Page 41 - DCOM308_DCOM502_INDIRECT_TAX_LAWS

Indirect Tax Laws Neha Khosla, Lovely Professional University

Notes Unit 3: Classification and Valuation of Excisable Goods

CONTENTS
Objectives
Introduction
3.1 Classification of Excisable Goods
3.1.1 Scheme of Classification

3.1.2 Broad Grouping in CETA
3.1.3 Trade Parlance Theory
3.2 Valuation of Excisable Goods
3.3 Valuation under Central Excise
3.4 Summary
3.5 Keywords
3.6 Review Questions

3.7 Further Readings
Objectives

After studying this unit, should will be able to:
 Know about Excisable Goods
 Understand classification of Excisable Goods

 Know about valuation of Excisable Goods

Introduction

There are thousands of varieties of manufactured goods and all goods cannot carry the same rate
or amount of duty. It is also not possible to identify all products individually. It is, therefore,
necessary to identify the numerous products through groups and sub-groups and then to decide
a rate of duty on each group/sub-group. This is called ‘Classification’ of a product, which means
determination of heading or sub-heading under which the particular product will be covered.
Excise is a duty on excisable goods manufactured or produced in India. The liability of payment
of excise is on the Manufacturer. Once the liability of payment is established, the next question
is what is the amount of duty payable? The two-step process is:

(a) Classification of excisable goods.
(b) Valuation of excisable goods.

3.1 Classification of Excisable Goods

The excise duty is chargeable at different goods at different rates. Therefore, goods are classified
for determination of duty. The classification of goods adopted in Central Excise Tariff Act and
Customs Act is common. The classification uses 8-digit nomenclature. CETA consists of two
schedules; the first schedule gives basic excise duty (i.e., CENVAT duty) and second schedule
gives export duties.

36 LOVELY PROFESSIONAL UNIVERSITY