Clearance of excisable goods

1. Dr.P.Ravichandran,
M.Com., M.B.A., M.A (Astrology)., M.Phil., Ph.d.,
D.C.P., D.L.L & A.L., P.G.D.C.A., P.G.D.P.M & I.R.,
Associate Professor of Commerce,
Commerce Research Centre,
S.B.K.College, Aruppukottai.
e-mail id : prcapk@gmail.com
Mobile: 9443424090 & 9080030090
Clearance of goods
Excise Duty

2. Clearance of goods
(Types of Excise Control)
 Clearance means removal of excisable goods from the
factory. Excise duty is payable before removal of
manufactured goods. Clearance of goods may be
classified as –
 1. Clearance under physical control;
 2. Clearance under compounded levy scheme;
3. Clearance under Self-Assessment Procedure (SAP)
(or) Self-Removal Procedure (SRP).

3. 1. Clearance under physical control
 Under physical control goods are cleared under
the supervision of Central Excise Officers,
posted at the factory (or) warehouse, strictly
supervise physically the manufacturing,
storing and clearance of excisable goods.
 This system is applicable in respect of cigarettes
only.

4.  Assessment is done by the inspector prior to the
removal of goods and the goods can be
cleared only after the invoicing counter
signed by the inspector.
 Goods can be cleared from factory only during
6 a.m. to 6 p.m.
 Goods cannot be cleared on Sundays (or)
public holidays without permission of
commissioner and on payment of prescribed fees.

5. 2. Clearance under
compounded levy scheme
 In many sectors of industry particularly the
unorganized sector are unable to maintain
basic accounts for production and
clearance.
 Many of these happened to be cottage industry.
 In order to facilitate these assessees, an option has
been given to them who pay duty on the
basis of a specified period as well as the
productive capacity of the factory.

6.  The goods covered in this scheme are –
embroidery items, marble slabs, stainless
steel patties, aluminium circles, cotton
fabrics produced on power looms.
 The duty payable under compounded levy
scheme is decided on the basis of some of
the identifiable equipment used in the
products.

7. 3. Clearance under self-removal
procedure (SRP)
 Self-removal means that the manufacturer can
remove the goods himself without
permission of central excise department.
 At present we have self-removal procedure
for all products except cigarettes.
 This does not mean physical checks are
completely ruled out as selective and
periodic visits by officers have been laid
down to ensure proper compliance of the
regulations.

8.  SRP is applicable in the following cases –
 1. Removals for export, whether under
bond (or) under claim for rebate of duty;
 2. Removal, in bond, (or) finished (or) semi-
finished goods;
 3. Removals for destruction of goods unfit for
consumption without payment of duty;
 4. Receipt of duty paid damaged goods (or)
reprocessing (or) repairs.

9. Exceptions
 SRP is not applicable in respect of goods to which
physical control systems as well as compounded
levy scheme are applicable.
 SRP is also not applicable in respect of goods
removed from FTZ or 100% EOU for home
consumption.

10. Removal of goods on different
occasions
 Goods may be cleared for different purposes like
 for captive consumption,
 for weighment,
 for samples,
 for exports,
 for warehousing,
 for SEZ units etc.,

11. Removal of goods for captive
consumption
 If excisable goods are used within the factory is
called captive consumption.
 The date of removal will be the date on which goods
are issued for use with in the factory.
 For captive consumption one issue is to be made
per day.

13. Removal of goods for outside
weighment
 Some of the manufactured items are sold on
weighment are sent outside to weighbridge
after loading in same truck.
 But goods can be removed only after making
the invoice.

14. Clearance of samples
 Since excise is a duty on manufacture, duty is
payable on samples even if they are not sold.
 Samples may be –
 1. Trade sample send to customers for trail;
 2. Samples for test;
 3. Samples for supply against sale contract;
 4. Samples for market enquiries by Central
Excise Officers;
 5. Samples relating to exports, assessment etc.

15. Remission of duty
 Remission of duty means duty levied but exempted
from payment of duty.
 Remission can be allowed if the goods are –
 damaged (or)
 destroyed by natural causes (or)
 destroyed by unavoidable accident (or)
 unfit for consumption (or)
 for marketing after recording the finished
goods into the Daily Stock Account.
 On the satisfaction of the Commissioner, he may remit
the duty (i.e. no demand of duty) payable on such goods.

16. Rebate of duty
 Rebate of duty can be under stood as duty draw back.
 In case of rebate, the amount may be returned to
someone else.
 For example in case rebate of duty paid on inputs,
the amount is returned exporter but duty would
have been paid by supplier of inputs.
 Similarly, in case of export through merchant
exporter, duty is paid by manufacturer, and the
rebate is to be given to merchant exporter.
 Refund of duty – the duty is returned to the person
who had paid it.

17. Daily Stock Account (DSA)
 Every assessee registered under Central Excise should
maintain the Daily Stock Account (DSA). There is no
specific format for DSA.
 The following information should be captured in the DSA.
 Description of goods manufactured;
 Opening balance of goods manufactured;
 Quantity manufactured;
 Inventory of goods (Closing stock);
 Goods removed from the place of removal (quantity);
 Assessable value of goods removed;
 Amount of duty payable to the department;
 Particulars with regard to the amount of duty
actually paid.

18. Personal Ledger Account (PLA)
 A manufacturer is required to maintain a current
account, called Personal Ledger Account (PLA).
 A manufacturer is required to pay duty in lump sum in the
Government by way of challan in form GAR-7.
 The PLA is credited when duty is deposited in the bank.
 The PLA is debited with the duty required to be paid on
manufacture of goods on monthly basis.
 At the end of the year balance in excise deposit a/c would
represent current asset and amount in excise duty
paid a/c would be transferred to P&L a/c.