New Central Excise Rules

June 15 2001

NEW CENTRAL EXCISE RULES EFFECTIVE FROM 1ST JULY 2001

Union Finance Minister, Shri Yashwant Sinha had indicated in his Union Budget Speech before the Parliament on 28th February 2001 that the new Central Excise rules are expected to be effective from 1.7.2001 will be user friendly. This was a needed welcome measure because despite some simplications in the past and a more positive approach, Central Excise rules and procedures continue to be complex, multiplicity oriented and difficult to understand and comply.

The new set of Central Excise rules have already been notified under Notification No. 9/2001-CE(NT) dated 1.3.2001 but effectively from 1.7.2001. The text of the same for your ready reference. It is necessary to read and understand the provisions fully as it is due for observance and compliance from next month. The new Rules is a condensation of the existing rules with some deletions alongwith some additions. It is on the whole clear, simple, transparent, governed by a rule, record and documentation based approach, it reduces scope for executive interference and permission raj at field levels. At the same time, the thrust is duty collection oriented. 

The rules cover all important aspects like duty payable on removal, assessment of duty including provisional assessment, manner of payment including the punishment for default, registration, maintenance of daily stock account, monthly returns, removal of goods under an invoice, provision for different methods and basis for levy of duty, CENVAT credit under certain situations, removal of goods for DTA by FTZs and 100% EOU, export under bond, rebate on duty of exports, warehousing, end use exemption, search and seizure, confiscation and penalty.

However, still there are few grey areas in the new rules as well as some missing areas covered earlier which are not covered now. These have been brought to the attention of CBEC. A few more notifications are expected to be issued soon. 

The Effect of implementation of these rules by way of any problems, grey area, hardship or injustice would have come to be known so that these can be taken up with them and get resolved. 

 

 

Notification

New Delhi, dated the 1st March, 2001

No.9 / 2001-Excise (N.T.)  

10 Phalguna, 1922 (Saka)

G.S.R. (E) In exercise of the powers conferred by section 37 of the Central Excise Act, 1944 (1 of 1944) and in supersession of the central Excise Rules, 1944, except as respect things done or omitted to be done before such supersession, the Central Government hereby makes the following rules, namely:-

 1.       Short title, extent and commencement –

 

i)    These rules may be called the Central Excise Rules 2001

ii)    They extend to the whole of India

iii)   They shall come into force on the 1st day of July, 2001.

 

2.       Definitions – in these rules, unless the context otherwise requires-

               a)  “Act” means the Central Excise Act, 1944;

b)  “assessment” includes self-assessment of duty made by the assessee and provisional assessment under rule 7.

c)  “assessee” 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.

d)  “Board” means the Central Board of Excise and Customs constituted under the Central Board of Revenue act, 1963 (54 of 1963).

e)  “duty” means the duty payable under section 3 of the Act.

f)   “notification” means the notification published in the Official Gazette;

g)   “proper form” means the appropriate form as may be notified;

h)   “warehouse” means any place or premises registered under rule 9; and

i)    “words and expressions used herein but not defined and defined in the Act shall have the meanings respectively assigned to them in the Act.

 

3.  Appointment and jurisdiction of Central Excise Officers (1) The board may, by notification, appoint such Central Excise Officers as it may deem fit to exercise all or any of the powers conferred by or under the Act and the rules made thereunder.

 

4.  Duty payable on removal (1) 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, and 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. (2) Notwithstanding anything contained in sub-rule (1) where molasses are produced in a khandsari sugar factory, the person who procures such molasses, whether directly from such factory or otherwise, for use in the manufacture of any commodity, whether or not excisable, shall pay the duty leviable on such molasses, in the same manner as if such molasses have been produced by the procurer.

5.  Date of determination of duty and tariff valuation (1) the rate of duty or tariff value applicable to any excisable goods, other than khandsari molasses, shall be the rate of value in force on the date when such goods are removed from a factory or a warehouse, as the case may be. (2) The rate of duty in the case of khandsari molasses, shall be the rate in force on the date of receipt of such molasses in the factory of the procurer of such molasses.

Explanation : If any excisable goods are used within the factory, the date of removal of such goods’ shall mean the date on which the goods are issued for such use.

6.  Assessment of duty : the assessee shall himself assess the duty payable on any excisable goods: Provided that in case of cigarettes, the Superintendent or Inspector of Central Excise shall assess the duty payable before removal by the assessee.

7.  Provisional assessment (1) Where the assessee is unable to determine the value of excisable goods or determine the rate of duty applicable thereto, he ma request the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be in writing given reasons for payment of duty on provisional basis and the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, may allow payment of duty on provisional basis at such rate or on such value as may be specified by him. (2) The payment of duty on provisional basis may be allowed, if the assessee executes a bond 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. (3) The Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be shall pass order for final assessment, as soon as may be, after all the relevant information, as may be required for finalizing the assessment, is available.

