Central Excise Act, 1944

(1) This Act may be called the Central Excise Act, 1944. (2) It extends 6 to the whole of India . (3) It shall come into force on such date 8 as the Central Government may, by notification in the Official Gazette, appoint in this behalf .

In this Act, unless there is anything repugnant in the subject or context, - [ 9 (a) "Adjudicating authority" means any authority competent to pass any order or decision under this Act, but does not include the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963), [ 10 Commissioner of Central Excise (Appeals) 10 ] or Appellate Tribunal; ( aa ) "Appellate Tribunal" means the Customs, Excise and Gold (Control) Appellate Tribunal constituted under section 129 of the Customs Act, 1962 (52 of 1962) 9 ]; [ 11 ( aaa ) "broker" or "commission agent" means a person who in the ordinary course of business makes contracts for the sale or purchase of excisable goods for others; 11 ] [ 12 (b) "Central Excise Officer" means the Chief Commissioner of Central Excise, Commissioner of Central Excise, Commissioner of Central Excise (Appeals), Additional Commissioner of Central Excise, Deputy Commissioner of Central Excise, Assistant Commissioner of Central Excise or any other officer of the Central Excise Department, or any person (including an officer of the State Government) invested by the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963) with any of the powers of a Central Excise Officer under this Act. 12 ] (c) " curing " includes wilting, drying, fermenting and any process for rendering an unmanufactured product fit for marketing or manufacture; (d) " excisable goods" means goods specified in the [ 13 [ 13a the First Schedule and Second Schedule 13a ] to the Central Excise Tariff Act, 1985 (5 of 1986) 13 ] as being subject to a duty of excise and includes salt; (e) "factory" means any premises, including the precincts thereof, wherein or in any part of which excisable goods other than salt are manufactured, or wherein or in any part of which any manufacturing process connected with the production of these goods is being carried on or is ordinarily carried on; [ 14 ( ee ) "Fund" means the Consumer Welfare Fund established under section 12C; 14 ] [ 13 (f) manufacture” includes any process, - ( i ) incidental or ancillary to the completion of a manufactured product; and (ii) which is specified in relation to any goods in the Section or Chapter notes of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to, manufacture, and the word "manufacturer" shall be construed accordingly and shall include not only a person who employs hired labor in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account; 13 ] (g) " prescribed " means prescribed by rules made under this Act; (h) "sale" and "purchase", with their grammatical variations and cognate expressions, mean any transfer of the possession of goods by one person to another in the ordinary course of trade or business for cash or deferred payment or other valuable consideration; [ 15 ( i ) * * * * 15 ]; [ 15 (j) * * * * 15 ] [ 16 ( jj ) * * * * * * 16 ] (k) "wholesale dealer" means a person who buys or sells excisable goods wholesale for the purpose of trade or manufacture, and includes a broker or commission agent who, in addition to making contracts for the sale or purchase of excisable goods for others, stocks such goods belonging to others as an agent for the purpose of sale.

