A overview of union excise

1. SHANSON
SHAJI
PUBLIC
ECONOMICS
VERSION 2.O

2. WELCOME TO ALL
UNION
EXCISE

3. Definition: Union excise duty is a type of indirect tax on goods
manufactured in India.
Description: Union excise duties are levied in accordance with the rates
mentioned in Schedule I and II of the Central Excise Tariff Act, 1985.
The taxable event here is the 'Manufacture'.
The burden of taxation is, however, passed on to the consumers by the
manufacturer. When the rate of valuation is on ad valorem basis, the
following methods are employed for the valuation of the excisable
goods:
 Transaction value
 Value determined on the basis of Maximum Retail Sale Price as per
Section 4A of the Central Excise Act 1944.
 Tariff value under Section 3, if applicable.

4. DOMESTIC
TRADE TAX
EXCISE DUTY
SERVICE TAX
Power to levy
and collect
union excise
duty
Goods and products
manufacture in India other
than alcohol ,liquors and
narcotics and taxable under
union excise duty

5. EXCISE DUTY
An excise is considered an indirect tax, meaning that the producer or
seller who pays the tax to the government is expected to try to recover or
shift the tax by raising the price paid by the buyer. Excises are typically
imposed in addition to another indirect tax such as a sales tax or value
added tax (VAT). In common terminology (but not necessarily in law), an
excise is distinguished from a sales tax or VAT in three ways:
 An excise typically applies to a narrower range of products.
 An excise is typically heavier, accounting for a higher fraction of the
retail price of the targeted products.
 An excise is typically a per unit tax, costing a specific amount for a
volume or unit of the item purchased, whereas a sales tax or VAT is an
ad valorem tax and proportional to the price of the good.

6.  Union excise duty is an important sources of revenue for the
union government.
 While the coverage of union excise duty was expanded has
changed over time and its structure has changed Since
independence.
 Excise duties were imposed on the domestic production of
commodities.
 Excise has been collected from India in ancient times .
 Modern excise system began in the country in 1894.
 In between 1896 and 1926 two excise levies were imposed
namely on motor sprit and kerosene.
 In 1934 the 1st step in the rational of excise levies and
extention of their coverage (Sugar , Matches, Steel e.t.c were
brought under excise.)
 1974-75 Around 128 commodity were group under different
tariff item subject to excise.

7. AN OUT LINE OF
L.K.JHA COMMITTEE 1963

8. The Central government announced the MODVAT scheme (modified Value
Added Tax) in March 1986. With effect from 1st March 1994, this scheme
has been extended to petroleum goods (except SBP/Hexane/HSD/MS)
which are used as an input in the manufacture of other excisable goods.
MODVAT (Modified Value Added Tax) is a
unique system under Central Excise Rules
that permits manufacturers of excisable
goods to avail credit of duty paid on the
notified inputs received and used in or in
relation to the manufacture of final products
and to utilise such credit towards the duty
liability on removal of final goods.
The purpose of the MODVAT scheme is to
avoid cascading effect of taxes i.e. double
taxation on inputs as well as final products.