CenfroI Excise (AppeoIs) PuIes Z00I
Cusfoms Excise ond Service Tox AppeIIofe TribunoI (Procedure) PuIes I98Z
Service fox circuIors nofificofions ond cose Iows
APPPOACHES OF LEVY OF SEPVICE TAX
SeIective or comprehensive coveruge of service tu: The Ievy of o service fox con be
bosed
on eifher of fhe foIIowing Z opprooches:
1, Comprehensive coveroge/opprooch
Z, SeIecfive coveroge/opprooch
1, Comprehensive coveruge/upprouch: The comprehensive opprooch confempIofes
foxofion of
oII services ond o negofive Iisf is given in cose some services ore fo be exempfed.
Z, SeIective coveruge/upprouch: In fhe cose of seIecfive opprooch onIy seIecfive ore
subjecf
fo service fox. In fhis cose fhe IegisIofor offempfs fo specify ond Iisf fhe services
fhof
Indirect tues - Service tu
5-6-
1
M Pugu Sekhur Churtered Accountunt Chennui MobiIe 94440190
6-1
wouId be foxobIe ond fhe scope of coveroge of eoch service. There is no residuory
cofegory for foxing oII services.
AppIicubiIity of Service tu
Service fox exfends fo whoIe of Indio excepf fhe sfofe of Jommu ond koshmir.
There shoII be no service fox on fhe services provided/consumed in fhe sfofe of Jommu ond
koshmir.
However if service provider is in fhe sfofe of Jommu ond koshmir ond provides
services fo onyone oufside fhe sfofe of Jommu ond koshmir fhen service fox shoII be
imposed on such services rendered
Churging Section
Service fox is imposed on foxobIe services provided or fo be provided in fufure by fhe
service provider.
Services fo be provided in fufure shoII be chorgeobIe fo service fox onIy if fhe
odvonce poymenf for if is received
ToxobIe services ore menfioned in secfion ob(I0b) of Finonce Acf I994
TofoI I00 + services Iisfed which ore IiobIe for service fox.
AII foxobIe Services chorged fo Service fox IZ.3o7
ToxobIe Evenf: for service fox is Pendering of Service
-Dofe of rendering service If Service Mon-foxobIe - Mo Service fox T poyobIe
- Dofe of rendering service If Service foxobIe - Service Tox poyobIe
AppIicobIe Pofe of Service fox ~ Pofe os oppIicobIe on dofe of rendering of service
Puyment of Service tu PuIe of Service Tu PuIes 1994
As ond when Poymenf is received
ST is poyobIe onIy on fhe omounf received
Service fox is poyobIe even odvonce poymenfs received
Service fox is poyobIe even omounf received in insfoIImenfs o r on porf poymenfs received
Any omounf received whefher before or offer provisioning of Service shoII offrocf
Service fox upon ifs receipf.
Free Service- Sec o7 nof oppIicobIe -Mo ST poyobIe
Service on sub-contruct busis
C8E&C vide circuIor Mo. 999.03/Z3.8.07 hos cIorified fhof o sub-confrocfor is oIso o
foxobIe
service provider. His services ore foxobIe even if fhese ore used by moin provider
for
compIefion of his work. The sub- confrocfor is IiobIe even if fhe service is inpuf service
of fhe moin confrocfor ond moin confrocfor is poying service fox on enfire voIue of
confrocf.
AII tuubIe services ure eempt under foIIowing situutions
5-2 M Pugu Sekhur Churtered Accountunt Chennui MobiIe 94440190
2
Provided fo Unifed Mofion or InfernofionoI Orgoni;ofion,
Provided fo SEZ Unif or DeveIoper of SEZ,
Provided fo P8I,
Provided by P8I,
Provided fo Foreign DipIomofic Missions / ConsuIofes,
Provided for personoI use of member (or his fomiIy) of o Foreign DipIomofic
Mission/ ConsuIofes,
Cosf of goods or moferioI soId by service provider fo fhe receiver of such
services. Mofificofion Mo. IZ/Z003.
Exporf of services i.e. services rendered obrood. Mofificofion Mo. 9/Z00b.
Exempfion ovoiIobIe fo smoII service providers (I0 Iokhs)
Services provided to EOU - Services provided fo EOU/EHTP/STP ore not
exempf from service fox. EOU/EHTP/STP unifs con ovoiI Cenvof credif of service fox
poid. The EOU unifs con cIoim rebofe of service fox poid on fheir inpuf services vide
PuIe b of Cenvof Credif PuIes
AIternute rute of service tu in cuse of certuin services:
AIfhough service fox is Ievied of fhe bosic rofe of IZ7 buf in cose of cerfoin services on
oIfernofive OpfionoI rofe is oIso provided. Some of fhese ore os under:
1, Specified immovubIe properties on opfionoI composifion fox rofe of 4% of gross voIue
hos been provided.
Z, In cose of Iife insurunce services oIfernofe mode of dischorge of service fox
IiobiIify hos been provided ond fhe rofe of service fox in fhis cose is 1% of fofoI
premium.
3, In cose of Air TruveI Agents services fhe Air TroveI Agenf shoII hove fhe opfion
fo poy service fox of on omounf coIcuIofed os under:
In cose of domesfic bookings - 0,% of fhe bosic fore.
In cose of infernofionoI bookings - 1,Z% of fhe bosic fore
SmuII Service Providers Eemption: /Z00{SmuII service providers}
Euch yeur service receipt up to 10 Iukhs eempt
If previous yeor service rendered up fo I0 Iokhs.
Conditions
Exempfion is opfionoI,
Exempfion Iimif nof for individuoI service or individuoI premise - oggregofe voIue of I0 Iokhs is
exempf.
Mo cenvof credif of Inpuf+ Inpuf Service + CopifoI goods con be ovoiIed fiII Iimif of I0 Iokhs.
CuIcuIution of monetury Iimits for Ps, 10 Iukhs
Where fhe previous yeor's voIue of foxobIe service provided exceeds Ps. I0 Iokhs service fox
wouId be poyobIe even if fhe currenf yeor's furnover is Iess fhon Ps. I0 Iokhs.
5-6-
1
6-1
Where fhe previous yeor's furnover is Ps. I0 Iokhs or beIow ond fhe currenf yeor's furnover
exceeds Ps. I0 Iokhs no service fox is poyobIe up fo Ps. I0 Iokhs if fhe specified condifions ore
compIied wifh.
Furfher fhe sum fofoI of firsf consecufive poymenfs 'received' during fhe finoncioI yeor
fowords fhe foxobIe services up fo Ps. I0 Iokhs wouId be exempf.
The poymenfs received fowords whoIIy exempf services ore fo be excIuded for defermining
fhe omounf of Ps. I0 Iokhs
10 Iukhs SmuII Service Provider eemption not uppIicubIe
Where foxobIe services ore provided by o person under o brond nome / frode nome of unother
person whefher regisfered or nof.
Thus service provided by o person under his own brond nome wouId nof be offecfed by fhis
resfricfion ond wouId be enfifIed for fhe exempfion.
Where service fox is poyobIe by o person As o receiver of service (reverse chorge ) e.g.
Services provided by Mon-residenfs / foreign componies who do nof hove on office in Indio
Services provided by insuronce ogenfs
Service provided by o mufuoI fund disfribufor
-As o poyer of service - for fronsporf services
Thus the eemption wouId uppIy onIy in cuses where service tu is puyubIe us u
provider of service,
PurtiuI eemption in respect of goods und services invoIved in service:
Motificution Mo 1Z/Z003 [uppIicubIe to uII tuubIe servicej VuIuution
in cuse of indivisibIe contructs
Thof porf of voIue of service ~ VoIue of goods ond moferioI soId in course of service shoII be
exempf if fhe foIIowing condifions ore sofisfied
Conditions:
Invoice of service shoII seporofeIy show fhe voIue of goods ond moferioI,
Cenvof Credif of inpuf shoII nof be ovoiIed [However Cenvut Credit of input service und
cupituI goods cun be tuken
Peverse Churge in cuse of Service tu,
MormoIIy service Provider wiII hove fo poy service fox. 8uf in fhe foIIowing coses service
receiver hos fo poy service fox
i) Insuronce AuxiIiory Service of Insuronce
Agenf
Insurer
ii) Service provided by o person from oufside
Indio
Sr receiver in Indio
iii) 0oods fronsporf Agency - when eifher
Consignor or Consignee is of "specified
cofegory"
Person poying fhe freighf fo 0TA
2
iv) 8usiness AuxiIiory Service of Disfribufion
of MufuoI Fund
- MufuoI Fund or Assef Monogemenf
Compony
v) Sponsorship service - 8ody Corporofe or Firm receiving such
service
If fhe recipienf of sponsorship service is
Iocofed oufside Indio service fox is
required fo be poid by fhe service
provider ond nof by fhe recipienf.