13a THE FIRST SCHEDULE AND THE SECOND SCHEDULE 13a ] TO THE CENTRAL EXCISE TARIFF ACT,1985 13 ] TO BE LEVIED 17 . (1) [ 17a There shall be levied and collected in such manner as may be prescribed (a) a duty of excise on all excisable goods [ 18 which are produced or manufactured in India 18 ] as, and at the rates, set forth in the [ 13 Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) 13 ] : (b) a special duty of excise, in addition to the duty of excise specified in clause (a) above, on excisable goods specified in the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) which are produced or manufacture in India , as, and at the rates set forth in the said Second Schedule. 17a ] [ 19 Provided that the duties of excise which shall be levied and collected on any [ 20 excisable goods which are produced or manufactured, - ( i ) in a free trade zone and brought to any other place in India ; or (ii) by a hundred per cent export-oriented undertaking and allowed to be sold in India, Shall be an amount equal to 20 ] the aggregate of the duties of customs which would be leviable under section 12 of the Customs Act, 1962 (52 of 1962), on like goods produced or manufactured outside India if imported into India, and where the said duties of customs are chargeable by reference to their value; the value of such excisable goods shall, notwithstanding anything contained in any other provision of this Act, be determined in accordance with the provisions of the Customs Act, 1962 (52 of 1962) and the Customs Tariff Act, 1975 (51 of 1975). [ Explanation1 : Where in respect of any such like goods, any duty of customs leviable under the said section 12 is leviable at different rates, then, such duty shall, for the purposes of this proviso, be deemed to be leviable under the said section 12 at the highest of those rates. [ 20 Explanation 2 : In this proviso, - ( i ) " free trade zone" means the Kandla Free Trade Zone and the Santa Cruz Electronics Export Processing Zone and includes any other free trade zone which the Central Government may, by notification in the Official Gazette, 21 specify in this behalf; (ii) "hundred per cent export-oriented undertaking" means an undertaking which has been approved as a hundred per cent export-oriented undertaking by the Board appointed in this behalf by the Central Government in exercise of the powers conferred by section 14 of the Industries (Development and Regulation) Act, 1951 (65 of 1951), and the rules made under that Act. 20 ] [ 22 (1A) The provisions of sub-section (1) shall apply in respect of all excisable goods other than salt which are produced or manufactured in India by, or on behalf of, Government, as they apply in respect of goods which are not produced or manufactured by Government. 22 ] (2) The Central Government may, by notification in the Official Gazette, fix, for the purpose of levying the said duties, tariff values of any articles enumerated, either specifically or under general headings, in the [ 13 [ 13a the First Schedule and the Second Schedule 13a ] to the Central Excise Tariff Act, 1985 (5 of 1986) 13 ] as chargeable with duty ad valorem and may alter any tariff values for the time being in force. [ 23 (3) Different tariff values may be fixed – (a) for different classes or descriptions of the same excisable goods; or (b) for excisable goods of the same class or description – ( i ) produced or manufactured by different classes of producers or manufacturers; or (ii) sold to different classes of buyers : Provided that in fixing different tariff values in respect of excisable goods falling under sub-clause ( i ) or sub-clause (ii), regard shall be had to the sale prices charged by the different classes of producers or manufacturers or, as the case may be, the normal practice of the wholesale trade in such goods 23 ].

