Page 46 - DCOM308_DCOM502_INDIRECT_TAX_LAWS
P. 46

Unit 3: Classification and Valuation of Excisable Goods




          normally sold along with such cases. Further, packing materials and containers are also to be  Notes
          classified with the goods except when the packing is for repetitive use (This provision is obviously
          made to ensure that the packing and the goods are charged at same rate of duty).
          Rule 6
          Classification of goods in sub-headings shall be determined  in terms of those  sub-headings.
          Only sub-headings at the same level are comparable.

               !
             Caution  In order to determine the rate of excise duty on goods, classification is prerequisite.
             Excise duty payable is based on the classification of goods given in the Central Excise
             Tariff Act, 1985 (CETA).

          Self Assessment

          Fill in the blanks:

          1.   CETA consists of two schedules, the first schedule gives ..............................
          2.   The .............................. Excise Tariff Act was amended in 2004.
          3.   .............................. system define as excisable goods list in India and goods are classified
               systematically following the footsteps of HSN.
          4.   The CE Act .............................. does not provide any guidelines for classification of goods.
          5.   The linkage between Central Excise Act 1944 and Central Excise Tariff Act ..............................
               as amended by the Central Excise Tariff Act 2004.
          3.2 Valuation of Excisable Goods


          Duty at ad valorem rates is charged on a wide range of excisable commodities. Valuation of such
          goods is governed by section 4 of the Central Excise Act, 1944, read with the Central Excise
          Valuation (Determination of Price of Excisable Goods) Rules, 2000. Valuation with reference to
          the retail sale price in respect of specified excisable goods is governed by section 4A of the above
          Act. A few cases of short levy of duty due to incorrect valuation involving revenue of   12.42
          crore, are illustrated in the following paragraphs. These observations were communicated to
          the Ministry through 23 draft audit paragraphs. The Ministry/department has accepted (till
          December 2009) the audit observations in 15 draft audit paragraphs with a revenue implication
          of   7.65 crore, of which   3.33 crore has been recovered.
          Incorrect determination of cost  of excisable goods Rule 8 read with proviso  to rule 9 of the
          Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 envisages that
          where excisable goods are not sold by the assessee but are consumed by it or by a related person
          of the assessee in the manufacture of other articles, the assessable value of such goods shall be
          one hundred and ten per cent of the cost of production or manufacture of such goods. Further,
          the Board had clarified (13 February 2003) that the value of goods consumed captively should be
          determined in accordance with the Cost Accounting Standard (CAS-4) method only.
          M/s BSNL (Telecom factory), in Kolkata V Commissionerate, engaged in the manufacture of
          telecom tower, SS drop-wire etc., cleared goods to its different telecom circles paying duty on
          the assessable value arrived at on ‘cost basis’. Scrutiny of records indicated that the assessable
          value was determined  by adopting value of raw materials which was lower than the  actual
          value. This resulted in short levy of duty of   20.40 lakh during the period from May 2005 to
          March 2006.



                                           LOVELY PROFESSIONAL UNIVERSITY                                   41
   41   42   43   44   45   46   47   48   49   50   51