CuIcuIution of service tu when service tu not churged
Where o service provider nof coIIecfed service fox or nof chorged service fox
Service Provider hos fo poy service fox freofing fhe voIue service is incIusive of Service fox
Service fox is fo be coIcuIofed using bockword coIcuIofion os beIow
ToxobIe voIue of service ~ omounf coIIecfed x I00/I00 + Pofe of service fox
For exompIe if 8iII omounf is Ps. I000 ond service fox is nof shown seporofeIy in Invoice fhe
fox poyobIe coIcuIofed by bockwords os foIIows -
AssessobIe VoIue ~ (Cum fox price)/(I + rofe of fox)
AssessobIe VoIue (AV) ~ I000 x I00/II0.3 ~ 90o.oZ .AssessobIe VoIue is Ps. 90o.oZ ond service fox
I07 wiII be Ps. 90.o7. Educofion cess Z7 of service fox wiII be Ps. I.8I . SAH educofion cess
I7 is Ps. 0.9I . Thus fofoI service fox inIcIuding ec wiII be Ps.93.38
.
Short recovery /Ecess recovery of service tu
Where fhere is shorf recovery of fhe biIIed omounf service provider shouId revise fhe biII
ofherwise he shoII be IiobIe fo poy service fox on fhe fuII omounf which hos been biIIed fo
service receiver.
Where fhere is excess recovery from o cIienf or cusfomer fhen such excess omounf con be
refunded fo such cIienf or cusfomer
Services VuIuution Service tu VuIuution PuIes
Situution TAXALE VALUE
Sec 7{1}{i}
Where fofoI considerofion is
"monefory considerofion"
ToxobIe VoIue ~ 0ross Amounf Chorged ExcIusive of
ST
3
Sec 7{1}{i}
Where considerofion is in kind
["non-monefory considerofion"]
WhoIIy in kind
PorfIy in kind
ToxobIe VoIue~ Monefory EquivoIenf of "non-
monefory considerofion"
PuIe 3 of Service Tu VuIuution PuIes Z00
Method-1: ToxobIe VoIue~ 0AC by service provider
for simiIor service provided fo fhird porfy
Method-Z: ToxobIe VoIue ~ [Monefory Considerofion
+ Mkf VoIue of Mon-Monefory Considerofion]
[but it shuII not be
Iess thun the cost of provisioningof servicej
Sec 7{1}{i}
Where considerofion is "nof-
quonfifiobIe"
.
ToxobIe VoIue ~ VoIue defermined in prescribed
monner Mo monner prescribed so for - buf
procficoIIy besf judgmenf ossessmenf]
.
Free Service Sec 7 not uppIicubIe Mo ST puyubIe
1, Considerofion oIso incIudes ony omounf which is poyobIe for fhe foxobIe services provided or
fo be provided.
Z, Money incIudes ony currency Cheque promissory nofe Ieffer of credif droff poy order
froveIers Cheque money order posfoI remiffonce ond ofher simiIor insfrumenfs buf does nof
incIude currency fhof heId for ifs numismofic voIue.
3, 0ross omounf chorged incIude poymenf by Cheque credif cord deducfion from occounf ond
ony form of poymenf by issue of credif nofes or debif nofes ond book odjusfmenf.
4, Service fox is poyobIe on fhe gross omounf ond nof on fhe nef omounf.
, Secfion o7 provides fhof fhe omounf chorged hos fo be in reIofion fo services rendered,
Treutment of Peimbursement of Epenses for Service tu
PuIe of Service Tu VuIuution PuIes Z00
Cosf/Exp incurred by Service provider ond fhen recovered from service receiver ---
freofmenf of such recovery in voIuofion
i) Where such cosf/exp wos incurred in fhe copocify of "PUPE
A0EMT" of service receiver
[PureAgenf:--4 feofures:
i) Seporofe ogreemenf fo ocf os pure ogenf
ii) Mo fifIe over fhe goods/services so procured
iii) Does nof use such goods/services
iv) Pecovery cosf on ocfuoI bosis
Mof incIudibIe
ii) Ofherwise IncIudibIe
4
CIussificution of Service [~PuIe 3 of CIossificofion ruIes in CETA]
One service - cIussifiubIe into more thun 1 cutegory
i) Choose specifice over generoI
ii) If Composife service - defermine which service provides fhe essenfioI chorocfer ond
cIossify composife service info fhof
iii) Choose firsf in numericoI order
Service tu Pegistrution Sec 9
Pegistrution --- by whom
i) Person IiobIe for poymenf of Service fox
(MormoIIy Service providers ond in some
coses service receivers - reverse chorge)
Wifhin 30 doys of service becoming
foxobIe
if business is commenced Iofer
on fhen wifhin 30 doys of
commencemenf of business.
ii) Service exempf - no IiobiIify for
poymenf Service Tox - Aggregofe voIue of
service exceeding 9 Iocs
Wifhin 30 doys of voIue exceeding 9
Iocs
iii) Inpuf Service Disfribufor Wifhin 30 doys of commencemenf
of business
The foIIowing persons who ure receivers of service IiubIe to puy service ure required to be
registered,
Cofegory of Service Specified Person
0eneroI Insuronce 8usiness. Insurer of Pe-insurer
Insuronce AuxiIiory Service provided
by on
Insuronce Agenf.
Insuronce Compony
Service provided by o 0oods Tronsporf
Agency for fronsporf of goods by rood.
Person LiobIe: Specified Consignor/
Consignee who poys or is IiobIe fo poy
freighf shouId poy fhe Service Tox.
Specified consignor or consignee incIudes -
(i) Focfory, (ii) Compony, (iii) Corporofion
(iv) Sociefy, (v) Co-operofive Sociefy,
(vi) Pegisfered DeoIer of ExcisobIe goods,
(vii) 8ody Corporofe, (viii) Porfnership
Firm
8usiness AuxiIiory Services
provided by MufuoI Fund
Disfribufors in reIofion fo
disfribufion of MufuoI Fund.
Service Tox shouId be poid by fhe MufuoI Fund
or fhe Assef Monogemenf Compony receiving
such service.
Sponsorship Service provided fo
ony 8ody Corporofion or Firm.
Service Tox is fo be poid by fhe 8ody
Corporofe or Firm which receives fhe
sponsorship service.
5
Any ToxobIe Service provided by ony
person from o counfry ofher fhon Indio u/s
ooA.
Person receiving such service [in occordonce
wifh Toxofion of Services (Provided from
Oufside Indio ond Peceived in Indio)
Premises to be registered
i) SingIe Premise SingIe Service SingIe Pegisfrofion
ii) MuIfipIe Premises SingIe
Service/MuIfipIe Services
CenfroIi;ed 8iIIing Sysfem or CenfroIi;ed
Accounfing Sysfem nof in exisfence -
Pegisfrofion required for oII premises
regisfrofion wifh Superintendent of CentruI
Ecisej
CenfroIi;ed 8iIIing Sysfem or CenfroIi;ed
Accounfing Sysfem in exisfence - Pegisfrofion
onIy fhose premises where C8S/CAS is in
exisfence with Commissioner of CentruI Ecise
Procedure for Pegistrution
Pegisfrofion shouId be mode in AppIicofion by form Mo ST-I duIy fiIIed up ond signed oIong
wifh seIf cerfified copy of PAM
Ofher encIosures normoIIy required ore MOA AOA in cose of Compony Porfnership deed in
cose of Firm Power of Afforney copy in cose of oppoinfmenf of Monoger decIorofion obouf
dofe of commencemenf of service/business. 8oord resoIufion in cose of direcfor who sign fhe
oppIicofion ond refurns ond records.
Document to be Submitted with ST-1
As per Hyderobod-IV Trode Mofice Mo. 7o/Z003 dofed o-II-Z003
Proof of oddress of fhe premises office soughf fo be regisfered
PAM number of fhe ossessee
Lisf of 8ronches offices or premises of fhe ossessee
8rief nofe on occounfing sysfem odopfed by fhe ossessee
8ronch-wise series of invoices moinfoined oIong wifh o sompIe copy fhereof
Previous yeors oudifed boIonce sheef oIong wifh gross frioI boIonce of differenf bronches
DefoiIs of records occounfs moinfoined of differenf bronches ond CenfroI Office
8onk occounf numbers of fhe 8ronches ond CenfroI Office fhrough which fhe receipfs ore
deposifed fronsocfed
The oppIicofion wiII be scrufinised ond regisfrofion cerfificofe wiII be gronfed in form M0 ST-Z
wifhin 7 doys)
STC code i,e, registrution number - Pegisfrofion Mo. oIso known os 'Service Tox Code
(STC)' is o fiffeen digif PAM bosed number. Firsf I0 digifs of fhis number ore fhe some os
fhe PAM of such person. Mexf fwo digifs ore 'ST'. Mexf fhree digifs ore serioI numbers
indicofing fhe
6
number of regisfrofions foken by fhe service foxpoyer ogoinsf o common PAM - C8E&C CircuIor
Mo. 97/8/Z007-ST dofed Z3-8-Z007.