CHARGING OF DUTY OF EXCISE. (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to value, such value, shall, subject to the other provisions of this section, be deemed to be – (a) the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale: Provided that - ( i ) where, in accordance with the normal practice of the wholesale trade in such goods, such goods are sold by the assessee at different prices to different classes of buyers (not being related persons) each such price shall, subject to the existence of the other circumstances specified in clause (a), be deemed to be the normal price of such goods in relation to each such class of buyers; [ 26 ( ia ) where the price at which such goods are ordinarily sold by the assessee is different for different places of removal, each such price shall, subject to the existence of other circumstances specified in clause (a), be deemed to be the normal price of such goods in relation to each such place of removal; 26 ] (ii) where such goods are sold by the assessee in the course of wholesale trade for delivery at the time and place of removal at a price fixed under any law for the time being in force or at a price, being the maximum, fixed under any such law, then, notwithstanding anything contained in clause (iii) of this proviso, the price or the maximum price, as the case may be, so fixed, shall, in relation to the goods so sold, be deemed to be the normal price thereof; (iii) where the assessee so arranges that the goods are generally not sold by him in the course of wholesale trade except to or through a related person, the normal price of the goods sold by the assessee to or through such related person shall be deemed to be the price at which they are ordinarily sold by the related person in the course of wholesale trade at the time of removal, to dealers (not being related persons) or where such goods are not sold to such dealers, to dealers (being related persons), who sell such goods in retail; (b) where the normal price of such goods is not ascertainable for the reason, that such goods are not sold or for any other reason, the nearest ascertainable equivalent thereof determined in such manner as may be prescribed. 27 (2) Where, in relation to any excisable goods the price thereof for delivery at the place of removal is not known and the value thereof is determined with reference to the price for delivery at a place other than the place of removal, the cost of transportation from the place of removal to the place of delivery shall be excluded from such price. (3) The provisions of this section shall not apply in respect of any excisable goods for which a tariff value has been fixed under sub-section (2) of section 3. (4) For the purposes of this section, - (a) " assessee " means the person who is liable to pay the duty of excise under this Act and includes his agent; (b) " place of removal" means – ( i ) a factory or any other place or premises of production or manufacture of the excisable goods; [ 28 * * * 28 ] (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty; [ 29 (iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory and, 29 ] from where such goods are removed; [ 29 ( ba ) "time of removal", in respect of goods removed from the place of removal referred to in sub-clause (iii) of clause (b), shall be deemed to be the time at which such goods are cleared from the factory; 29 ] (c) "related person" means a person who is so associated with the assessee that they have interest, directly or indirectly, in the business of each other and includes a holding company, a subsidiary company, a relative and a distributor of the assessee , and any sub-distributor of such distributor. Explanation : In this clause "holding company", "subsidiary company" and "relative" have the same meanings as in the Companies Act, 1956 (1 of 1956); (d) " value ", in relation to any excisable goods, - ( i ) where the goods are delivered at the time of removal in a packed condition, includes the cost of such packing except the cost of the packing which is of a durable nature and is returnable by the buyer to the assessee . Explanation : In this sub-clause, "packing" means the wrapper, container, bobbin, pirn , spool, reel or warp beam or any other thing in which or on which the excisable goods are wrapped, contained or wound; (ii) does not include the amount of the duty of excise, sales tax and other taxes, if any, payable on such goods and, subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale. [ 30 Explanation : For the purposes of this sub-clause, the amount of the duty of excise payable on any excisable goods shall be the sum total of – (a) the effective duty of excise payable on such goods under this Act; and (b) the aggregate of the effective duties of excise payable under other Central Acts, if any, providing for the levy of duties of excise on such goods, and the effective duty of excise on such goods under each Act referred to in clause (a) or clause (b) shall be, - ( i ) in a case where a notification or order providing for any exemption (not being an exemption for giving credit with respect to, [ 31 or reduction of duty of excise under such Act on such goods equal to, any duty of excise under such Act, or the additional duty under section 3 of the Customs Tariff Act, 1975 (51 of 1975), already paid 31 ] on the raw material or component parts used in the production or manufacture of such goods) from the duty of excise under such Act is for the time being in force, the duty of excise computed with reference to the rate specified in such Act, in respect of such goods as reduced so as to give full and complete effect to such exemption; and (ii) in any other case, the duty of excise computed with reference to the rate specified in such Act in respect of such goods. 30 ] (e) " wholesale trade" means sales to dealers, industrial consumers, Government, local authorities and other buyers, who or which purchase their requirements otherwise than in retail. 25 ] Comment : "It is relevant to note that the packing, of which the cost is included, is the packing, in which the goods are wrapped, contained or wound when the goods are delivered at the time of removal. In other words, it is the packing in which it is ordinarily sold in the course of wholesale trade to the. wholesale buyer. The degree of packing in which the excisable article is contained will vary from one class of articles to another. From the particulars detailed before us by the assessees , it is apparent that the cost of primary packing, that is to say, the packing in which the article is contained and in which it is made marketable for the ordinary consumer, for example a tube of toothpaste or a bottle of tablets in a cardboard carton, or biscuits in a paper wrapper or in a tin container, must be regarded as falling within Section 4 (4) (d) ( i )"Union of India v.. Bombay Tyre International Ltd., AIR 1984 SUPREME COURT 420

(1) The Central Government may, by rules made under this section, provide for remission of duty of excise leviable on any excisable goods which due to any natural cause are found to be deficient in quantity. (2) Any rules made under sub-section (1) may, having regard to the nature of the excisable goods or of processing or of curing thereof, the period of their storage or transit and other relevant considerations, fix the limit or limits of percentage beyond which no such remission shall be allowed : Provided that different limit or limits of percentage may be fixed for different varieties of the same excisable goods or for different areas or for different seasons. 33 ]

Any prescribed person who is engaged in – (a) the production or manufacture or any process of production or manufacture of any specified goods included in the [ 13a the First Schedule and the Second Schedule 13a ] to the Central Excise Tariff Act, 1985 (5 of 1986), or (b) the wholesale purchase or sale (whether on his own account or as a broker or commission agent) or the storage of any specified goods included in the [ 13a the First Schedule and the Second Schedule 13a ] to the Central Excise Tariff Act, 1985 (5 of 1986). Shall get himself registered with the proper officer in such manner as may be prescribed. 36 ]

REPEALED

From such date as may be specified in this behalf by the Central Government by notification in the Official Gazette, no person shall, except as provided by rules made under this Act, have in his possession [ 38 any goods specified in the Second Schedule 38 ] in excess of such quantity as may be prescribed for the purposes of this section as the maximum amount of such goods or of any variety of such goods which may be possessed at any one time by such a person.

