Assessment under Central Excise Law
The expressions ‘assessment’ and ‘assessee’ have been defined in the Central Excise Rules, 2002.
Assessment, as per Rule 2(b), includes self-assessment of duty made by the assessee and provisional assessment under Rule 7 of the said Rules
Assessee, as per Rule 2(c), means any person, who is liable for payment of duty assessed or a producer or manufacturer of excisable goods or a registered person of a private warehouse in which excisable goods are stored and includes an authorized agent of such person.
Liability to assessment and Payment of Duty
Rule 4 of the Central Excise Rules, 2002 provides that every person, who produces or manufactures any excisable goods, or who stores such goods in a warehouse, shall pay the duty leviable on such goods in the manner provided in Rule 8 or under any other law. No excisable goods, on which any duty is payable, shall be removed without payment of duty from any place, where they are produced or manufactured, or from a warehouse, unless otherwise provided
Incidence of Duty i.e. Removal
For the purposes of the Rule 4, excisable goods manufactured in a factory and utilized, as such or after subjecting to any process, for the manufacture of any other commodity, in such factory, shall be deemed to have been removed from such factory immediately before such utilization
Major Ingredients of Assessment
Before each removal, whether outside the factory of manufacture or production or for captive consumption, duty has to be assessed on the excisable goods
Classification and Rate of Duty
For determining the rate of duty, classification is a prerequisite. Classification means the appropriate classification code, which is applicable to the excisable goods in question
under the First Schedule to Central Excise Tariff Act, 1985. There are Section Notes and Chapter Notes, in the Tariff which are helpful in determining the appropriate classification. In case of difficulties, there are “Interpretative Rules” in the said Act.
Where rate of duty is dependent on the value of goods (ad valorem duty), value has to be determined, in accordance with the provisions of Central Excise Act, 1944, as follows :
(i) Value under section 4 based on transaction value or determined in terms of valuation Rule,
(ii) Value based on retail sale price under section 4A,
(iii) Tariff value fixed under section 3.
As per Rule 6 of the Central Excise Rules, 2002 a Central Excise assessee is himself (self-assessment) required to determine duty liability at the time of removal of excisable goods and discharge the same. In other words, the assessee should apply correct classification and value (where duty is ad valorem) on the quantities being removed by him and indicate the same in the invoice. However, in case assesses manufacturing cigarettes, the Superintendent or Inspector of Central Excise has to assess the duty payable before removal by the assessee Provisional Assessment Provisional assessment is resorted to, in the event the duty can not be determined at the point of clearance of the goods.
Guidelines and Procedure for Provisional Assessment
Rule 7 of the Central Excise Rules lays down that where the assessee is unable to determine the value of excisable goods or determine the rate of duty applicable thereto, they may request the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, indicating :
1. Specific grounds and reasons and the documents or information’s, for want of which final assessment cannot be made.
2. Period for which provisional assessment is required.
3. The rate of duty or the value or both, as the case may be, proposed to be applied by the assessee, for Provisional Assessment.
4. That he undertakes to appear before the Assistant Commissioner or Deputy Commissioner of Central Excise within 7 days or such date fixed by him, and furnish all relevant information and documents within the time specified by the Assistant or Deputy Commissioner of Central Excise in his order, so as to enable the proper officer to finalize the provisional assessment.
Rule 7 further provides that the payment of duty on provisional basis may be allowed, if the assessee executes a bond in the form prescribed by notification by the Board with such surety or security in such amount as the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, deem fit, binding the assessee for payment of difference between the amount of duty as may be finally assessed and the amount of duty provisionally assessed.
Payment of Duty under Protest
Sometimes it happens that the classification of goods done by excise authorities, Assessable Value determined by the excise authorities in adjudication proceedings, etc. are not agreeable or acceptable to the assessee. In such cases, the assessee can file an appeal and in the meanwhile he can pay duty under protest (If no stay is obtained from Appellate Authorities).
Duty Liability of Pre-budget Stock
Some goods in stock on the budget day are cleared subsequent to presentation of budget. If there is change in duty at budget, it was felt that these goods should be cleared at the rate applicable before the budget. The thinking was that duty liability is fastened as soon as goods are manufactured as ‘manufacture in India’ is taxable event in Central Excise. Since goods were already manufactured before budget, rate as applicable at the time of manufacture should be applied.