Premises code - The regisfrofion cerfificofe gives defoiIs of 'premises code' which is given on
fhe bosis of Commissionerofe + Division + Ponge + SerioI Mo. The number is given in fhe
regisfrofion cerfificofe ST-Z of SI Mo. b. This number is used for eosy idenfificofion of Iocofion
of regisfrofion of fox poyer - poro Z.o of C8E&C CircuIor Mo. 97/8/Z007-ST dofed Z3-8-Z007.
Chunge in the Constitution of firm
Infimofe ony chonge in fhe defoiIs furnished in STI fo AC/DC
-Wifhin 30 doys of such chonge
Surrender of Pegistrution
Every regisfered ossessee who ceoses fo provide fhe foxobIe service for which he is
regisfered shoII surrender his regisfrofion cerfificofe immediofeIy. ruIe 4(7)
Assessee shouId fiIe up-fo-dofe refurns ond oppIy for conceIIofion. Pegisfrofion moy nof be
conceIIed if ony demonds ore pending.
PenoIfy for foiIure fo obfoin regisfrofion - Ps. b000/ Ps Z00 per doy which ever is higher
Due dutes for puyment of Service tu
.
Service fox hod fo be poid on o monfhIy / quorferIy bosis depending upon fhe sfofus of
fhe service provider.
Service provider Due dutes Due dute for the
month
of Murch und
Quurter
ending Murch
IndividuoIs ond Firms
(QuorferIy Poymenf)
b
fh
of fhe monfh foIIowing fhe
Quorfer ended June Sep Dec.
3I
sf
Morch
Ofhers (MonfhIy
Poymenf)
b
fh
of fhe foIIowing Monfh 3I
sf
Morch
e-poymenf o
fh
of fhe foIIowing Monfh 3I
sf
Morch
1, 8ig ossessee who poid Service fox b0 Iokhs in Previous yeor or fhey hove oIreody poid b0
Iokhs in currenf yeor fhey shouId poy fox eIecfronicoIIy.(Limif Ps. I0 Iokhs wef 0I.04.Z0I0) .
Z, If fhe Iosf dofe for poying fox is o pubIic hoIidoy fox moy be poid on fhe nexf working doy.
3, Tox is poid by debit to CEMVAT uccount (if credif ovoiIobIe) or through SAP - 7 choIIon.
4, The dofe of presenfofion of Cheque fo fhe designofed bonk shoII be deemed fo be fhe dofe
of poymenf of service fox (8uf fhe Cheque is honoured).
, If tu hos been puid fo 0overnmenf for service not provided fhen fhe ecess puyment
mode fo 0overnmenf moy be udgusted in future dues provided fhe ecess is refunded to
customer,
, Service Tox coIIecfed by fhe Service provider/ Service receiver os fhe cose moy be
shouId
be remiffed wifhin fhe due dofe fo fhe credif of fhe CenfroI 0overnmenf.
7, Pounding off of tu:
The poymenf of service fox shouId be round of in muIfipIe of Pupees. Where such omounf
incIudes b0 poise of more if shouId be increosed fo one rupee ond if if is Iess fhon b0 poise
if shouId be ignored.
7
Mundutory interest for Iute puyment of service tu - In cose of deIoyed poymenf of
service fox fhere is mondofory poymenf of simpIe inferesf under Secfion 7b for fhe
period which fhe poymenf is deIoyed. The inferesf rofe is I37 w.e.f. I0-9-Z004
Ecess coIIection of tu - Sec, 73A & 73
1, The service provider shoII nof coIIecf fox in excess of whof he poys fo fhe 0overnmenf.
Z, The cose his coIIecfion is more fhon his poymenf he shoII prompfIy deposif fhe excess
wifh
0overnmenf or refund fhe omounf coIIecfed excess fo fhe cusfomer.
3, Any deIoy in fhis regord offrocfs poymenf of inferesf I37 p.o.
SELF ADJUSTMEMT OF EXCESS SEPVICE TAX PAID
SeIf Adgustment of Ecess service tu puid
1, In cose of reoson nof invoIving inferprefofion of Iow foxobiIify cIossificofion
voIuofion or oppIicobiIify of ony exempfion nofificofion odjusfmenf connof be mode
Z, On occounf of deIoyed receipf of defoiIs of poymenfs fowords foxobIe services
moy be odjusfed wifhouf monefory Iimif.
3, In cose ofher fhon specified in cIouse Z obove for exompIe difficuIf fo occurofeIy
esfimofe fhe omounfs he is going fo receive from his cusfomers in Iosf fwo doys in fhe
monfh of morch fhe excess omounf poid moy be odjusfed wifh o monefory Iimif of rupees
One Iukh for o reIevonf monfh or quorfer os fhe cose moy be
4, The defoiIs ond reosons for such odjusfmenf shoII be infimofed fo fhe
jurisdicfion Superinfendenf of CenfroI Excise wifhin o period of fiffeen doys from fhe
dofe of such odjusfmenf. This is direcfory provision ond nof mondofory provision since in
mony coses if is impossibIe fo inform in Ib doys. In such coses informofion of fhe fime
of fiIing refurn shouId be sufficienf
, SeIf- odjusfmenf of excess credif is nof oIIowed on occounf of reosons Iike inferprefofion
of
Iow foxobiIify cIossificofion voIuofion or oppIicobiIify of ony exempfion nofificofion [PuIe
o(48)(i)]. In such coses refund oppIicofion shouId be fiIed ond seIf odjusfmenf is nof
permissibIe.
Adgustment if service not provided purtIy or fuIIy - If excess fox is poid in
respecf of service which is nof provided eifher whoIIy or porfIy for ony reoson fhe excess
service fox poid con be odjusfed ogoinsf service fox poyobIe for subsequenf period if fhe
voIue of services ond fox fhereon is refunded fo fhe person from whom if wos received.
[PuIe o(3)]. Such odjusfmenf is permissibIe onIy when refund is on occounf of services
nof provided. Thus if fhe person refunds on occounf of giving some discounf fo cIienf fhis
provision does nof oppIy.
Adgustmentin cuse of service tu on renting of immovubIeproperty- In cose of service
fox on renfing of immovobIe properfy obofemenf is ovoiIobIe in cose of properfy fox poid fo
IocoI oufhorifies. If such fox is poid of o Iofer dofe seIf odjusfmenf in service fox poyobIe
is permissibIe wifhin one yeor from dofe of poymenf of fox wifhouf ony monefory Iimif.
Assessee shouId inform Superinfendenf wifhin Ib doys of moking odjusfmenf [PuIe o(4C) of
Service Tox PuIes].
8
Invoice by service provider
Assessee shouId prepore invoice in respecf of his services. The Invoice shouId be prepored
wifhin I4 doys from dofe of compIefion of foxobIe service or receipf of poymenf fowords fhe
voIue of foxobIe service whichever is eorIier.
DetuiIs requiredto be shown in invoice/biII/chuIIun - As per PuIe 4A(I) fhe
invoice/choIIon/8iII shouId be signed by oufhorised person of provider of inpuf services
shouId be serioIIy numbered ond shouId confoin foIIowing defoiIs -
(I) Mome oddress ond regisfrofion number of person providing foxobIe service
(Z) Mome ond oddress of person receiving foxobIe service
(3) Descripfion cIossificofion ond voIue of foxobIe service provided or fo be provided ond
(4) Service fox poyobIe on fhe foxobIe service
The PuIe does nof moke menfion of dofe buf ocfuoIIy dofe shouId be menfioned.
Educofion Cess ond SAH educofion Cess fo be shown seporofeIy in fhe Invoice for
compIying wifh requiremenfs of Cenvof Credif PuIes fo fociIifofe ovoiImenf of Cenvof credif
by recipienf PeIuution in cuse of bunking und finunciuI services - In cose of bonking ond
finoncioI services provided by bonking compony FI M8FC or o commercioI concern fhe
invoice/choIIon need nof be serioIIy numbered ond nome ond oddress of person
receiving foxobIe service need nof be confoined on fhe invoice/choIIon.[provisofo PuIe
4A(I) of Service Tox PuIes]. This fociIify is oIso ovoiIobIe fo inpuf service disfribufors of
such fype of service Poro b.3 of C8E&C CircuIor Mo.
97/8/Z007-ST dofed Z3-8-Z007.
Invoice in cuse of continuousservice/PeriodicuI biIIing
In some coses service is provided confinuousIy for successive periods of fime ond voIue of
such
foxobIe service is defermined or poyobIe periodicoIIy. In such coses fhe Invoice or choIIon
shoII
be issued wifhin I4 doys from Iosf dofe of fhe period [second proviso fo PuIe 4A(I) .