[ 39 (1) 39 ] Whoever commits any of the following offences, namely : - [ 40 (a) contravenes any of the provisions of section 8 or of a rule made under clause (iii) or clause (xxvii) of sub-section (2) of section 37; 40 ] ( b ) evades the payment of any duty payable under this Act; [ 41 (bb) removes any excisable goods in contravention of any of the provisions of this Act or any rules made thereunder or in any way concerns himself with such removal; ( bbb ) acquires possession of, or in any way concerns himself in transporting, 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 this Act or any rule made thereunder ; 41 ] [ 41a ( bbbb ) contravenes any of the provisions of this Act or the rules made thereunder in relation to credit of any duty allowed to be utilized towards payment of excise duty on final products; 41a ] (c) fails to supply any information which he is required by rules made under this Act to supply, or (unless with a reasonable belief, the burden of proving which shall be upon him, that the information supplied by him is true) supplies false information; (d) attempts to commit, or abets the commission of, any of the offences mentioned in clauses (a) and (b) of this section; [ 42 shall be punishable, - ( i ) in the case of an offence relating to any excisable goods, the duty leviable thereon under this Act exceeds one lakh of rupees, with imprisonment for a term which may extend to seven years and with fine : Provided that in the absence of special and adequate reasons to the contrary to be recorded in the judgment of the Court such imprisonment shall not be for a term of less than six months; (ii) in any other case, with imprisonment for a term which may extend to three years or with fine or with both. 42 ] [ 43 (2) If any person convicted of an offence under this section is again convicted of an offence under this section, then, he shall be punishable 'for the second and for every subsequent offence with imprisonment for a term which may extend to seven years and with fine : Provided that in the absence of special and adequate reasons to the contrary to be recorded in the judgment of the Court such imprisonment shall not be for a term of less than six months. (3) For the purposes of sub-sections (1) and (2), the following shall not be considered as special and adequate reasons for awarding a sentence of imprisonment for a term of less than six months, namely :- ( i ) the fact that the accused has been convicted for the first time for an offence under this Act; (ii) the fact that in any proceeding under this Act, other than a prosecution, the accused has been ordered to pay a penalty or the goods in relation to such proceedings have been ordered to be confiscated or any other action has been taken against him for the same act which constitutes the offence; (iii) the fact that the accused was not the principal offender and was acting merely as a carrier of goods or otherwise was a secondary party in the commission of the offence; (iv) the age of the accused. 43 ]

Any Court trying an offence under this Chapter may order the forfeiture to [ 48 Government 48 ] of any goods in respect of which the Court is satisfied that an offence under this Chapter has been committed, and may also order the forfeiture of any receptacles, packages or coverings in which such goods are contained and the animals, vehicles, vessels or other conveyances used in carrying the goods, and any implements or machinery used in the manufacture of the goods.

In respect of duty and any other sums of any kind payable to the Central Government under any of the provisions of this Act or of the rules made thereunder , the officer empowered by the [ 49 Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963) 49 ] to levy such duty or require the payment of such sums may deduct the amount so payable from any money owing to the person from whom such sums may be recoverable or due which may be in his hands or under his disposal or control, or may recover the amount by attachment and sale of excisable goods belonging to such person; and if the amount payable is not so recovered, he may prepare a certificate signed by him specifying the amount due from the person liable to pay the same and send it to the Collector of the district in which such person resides or conducts his business and the said Collector, on receipt of such certificate, shall proceed to recover from the said person the amount specified therein as if it were an arrear of land revenue.

ACT NO. 52 OF 1962 78 ] TO CENTRAL EXCISE DUTIES. The Central Government may, by notification in the Official Gazette, 79 declare that any of the provisions of the [ 78 Customs Act, 1962 (52 of 1962) 78 ], relating to the levy of and exemption from customs duties, drawback of duty, warehousing, offences and penalties, confiscation, and procedure relating to offences and appeals shall, with such modifications and alterations as it may consider necessary or desirable to adapt them to the circumstances, be applicable in regard to like matters in respect of the duties imposed by section 3.