Invoice ut end of biIIing period - In cose of some services Iike services of commission
ogenf if is improcficoI fo prepore invoice of commission for eoch soIe. 8iIIing is done of end
of fhe ogreed period (soy monfh or quorfer) which is fermed os '8iIIing Period'. In such
coses if con be orgued fhof such services ore provided on confinuous bosis ond 8iIIing of
end of fhe period shouId be occepfobIe.
Muintenunce of Pecords - Service Tu PuIe Mo
Mo seporofe form hos been prescribed.
Pecords con be kepf in eIecfronic form oIso.
Pecord shouId normoIIy incIude (I) Pegisfer for voIue of services biIIed giving biII wise
defoiIs (Z) Pegisfer for voIue of services received/coIIecfed giving biII wise defoiIs
(3) Pegisfer for Cenvof credif for Credif ovoiIobIe ufiIi;ed ond boIonce os per Cenvof
credif ruIes 9 (4) UsuoI finoncioI records such os cosh bonk book generoI Iedger
copies of invoices ond 8onk sfofemenfs efc.
Pecords shouId be preserved for o period of five yeors.
They shouId be mode ovoiIobIe for inspecfion by deporfmenfoI officers.
9
Peturns to be fiIed under Service tu
Service tu Peturns Form Mo ST 3 - HuIf yeurIy busis
i) Person IiobIe for poymenf of
Service fox
ApriI fo Sepfember - Due dofe Ocfober
Zbfh
Ocfober fo Morch - Due dofe ApriI
Zbfh
ii) Service exempf - no IiobiIify
for poymenf of Service Tox -
Aggregofe voIue of service
exceeding 9 Iocs
ApriI fo Sepfember - Due dofe Ocfober Zbfh
Ocfober fo Morch - Due dofe ApriI Zbfh
iii) Inpuf Service Disfribufor ApriI fo Sepfember - Due dofe Ocfober
30 fh
Ocfober fo Morch - Due dofe ApriI
30 fh ST refurn con be revised fo correcf error or omission - revised refurn con be fiIed wifhin o0
doys. If refurn is revised fhen PeIevonf Dofe for fhe purposes of sending SCM shoII be "Dofe of
fiIing of revised refurn" [PuIe 7-8 of STP I994]
Documents to be uttuched uIong with return
The foIIowing documenfs fhof ore fo be offoched oIong wifh ST-3
1, Copies of 0AP-7 choIIons for poymenfs mode. (Mow if is nof mondofory. Z0 digif CIM fo
be quofed)
Z, Memorondum ST-3A incose of provisionoI poymenf of fox.
3, In cose of firsf refurn defoiIs of occounfs moinfoined in reIofion fo service fox shouId be
furnished fo superinfendenf of CenfroI Excise of fhe fime of fiIing firsf hoIf yeorIy refurn
i.e. ST-3 o Iisf of oII occounfs moinfoined by him in reIofion fo service fox incIuding
memorondum received from his bronch office
PenuIty of beIuted fiIing of service tu return
Sec 70 hos been omended by FA Z007. If provides for poymenf of Iofe fees for beIofed refurn
.As per PuIe 7C. Amounf fo be poid for deIoy in furnishing is os beIow
Period of deIuy Lute fee puyubIe
(i) Ib doys from fhe due dofe Ps b00/-
(ii) beyond Ib buf nof Iofer fhon 30 doys
from fhe due
dofe
Ps I000/-
(iii) beyond 30 doys from fhe due dofe Ps I000 pIus Ps I00 for every doy
from fhe 3I
sf
doy fiII fhe dofe of
furnishing fhe soid refurn
Provided thut fhe fofoI omounf of Iofe fee shoII nof exceed Ps.Z000/-.
PenuIty cun be wuived if no tu wus puyubIe - Once o person is regisfered he hos fo
fiIe refurn even if fhere is no fox IiobiIify. He shouId fiIe MiI refurn if fhere wos no
service fox poyobIe. However if he does nof fiIe refurn penoIfy con be woived/reduced
if non-fiIing of refurn wos for sufficienf couse [PuIe 7C].
Depurtment is required to uccept Iute return even if Iute fee is not puid - In
cose of
refurns fiIed Iofe fhe oppropriofe Iofe fees shouId be poid of fhe fime of fiIing fhe
refurn
wifhouf woifing for ony communicofion or nofice from fhe deporfmenf. Mere non-
submission of
evidence of poymenf of Iofe fee oIong wifh fhe refurn is however nof o ground for
10
refusoI fo oIIow fiIing of fhe refurn - poro o.4 of C8E&C CircuIor Mo. 97/8/Z007-ST
dofed Z3-8-Z007.
11
.
E fiIing of Service tu return
Mandatory where the Service tax paid is Rs. 10 lakhs during PY or already paid Rs. 10
lakhs in CY. Optional- Other cases
Basic Requirement -PAN Based Service Tax Code (STC)
Procedure
File Application to Divisional AC/DC in Annexure A with a Trusted e-mail id & a Contact No.
AC/DC will Provide User id & Password within Ten Days of receipt of Application
through e- mail
You can Change Password
File return on www. aces.gov.in
Condonution of DeIuy
Only for those using e-filing Facility first time
Assessee has faced technical difficulties
Delay of 1 month shall be condoned as per Circular No. 71/2004
Exemption by way of ABATEMENT: Notification No 1/2006 [Master
Exemption] Specific Eemptions
[applicable to certain taxable services different % for different services]
Certain % of Gross Amount Charged Exempt, if the service includes the cost of materials
and
goods
Basic Conditions:
i)Cenvat Credit of input, input service and capital goods shall not be availed
ii) The value of Material and goods used in service is includible in taxable value.
Sl
No.
Nature of Service Abatement
Allowed
Taxabl
e
Valu
e
Remarks
(i) Rent-A-Cab Scheme Operators
Service
60% 40% Tax on gross amount charged
(ii) Tour-Operators Service
4 Package Tour [i.e.,
accommodation cum-
transport, part of tour]
4 Non-package Tour
75%
60%
90%
25%
40%
10%
Tax on gross amount charged
(iii) Mandap Keeper Service 40% 60% Tax on gross amount charged
(iv) Convention services 40% 60% Tax on gross amount charged
(v) Outdoor Catering 50% 50%
(vi) Pandal & Shamiana
Contractors
Service
if full catering service
provided
12
(vii) Commercial or Industrial Building
Construction Service
67% 33% Tax on gross amount if
gross amount includes value
of material
(viii) Residential Complex Construction
Service
of material
(ix) Erection, Commissioning &
Installation
of material
(x) Transport of goods in Containers
by Rail
Business
Auxi
in
relation t
processing
of
ACCESS
ORIE
liary Service
o production/
PARTS and
S which are used in
(xi)
the manufacture of Cycles
/ Cycle Rickshaws / Hand-
operated Sewing Machines.
30% 70% Tax on gross amount if gross
amount is inclusive of cost of
inputs and input services,
whether or not supplied by
the client
(xii) Goods Transport Agency 75% 25% Tax on amount in his Invoice
[Payment will be made by
consignor/consignee who is
actually paying freight]
Import of Service [Service provided from outside Indiu und received in Indiuj
--- Service recipient shall be liable for paying ST
--- Service recipient shall be treated as if he has provided such service.
Tuution of Service {Provided from outside Indiu und received in Indiu}
PuIes Z00
PuIe 3
i) Immovable Property Criteria Immovable property situation in India
i) Performance Based Criteria Service is physically performed in India
(whether wholly or partly)
iii) Residuary
[EcIuding Z:
u} Foreign TruveI Air}
b} TruveI by Cruise Servicej
Provided in relation to Business or Commerce
Sr recipient is located in India
PuIe 4 Service recipients shall get himself registered.
PuIe The service imported into India for which service recipient is liable for payment of ST
shall not be treated as Output Service for the purpose of using cenvat credit of other
services for payment of such amount.
India includes the installations, structures and vessels in the Continental Shelf
and Exclusive Economic Zone (UP to 200 nautical miles) of India
13
PuIe 3
Eport of Service [Eport of Service PuIes Z00j
i) Immovable Property Criteria Immovable property situation outside India
i) Performance Based Criteria Service is physically performed outside
India (whether wholly or partly)
iii) Residuary
[EcIuding Z:
u} Foreign TruveI cIuss}
b} TruveI by Cruise Servicej
Provided in relation to Business or Commerce
---- Sr receiver is located outside India
Other cases ---Sr receiver is located
outside India at the time order for provisioning
is made
AdditionuI Conditionsfor uII 3 cutegories:
1} Service must be provided from Indiu und used outside Indiu
Z} Puyment must be receivedin Foreign Echunge,
How to eport service? --- Z-Options
Export without payment of Service tax (Rule 4 of Export of Service Rules, 2005)
Pay ST and then claim rebate (Rule 5 of Export of Service Rules, 2005)
---[Rebate is also admissible of related input and input service]
Service tu Assessments- Demunds und refunds
SeIf Assessment
The Provision is similar to Central excise self assessment rule 6
Every assessee shall calculate taxable value of services
Every assessee shall determine the service tax payable on the taxable services after availing
the cenvat credit if any
Every assessee shall pay service tax on the due date, if not paid on due date he should also
pay interest for late payment and penalty
He should file service tax return in form No ST 3 half yearly to the Superintendent of Central
Excise
And declare in the self assessment memorandum that details are correct and true
ProvisionuI Assessment
The Provision is similar to Central excise self assessment rule 6
An assessee is unable to correctly estimate the actual amount payable by any particular month
or quarter,
he may apply to Asstt / Dy. Commissioner to pay service tax on provisional basis [Rule6(4)]
Statement to be filed Memorandum to ST3A
The Asstt./ Dy. Commissioner may allow payment of service tax on provisional basis on such
value of the taxable service as may be specified by him
The Provision with regard to Central excise Provision will apply with regard to time limit etc
except to that no bond is required to execute
14
Demund for service tu
The Provision is same and similar to Central excise demand u/s 11 A. The time limit to issue
show cause notice, the relevant date is same
The provisions with regard to payment of service tax before issue of SCN and adjudication
orders are similar to that of Central excise provisions.
Pecovery of Service tu if not puid
The Provision is same and similar to Central excise recovery u/s 11 . The modes of recovery is
same
Pefund of service tu
The Provision is same and similar to Central excise recovery u/s 11B. Time limit to claim refund,
relevant date and is same. The Provisions of doctrine of unjust enrichment will also apply to
service tax
Pectificution of Mistuke uppurent on record
The Central Excise Officer who has passed order (of assessment or demand or penalty) can
rectify any mistake apparent from the record, within two years of the date on which the order
was passed. The mistake must be apparent from the records.
Pevision
The Commissioner of Central Excise can revise the orders passed by adjudicating authority
subordinate to him. The revision order can be passed anytime within two years of the original
order, but not afterwards. No revision can be made if appeal against such order is pending with
Commissioner (Appeals) [Section 84]. Appeal against the order of Commissioner (after
revision) lies with CESTAT under Section 86.
Power of CentruI Ecise Officer to Access to u registered premises PuIe A
(1) An officer authorised by the Commissioner in this behalf shall have access to any premises
registered under these rules for the purpose of carrying out any scrutiny, verification and
checks as may be necessary to safeguard the interest of revenue.
(2) Every assessee shall, on demand, make available to the officer authorised under sub-rule (1)
or the audit party deputed by the Commissioner or the Comptroller and Auditor General of
India, within a reasonable time not exceeding fifteen working days from the day when such
demand is made, or such further period as may be allowed by such officer or the audit party, as
the case may be,-
SEPVICE TAX PETUPM PPEPAPEPS SCHEME
Service Tu Peturn prepurers Scheme:
1, Definitions:
Service Tu Peturn Prepurer: It refers to an individual who has been authorized to act
as a Service Tax Return Preparer under a scheme framed under this section.
Specified CIusses of persons: It refers to persons specified in the Scheme, who are
required to furnish a return required to be field under section 70.
Z, Power of ourd: The CBEC is empowered to frame a scheme for furnishing return of
income by any specified classes through a Service Tax Return Preparer.
3, Duty of Service Tu Peturn Prepurer: Every Service Tax Return Preparer should assist
the specified classes of persons to prepare and furnish the service tax return in the manner
specified in the scheme.
4, Structure of the Scheme: The scheme framed by the Board may provide for the following
Manner in which and the period for which the Service Tax Return Preparer shall be
authorized,
15
Educational and other qualifications to be possessed, and the training and other
conditions required to be fulfilled, by a person to act as a Service Tax Return, Preparer,
Code of Conduct for the Service Tax Return Preparer,
Duties and Obligations of the Service Tax Return Preparer,
Circumstances under which the authorization given to a Service Tax Return Preparer
may be withdrawn,
Any other matter which is required to be specified by the Scheme for the purposes of this
section.
PenuIties under Service tu - Sec, 7 77 & 7
S,
Mo
,
Muture of VioIution PenuIty
1. Failure to pay Service tax [Sec.76
Not less than Rs.200 per day of default
or 2% per month of tax whichever is
higher. In no case penalty can exceed
the amount of tax.
2. Suppression of Value (fraud cases)
100% to 200% of duty sought to be
charged. Penalty is reduced to 25% of if
service tax paid with in 30 days.
3. Failure of registration
Rs.5,000 or Rs.200 per day whichever is
higher from the first day after due
date till the day of actual compliance.
4.
Failure to furnish information called by
officer on Central Excise Offier
Rs.5,000 or Rs. per day whichever is
5.
Failure to appear before the Central
Excise Officer when issued with a
summon for appearance to give evidence
or to produce document.
Rs.5,000 or Rs.200 per day whichever is
6. Failure to maintain books of accounts. Maximum Rs.5,000/-
7. Fails to pay through e-payment Maximum Rs.5,000/-
8. Where no penalty is mentioned Maximum Rs.5,000/-
No penalty will be levied if assessee proves; there is a reasonable and sufficient cause for
failure to Comply- Sec 80
16
List of TuubIe
Services S,
Mo
TuubIe Services Effective Dute
1. Advertising Services 01/11/1996
2. Air transport of passengers embarking for
International travel
01/05/2006
3. Air Travel Agents Services 01/07/1997
4. Aircraft Transport Services 10/09/2004
5. Airport Services 10/09/2004
6. Architects Services 16/10/1998
7. Asset Management Services 01/06/2007
8. ATM operations 01/05/2006
9. Auctioneers Services 01/05/2006
10. Authorized Service Stations Services 16/07/2001
11. Banking and other Financial Services 16/07/2001
12. Beauty Parlours 16/08/2002
13. Broadcasting services 16/07/2002
14. Business Auxiliary Services 01/07/2003
15. Business Exhibition Services 19/09/2004
16. Business Support Services 01/05/2006
17. Cable Operators 16/08/2002
18. Card Services 01/05/2006
19. Cargo Handling 16/08/2002
20. Chartered Accountants 16/10/1998
21. Cleaning & Forwarding Agents Services 16/07/1997
22. Commercial coaching classes 01/07/2003
23. Company Secretaries 16/10/1998
24. Construction of Complex Services 16/06/2005
25. Construction Services 10/09/2004
26. Consulting Engineers Services 07/07/1997
27. Convention Service 16/07/2001
28. Cosmetic and plastic surgery service
16.08.2009
29. Cost Accountants 16/10/1998
30. Courier Services 01/11/1996
31. Credit Card, Debit Card, Charge Card or Other Payment
Card Services
01/05/2006
32. Credit Rating Agencies 16/10/1998
33. Customs House Agents Services 15/06/1997
34
Designing Services 12/05/2007
5-6-
1
6-1
35. Development and supply of content services 12/05/2007
36. Dredging Services 16/06/2005
37. Dry Cleaning Services 16/08/2005
38. Erection, Commissioning & Installation Services 01/07/2003
39. Event Management 16/08/2002
40. Fashion Designers 16/08/2002
41. Forward Contract Brokers Services 10/09/2004
42. Franchisee service 01/07/2003
43. Goods Transport Services 10/09/2004
44. Health Club & Fitness Centres 16/08/2002
45. Information Technology Services 01/07/2004
46. Insurance Auxiliary Services (Concerning general
insurance)
16/07/2001
47. Insurance Auxiliary Services (Concerning Life Insurance) 16/07/2001
48. Intellectual Property Services 10/09/2004
49. Interior Decorators 16/10/1998
50. International Air Travel dervices 01/05/2006
51. Internet Caf services 01/07/2003
52. Internet Tele-communication services 16/05/2008
53. Internet Telephony Services 01/05/2006
54. Legal consultancy service
16/08/2009
55. Life Insurance Services 01/05/2006
56. Mailing List Services 16/08/2002
57. Maintenance & Repairs Services 01/07/2003
58. Management Consultancy services 16/07/1997
59. Mandap Keepers Services 01/07/1997
60. Manpower Recruitment Agency Services 07/07/1997
61. Market Research Agencies 16/10/1998
62. Membership of Clubs 16/06/2005
63. Mining Services 12/05/2007
64. Online Information and database access 16/07/2001
65. Opinion Poll Services 10/09/2004
66. Other port services 16/07/2001
67. Outdoor catering services 10/09/2004
68. Packaging Services 16/06/2005
69. Pandal & Shamiana Contractor Services 10/09/2004
70
Photography Service 16/07/2001
71
Port Services 16/07/2001
2
72. Processing and clearing house services 16/05/2008
73. Public Relations Services 01/05/2006
74. Rail Travel Agents 16/07/1997
75. Real Estate Agents or Consultants 16/10/1998
76. Recognized Association Services 16/05/2008
77. Recognized Stock Exchange Services 16/05/2008
78. Recovery Agents Services 01/05/2006
79. Registrar 01/05/2006
80. Rent a Cab Scheme Operators 16/07/1997
81. Renting of Immoveable Property Services 12/05/2007
82. Sale of Space or Time for Advertisement services 01/05/2006
83. Scientific & technical consulting service 16/07/2001
84. Security Agencies 16/10/1998
85. Share Transfer Agents Services 01/05/2006
86. Ship Management Services 01/05/2006
87. Site Formation Service 16/06/2005
88. Sound recording services 16/07/2001
89. Sponsorship 01/05/2006
90. Steamer Agents Service 15/06/1997
91. Stock Brokerage Service 01/07/1994
92. Storage & Warehousing Services 16/08/2002
93. Supply of tangible goods 16/05/2008
94. Survey and exploration of mineral services 10/09/2004
95. Survey and Map Making Services 16/06/2005
96. Technical inspection and certification services 01/07/2003
97. Technical Testing & Analysis & Certification 01/07/2003
98. Telecommunication Services 12/05/2007
99. Tour Operators 19/09/1997
100. Transport of goods by Air Services 10/09/2004
101. Transport of goods by pipeline or other conduit Services 16/06/2005
102. Transport of goods in containers by Rail Services 01/05/2006
103. Transport of Persons by Cruise Ship Services 01/05/2006
104. Transport of goods by rail 16.08.2009
105. Travel Agent Services 10/09/2004
106. ULIP Services 16/05/2008
107 Underwriting Agents 16/10/1998
108
Video tape services
16/07/2001
109 Works contracts Services 12/05/2007
Indirect tues CentruI SuIes tu simpIified

Chupter 3 CentruI SuIes tu
CST wiII be Ievied on infersfofe soIes os per Enfry Mo 9Z A Lisf I of Indion
Consfifufion.
CST Acf Provides for impose of fhe soIes fox on infer sfofe soIes
CST Acf mokes provisions for very few procedures ond ruIes for odminisfrofion
In respecf of provisions Iike refurn ossessmenf oppeoIs efc. provisions of 0eneroI
SoIes Tox Iow of fhe Sfofe oppIies.
Obgects of CST Act
To defermine fhe principIes wifh regord fo When o soIe is soid fo infersfofe
/exporf/imporf soIe
Levy coIIecf ond disfribufion of foxes on infer sfofe soIe
To decIore cerfoin goods os goods of specioI imporfonce ond resfricf fhe sfofe fo Ievy
fox on fhese (DecIore goods) goods
Types of suIes
Infro sfofe soIes- SoIes wifh in fhe sfofe- onIy soIes fox/Vof- Mo CST
Infer sfofe SoIes- Mo SoIes fox/ Vof - OnIy CST
Exporf SoIes- Mo SoIes fox/Mo Vof/Mo CST
Importunt Definitions under CST Act
SuIe Outside Stute:
If fhe soIe is inside sfofe ond if wiII soIe oufside sfofe for oII ofher sfofe
SuIe inside u Stute
If fhe goods ore wifhin fhe Sfofe
In fhe cose of specific or oscerfoined goods of fhe fime fhe confrocf of soIe is mode
ond
In fhe cose of un-oscerfoined or fufure goods of fhe fime of fheir oppropriofion fo
fhe confrocf of soIe by fhe seIIer or by fhe buyer whefher ossenf of fhe ofher porfy
is prior or subsequenf fo such oppropriofion.
SoIe fo ship which is wifhin ferriforioI wofers is 'IocoI soIe'
Soods: Section Z{d}
AII moferioIs orficIes commodifies ond oII kinds of movobIe properfy
EcIuding
Mewspopers ocfionobIe cIoims sfocks shores ond securifies. Mews popers incIudes
mogo;ines
However Mews pupers soId us scrup/oId newspupers ure goods
EumpIes for Soods
AII movobIe properfy oII infongibIe goods such os pofenfs frode morks Iicenses Ioffery
fickefs sfeom EIecfricoI energy - onimoIs ond bird in copfivify 0oods incIude uproofed
frees second hond goods rejecfed goods worn ouf goods Wosfe Scrop efc. 8randed
soflvare) is 'goods and saIes lax can le Ievied.
EumpIes for not us goods
'ImmovobIe properfy' incIudes Iond benefifs orising ouf of Iond ond fhings offoched fo
fhe eorfh or permonenfIy fosfened fo onyfhing fhof is offoched fo fhe eorfh is nof
goods. However os per secfion Z(7) of SoIe of 0oods Acf goods incIude sfonding crop
gross ond fhings offoched fo ond forming porf of fhe Iond which is ogreed fo be severed
before soIe or under confrocf of soIe.
SuIe
Tronsfer of properfy in goods by one person fo onofher for cosh or for deferred poymenf
or for ony ofher voIuobIe considerofion
SuIes incIude
(i) Tronsfer of properfy in goods
(ii) 0oods invoIved in Works confrocf
(iii) Pighf fo use goods (Iike Ieosing)
(iv) SuppIy of goods by on unincorporofed ossociofion or body of persons fo o member
fhereof for cosh deferred poymenf or ofher voIuobIe considerofion.
(v) SuppIy of food orficIes
(vi) Hire purchose
SuIes does not incIude
borfer
o morfgoge
hypofhecofion or o chorge
pIedge
Consignmenf soIes (decIorofion in form F is require)
8ronch ond heod office fronsfers (decIorofion in form F is require)
Job work/processing
0iffs/SompIes
Tronsfer fo C & F Agenf (decIorofion in form F is require)
usiness
Trode Commerce monufocfure or ony odvenfure mofive fo moke goin or profif or
moy nof hove mofive fo goin profif
ony fronsocfion in connecfion wifh or incidenfoI or onciIIory fo such frode commerce
monufocfure odvenfure or concern
PIuce of usiness
PIoce where deoIer corries business
PIoce where deoIer sfores fhe goods -Focfory worehouse sfore depof
PIoce where deoIers books of occounf kepf
DeuIer
Every person corries on fhe business of buying seIIing suppIying or disfribufion of goods
direcfIy or indirecfIy for cosh or for deferred poymenf or for voIuobIe considerofion &
IncIude
o IocoI oufhorify o body corporofe o compony ony cooperofive sociefy cIub firm
Hindu undivided fomiIy or ofher ossociofion of persons which corries on such business
o focfor broker commission ogenf deIcredere ogenf or ony ofher merconfiIe ogenf
oucfioneer
0overnmenf/CIub is oIso o deoIers
Churging section of CST Sec 3
Levy is on soIe of goods (i.e. Ievy is nof on purchoses)
Mo Levy on EIecfricoI Energy (fhough eIecfricoI energy is goods)
Levy is onIy on Infer sfofe soIes
The IiobiIify is subjecf fo ofher provision of Acf (ie exempfions if ony in ofher
secfions shouId be considered
Meuning of 'Inter Stute SuIe' sec 3
A soIe or purchose of goods shoII be deemed fo foke pIoce in fhe course of infer-Sfofe
frode or commerce if fhe soIe or purchose
Occosions fhe movemenf of goods from one Sfofe fo onofher or
Is effecfed by o fronsfer of documenfs of fifIe fo fhe goods during fheir movemenf
from one Sfofe fo onofher.
EssentiuI feutures of Inter-stute SuIe
Tronsocfion musf be compIefed soIe
Locofion of buyer ond seIIer immoferioI
There shouId be ogreemenf fo soIe sfipuIofion fhof fhere shouId be movemenf of goods
from one pIoce fo onofher
There shouId be physicoI movemenf of goods from one sfofe fo ofher
If is immoferioI which sfofe fhe ownership posses
Mode of fronsporf is immoferioI fronsporfofion moy be ony mode
Ever 8uyer fokes deIiver from seIIer if fhere is movemenf one sfofe fo onofher if is
infersfofe soIe
SoIe shouId concIude in differenf sfofe. If concIude in some sfofe subsequenf
movemenf wiII be on behoIf of Purchoser ond if is nof infersfofe soIe
Temporory movemenf fhrough onofher Sfofe is nof Infer Sfofe soIe -
SuIe by trunsfer of documents of titIe
Documents of titIe:
Lorry Peceipf - LP in cose of fronsporf by Pood
PoiIwoy Peceipf - PP - in cose of fronsporf by roiI
8iII of Loding - 8L - in cose of fronsporf by seo
Air Woy 8iII - AW8 - in cose of fronsporf by oir.
One who submifs documenf of fifIe fhe some is enfifIed fo gef deIivery of goods if
documenf is in his nome or endorsed in his nome.
Trunsfer of documents of titIe is uIso interstute suIe:
The movemenf of goods from one Sfofe fo onofher need nof be occosioned by soIe. For
exompIe if fhe goods ore being senf fo o bronch by fronsporf soIe during movemenf by
fronsfer of documenf wiII oIso be on 'infer sfofe soIe' u/s 3(b).
Soods invoIved in Works Contruct
Mo CST on works confrocf
CST con be Ievied on goods invoIved in works confrocf if goods move from one Sfofe fo
onofher on occounf of such works.
CST on works confrocf onIy in cose of movobIe properfy ond nof on immovobIe properfy
SoIe price for fhe goods is simiIor fo fhof of definifion of goods.
Putes of CentruI SuIes Tu sec
SMO Secfion Pofe of Tox
I 8(I)(o)].
8(Z)
SoIe fo 0overnmenf/
unregisfered deoIer oII goods
LocoI generoI soIes fox rofe for soIe wifhin fhe
Sfofe
Z 8(I)(b)]. SoIe fo regisfered deoIer Z7 or generoI soIes fox rofe for soIe wifhin
fhe Sfofe whichever is Iower provided fhof fhe
goods ore 'eIigibIe' os per secfion 8(3) ond fhese
ore specified in fhe Pegisfrofion (Condifion:
Form fo be issued by purchoser- C form
Mote: When IocoI soIes fox rofe is niI CST is oIso MiI
TuubIe turnover & IncIusions und EcIusions in Turnover sec Z {g}
Turnover
Aggregofe of fhe soIe prices received ond receivobIe by fhe deoIer in respecf of soIes
of ony goods in fhe course of infer-Sfofe frode or commerce mode during ony
prescribed period
Determinution of Turnover
Turnover is fo be defermined in occordonce wifh provisions of CenfroI SoIes Tox Acf ond
PuIes
In defermining furnover deducfion of soIes fox shouId be mode from fhe oggregofe of
soIe price. Secfion 8A(I)
Prescribed period under CST
-Period in o deoIer is IiobIe fo submif refurns under fhe IocoI SoIes Tox Iow For exompIe
monfhIy/quorferIy.
The 'uggregute suIe price
The oggregofe soIe price is ossumed os incIusive of CenfroI SoIes Tox ond bockword
coIcuIofion is mode.
Thus if oggregofe of soIe price is 'S' ond rofe of fox is 'P', 'furnover' ond 'fox poyobIe'
wiII be coIcuIofed os foIIows:
Turnover~ S x I00/I00+P
Tox ~ S x P/I00+P
Pound off of CST poyobIe To neoresf rupee.( Secfion 98 of CST )
IncIusions in Turnover for CST IiubiIity
CenfroI Excise
AII expenses before fhe deIivery (Iooding wieghmenf cooIie )
Pocking moferioI ond pocking chorges
Freighf is nof shown seporofeIy in invoice
Freighf in cose of F O P Confrocfs
Design ond deveIopmenf chorges in respecf of goods
SoIesmon commission
Freighf from focfory fo depof in cose of soIe from depof
EcIusions in Turnover - Where no CST PuyubIe
fronsif Insuronce of fhe of fhe requesf of buyer
Freighf if shown seporofeIy in invoice
Subsidy/chorify
Cosf of insfoIIofion shown seporofeIy in invoice
0oods refurned by buyer wifh in o monfhs from fhe dofe of soIe
0oods rejecfed by buyer (Mo fime Iimif)
Eemptions from CST
SoIes during movemenf of goods Secfion o(Z)
SoIe fo dipIomofic missions UM infernofionoI orgoni;ofions efc Secfion o(3)
When IocoI soIes fox rofe is niI CST is oIso niI. Sec 8
Exempfion when soIe is penuIfimofe fo exporf os defined u/s b(3) u/ S o(I)
Exempfing soIe fo SEZ unif. Secfion 8(o)
Exempfion by issue of nofificofion by Sfofe 0overnmenf
SoIe during exporf/imporf is nof foxobIe
Eport suIe und suIe in the course of eport
Exporf SoIes meons -Direcf exporfs
SoIe during fhe course of exporf - incIudes direcf exporf ond oIso (o) SoIe by fronsfer
of documenfs offer goods cross cusfoms fronfier (b) PenuIfimofe soIe for exporf (c)
Exporf wifh heIp of ogenf./SoIe fo exporf house/soIe fo exporfer who exporfs
PenuItimute suIe
PenuIfimofe soIe (Iosf buf one soIe) is exempfed from CST when oII fhe foIIowing
condifions ore sofisfied
Exporfer shouId hove exporf order in his hond before foking deIivery.
SoIe is mode os per os per ogreemenf considering fhe exporf order
The goods shoII be exporfed in fhe some condifion (wifhouf ony process)
Exporfer shouId issue decIorofion in form no H/I fo seIIer
Import suIe und suIe during the course of Import
Direcf imporfs - direcfIy imporfing by person
SoIe in course of imporfs meons imporfs fhrough ogenf
A SoIe is soid fo imporfed soIe when soIe foke pIoce before reoching fhe cusfoms
borriers
Mo CST in cose of Imporfs Affer imporfing If goods soId in IocoI sfofe IocoI soIe fox
is poyobIe
When fhe soIe is offer reoching ferriforioI wofers if is soIe wifh in fhe sfofe ond IocoI
soIes fox con be Ievied. 8ecouse ferriforioI wofers wiII beIong fo respecfive sfofe
governmenf
Soods of speciuI importunce {DecIured Soods} Section 14
CereoIs (rice poddy wheof)
PuIses(grom fur moong mosur urod)
CooI coke oII form excIuding chorcooI
Hides ond skins
Crude oiI
Coffon in un monufocfured form excIuding coffon wosfe
Iron ond SfeeI
Jufe
OiI seeds
Monmode fobrics
Sugor ond khondosori Sugor
Woven Fobric of wooI
Aviofion fueI soId fo furbo prop oircroff
Sfofe 0overnmenf connof chorge more fhon 37 fox on decIored goods
Procedures under CST
Pegistrution under CST Act
DeoIers who 'effecf' infer sfofe soIes ore required fo regisfer wifh in 30 doys from
fhe dofe of firsf infer sfofe soIe.
Ofher deoIers voIunforiIy con oIso regisfer (exompIe infer sfofe purchoses no infer
sfofe soIe bronch fronsfers efc)
Procedure for registrution
AppIicofion in form Mo A offixed wifh Ps. Zb courf fee sfomp.
AppIicofion shouId be signed by deoIer
EncIosures to AppIicution
PorficuIors of Direcfors/ porfners
Copies of orficIes of ossociofion memorondum in cose of compony ond porfnership
deed if oppIiconf is o firm Copies of renf ogreemenfs
Mominofions os Monoger
Lisf of pIoces of business go down
DefoiIs of mochinery
DefoiIs of bonkers
Phofogrophs of direcfors / porfners
Lisf of goods deoI for purchose soIe resoIe monufocfure exporf efc
PIoce of business Iocofion skefch
Securify deposif
Infroducfion by fwo deoIers in from fhe pIoce of deoIer
SeIf oddressed sfomped enveIop Ps. 30
Differenf pIoces in some sfofe One regisfrofion differenf pIoces in differenf sfofes
regisfrofion required under eoch sfofe seporofeIy
Srunt of Pegistrution Certificution
Pegisfering oufhorify wiII ensure fhof oppIicofion is in conformify wifh provisions of
CST Acf.
He con moke necessory enquiries obouf fhe porficuIors given ore correcf
MoferioIs requesfed for regisfrofion ore eIigibIe for incIusion ond fhe goods ore in focf
needed for fhe business.
Affer he is sofisfied ond offer obfoining required securify
The deoIer wiII be issued o Cerfificofe of Pegisfrofion in prescribed form '8'.
A copy of fhe some wiII be issued for every oddifionoI pIoce of business in fhe Sfofe.
This cerfificofe shouId be kepf of principoI pIoce of business
A copy of fhe cerfificofe shouId be kepf of eoch oddifionoI pIoce of business in fhe
Sfofe.
Amendment of Certificute
The cerfificofe con be omended e.g. chonge of nome chonge of business chonge of
cIoss of goods in which he corries business chonge/oddifion of pIoce of business
worehouses efc. This omendmenf con be mode on oppIicofion from deoIer
SoIes fox oufhorifies fhemseIves offer giving nofice fo deoIer.
The omendmenf wiII be effecfive from dofe of oppIicofion
CunceIIution of CST Pegistrution
Pegisfrofion con be conceIIed eifher on requesf of deoIer or
Suo mofu by soIes fox oufhorifies.
Forms under CST
Muture of
form
Issued by Issued to Purpose
Form C Pegisfered DeoIer
who is o buyer
To Pegisfered
SeIIer
To AvoiI Concession
Pofe of Dufy
Form F Peceiver of goods in
cose of
8ronch/HO/Depof
fronsfers
To Sender of goods To exempf CST ond
freof fronsfer is
nof os soIe
Form H Pegisfered DeoIer
who is o Exporfer
(buyer)
To Pegisfered
SeIIer
To exempf CST
Form I Pegisfered DeoIer
who is o Exporfer in
SEZ (buyer)
To Pegisfered
SeIIer
To exempf CST
For EI & EZ Pegisfered SeIIer in
soIe fhrough
documenfs of fifIe on
movemenf of goods
To Pegisfered
DeoIer who is o
buyer
To exempf CST
A deoIer hos fo issue cerfoin decIorofions in prescribed forms fo buyers/seIIers.
These forms ore prescribed in CenfroI SoIes Tox (Pegisfrofion ond Turnover) PuIes
I9b7.
Forms C E-I E-II F H ond I ore prinfed ond suppIied by SoIes Tox oufhorifies
DeoIer hos moke o wriffen requesf fo obfoin fhe forms
DeoIer hos fo issue decIorofions in fhe forms prinfed ond suppIied by fhe SoIes Tox
oufhorifies onIy.
These forms ore in fripIicofe.
One C form con be issued fo eoch deoIer for covering oII fhe fronsocfions in whoIe
finoncioI yeor.
Sfofe governmenf hos no power fo woive fhe decIorofions in form C
F form
E 1 & E Z
Forms
H
form
I form
C From
Forms
enefits of using forms
C form is issued fo ovoiI Concession rofe
F form is issued in cose of 8roch/Ho/Depof fronsfer fo ovoiI CST Exempfion
H form/I form is issued fo ovoiI exempfion from CST when Purchosing for exporf
EI & EZ wos issued fo ovoiI exempfion from CST in cose of soIe by fronsfer of
documenfs of fifIe on fhe movemenf of goods
Eemption of suIe in cuse of trunsfer of documents during the movement of goods
Mo CST in cose of soIe fhrough fronsfer of documenfs befween Mr. M fo Mr. O ond Mr.
O fo Mr. P.
AppeuIs to AppeIIute Authority
In cose of dispufe concerning fhe soIe of goods effecfed in infer-sfofe soIe he oppeoI
wiII Iie wifh 'CenfroI SoIes Tox AppeIIofe Aufhorify Sec'oA reod wifh 9 of CST Acf. In
respecf of ofher moffers oppeoI Iies wifh Sfofe soIes fox oufhorifies (Iike AppeIIofe
Commissioner or TribunoI efc).
Formution of AppeIIute Authority -
A seporofe 'CenfroI SoIes Tox AppeIIofe Aufhorify' wiII be consfifufed by CenfroI
0overnmenf. The Aufhorify wiII consisf of Choirmon Officers of LegoI Service of
CenfroI governmenf CenfroI 0overnmenf wiII provide odminisfrofive sfoff fo fhe
Aufhorify. [Secfion I9 of CST Acf]. The oufhorify wiII reguIofe ifs own procedures.
[Secfion Z3 of CST Acf].
T N
A P M P U P
M of T N
Invoice
To N of UP
N endorse
Documents to
O of A. P
N issue form E II
To O &
O issue form C
To N
O endorse
Documents to
P of M. P
O issue form E II
To P &
P issue form C
To O
P endorse
Documents to
Q of U. P
Q handover
Documents to
Transporter &
Takes delivery
Of goods
M issue form E 1
To N &N issue
form C to M
To M
Mutters uppeuIubIe to the uuthority -If fhe dispufe reIofes fo soIe of goods
effecfed in infer-sfofe soIe. AppeoI shouId be fiIed wifhin 4b doys from dofe on which
order is served on him. AppeIIofe Aufhorify con gronf furfher exfension of Ib doys.
[Secfion Z0(Z)]. AppeoI musf be fiIed in quodrupIicofe ond occomponied by o fee of Ps
b000/-.
Procedure for heuring
On receipf of oppeoI o copy of oppeoI wiII be forworded fo ossessing oufhorify os
weII os Sfofe 0overnmenfs concerned.
AppeIIofe Aufhorify wiII coII upon ossessing oufhorify ond Sfofe 0overnmenf/s
fo furnish reIevonf records.
The records wiII be refurned fo ossessing oufhorify/Sfofe 0overnmenf os soon
os possibIe. [Secfion ZI(I)].
Aufhorify wiII heor fhe moffer exomine fhe moffer ond eifher occepf or rejecf
fhe oppeoI.
8efore rejecfing oppeoI opporfunify of heoring wiII be given fo oppeIIonf or his
oufhorised represenfofive ond oIso fo Sfofe 0overnmenf concerned. [Secfion
ZI(3)].
AppeoI shouId be normoIIy decided wifhin o monfhs.
Copy of order wiII be senf fo oppeIIonf ond ossessing oufhorify. [Secfion ZI(b)].
If moy hoppen fhof soIes fox wos poid fo one Sfofe 0overnmenf whiIe in focf if
wos poyobIe fo onofher Sfofe 0overnmenf
Secfion Zo provides fhof order of CST AppeIIofe Aufhorify wiII be binding on
ossessing oufhorifies ond ofher oufhorifies under Sfofe soIes fox Iows
There is no provision for oppeoI ogoinsf fhe order of CST AppeIIofe Aufhorify.
Offences under the Act
CenfroI SoIes Tox Acf provides for penoIfies ond punishmenfs in respecf of cerfoin
offences. In respecf of offences nof provided in fhe CST Acf provisions of 0eneroI
SoIes Tox Low of fhe Sfofe where fhe deoIer is corrying on business ore oppIicobIe.
CST Acf envisoges fhree fypes of punishmenfs (o) Imprisonmenf ond fine which con onIy
be imposed by Courf of Low (b) Compounding of offences by SoIes Tox oufhorifies (c)
PenoIfy in cerfoin coses which con be imposed by SoIes Tox oufhorifies.
Secfion I0 of CST Acf provides fhof punishmenf up fo six monfhs of simpIe
imprisonmenf or wifh fine or bofh con be imposed for foIIowing offences under CST Acf.
knowingIy giving decIorofion in form C E-I E-II F or H which he knows or hos
reoson fo beIieve fo be foIse
Mof regisfering under CST Acf when required fo be regisfered
FoIse represenfofion by o regisfered deoIer fhof fhe goods being purchosed ore
covered under his Cerfificofe of Pegisfrofion for concessionoI rofe
FoIseIy represenfing fhof he is o regisfered deoIer fhough he is nof.
Misusing or using for differenf purpose fhe goods obfoined under C form or H
form prescribed for SEZ unif of concessionoI rofe
Hoving in possession C forms or H form prescribed for SEZ unif which ore nof
obfoined os per provisions of Acf.
CoIIecfing ony omounf represenfing os CenfroI SoIes Tox by on unregisfered
deoIer or by o regisfered deoIer in confrovenfion of provisions of Acf.
Provisions regording offences in '0eneroI SoIes Tox Low' (excepfing fhose
enumerofed obove) ore oppIicobIe in respecf of offences commiffed by deoIers in
fhof Sfofe.
Punishmenf of imprisonmenf ond/or fine con be imposed onIy by Courf of Iow.
PenuIty in Iieu of Prosecution
Secfion I0A of CST Acf oufhorises imposifion of penoIfy in Iieu of punishmenf in
respecf of offences regording
obfoining goods nof incIuded in regisfrofion cerfificofe
purchosing goods represenfing fhof he is regisfered deoIer fhough he is nof
using goods for purposes differenf fhon fhe purposes for which purchosed
The penoIfy con be up fo one ond hoIf fime fhe fox which wouId hove been
poyobIe.
SoIes Tox Aufhorify hoving jurisdicfion over fhe deoIer's pIoce of business con
impose fhe penoIfy.
Other provisions
LiubiIity of compuny in Iiquidution Sec 17
If o Iiquidofor or receiver is oppoinfed for o Compony he shouId inform soIes
fox oufhorifies wifhin 30 doys of fhe oppoinfmenf.
The oppropriofe oufhorify [ossessing officer i.e. soIes fox officer wiII inform
him wifhin fhree monfhs fhe omounf of fox due from compony which is in
Iiquidofion. .
Liquidofor connof seII ossefs of compony before seffing oside omounf of due os
informed by soIes fox oufhorifies - unIess such fronsfer or soIe is by order of
Courf. . Ofherwise Iiquidofor is personoIIy IiobIe. .
Priority of Stute dues
0overnmenf dues mosf of fhe fimes hove priorify over ofher dues in cose of Iiquidofion.
The priorify is subjecf fo provisions of Componies Acf.
LiubiIity of directors of Privute Limited Compuny in cuse of Iiquidution sec 1
if o privofe Iimifed compony is being wound up IiobiIify of direcfors of such
privofe Iimifed compony is personoI if omounf connof be recovered in Iiquidofion
i.e. fhe fox due con be recovered from his personoI properfy.
Direcfor sove fhe IiobiIify onIy if he proves fhof non-poymenf of fox connof be
offribufed fo ony gross negIecf misfeosonce or breoch of dufy on his porf in
reIofion fo offoirs of fhe compony.

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