8.  Manner of payment (1) The duty on the goods removed from the factory or the warehouse during the first fortnight of the month shall be paid by the 20th of that month and the duty on the goods removed from the factory or the warehouse during the second fortnight of the month shall be paid y the 5th of the following month.

Provided that in case of goods removed during the second fortnight of the month of March, the duty shall be paid by 31st day of March.

Provided further that where an assessee is availing of the exemption under a notification based on the value of clearances in a financial year, the duty on goods cleared during a calendar month shall be paid y the 15th day of the following month.

Explanation : For removal of doubts, it is hereby clarified that the duty liability shall be deemed to have been discharged only if the amount payable is credited to the account of the Central Government by the specified date.

(2) The duty of excise shall be deemed to have been paid for the purpose of these rules on the excisable goods removed in he manner provided under sub-rule (1) and the credit of such duty allowed, as provided by or under any rule.

 

(3) If the assessee fails to pay the amount of duty by the date, he shall be liable to pay the outstanding amount alongwith interest at the rate of twenty four per cent, per annum on the outstanding amount, for the period starting with the first day after due dates till the date of actual payment of the outstanding amount.

 

(4) If the assessee defaults –

 

i) In payment of any one installment and the same is discharged beyond a period of thirty days from the date on which the installment was due in a financial year, or

ii) In payment of installment by the due date in a financial year, whether in succession or otherwise.

then the assessee shall forefeit the facility to pay the dues in installments under this rule for a period of two months, starting from the date of communication of the order passed by the Assistant Commissioner of Central Excise or the deputy Commissioner of Central Excise, as the case may be, in this regard or till such date on which all dues are paid, whichever is later, and during this period the assessee shall be required to pay excise duty for each consignment by debit to the account current and in the event of any failure, it shall be deemed that such goods have been cleared without payment of duty and the consequences and penalties as provided in these rules shall follow. 

9.  Registration (1) Every person, who produces, manufacturers, carried on trade, holds private store-room or warehouse or otherwise uses excisable goods, shall get registered and shall not engage in the production, manufacture, trade, storing in private store room or warehouse or use excisable goods without having applied for such registration to the jurisdictional Superintendent of Central Excise in proper form. (2) The Superintendent of Central Excise shall grant a Registration Certificate under this rule within thirty days of the receipt of an application and if registration certificate is not granted within the said period, the registration shall be deemed to have been granted. (3) The board, may, by notification, and subject to such conditions or limitations as may be specified in such notification, specify person or class of persons who may not require such registration. (4) If the person specified under sub-rule (1) make use of more than one premises, registration he shall obtain separate registration certificate for each of such premises. (5) every registration certificate granted shall be in the proper form and shall be valid only for the premises specified in such certificate. (6) Where a registered person transfers his business to another person the transferee shall have to obtain a fresh certificate. (7) Where a registered person is a firm or a company or association of persons, any change in the constitution of such firm, company or association, shall be intimated to the Superintendent of Central Excise within thirty days of such change for incorporation in the certificate. (8) In case a registered person intend to manufacture a new product, he shall get the product endorsed on his registration certificate. (9) Every registered person, who ceases to carry on the operation or operations for which he is registered, shall deposit his registration certificate immediately with the Superintendent of Central Excise. (10) Every registered person shall exhibit his registration certificate or a certified copy thereof in a conspicuous part of the registered premises. (11) A registration certification granted under this rule may be revoked or suspended by the Superintendent of Central Excise, if the holder of such certificate or any person in his employment, is found to have committed a breach of any of the provisions of the Act or these rules or has been convicted of an offence under section 161, read with section 109 or with section 116 of the Indian Penal Code (45 of 1860).

10.  Daily stock account (1) Every assessee shall maintain proper records, on a daily basis in a legible manner indicating the particulars regarding description of the goods produced or manufactured, opening balance, quantity produced or manufactured, inventory of goods, quantity removed, assessable value, the amount of duty payable and particulars regarding amount of duty actually paid. (2) The first page and the last page of each such account book shall be duly authenticated by the producer or the manufacturer or his authorized agent. (3) All such records shall be preserved for a period of five years immediately after the financial year to which such records pertain.

11. Goods to be removed on invoice (1) No excisable goods shall be removed from a factory or a warehouse except under an invoice signed by the owner of the factory or his authorized agent and in the case of cigarettes, each such invoice shall also be countersigned by the Inspector of Central Excise or the Superintendent of Central Excise Before the cigarettes are removed from the factory. (2) The invoice shall be serially numbered and shall contain the description, quantity and value of goods and the duty payable thereon. (3) the invoice shall be prepared in triplicate in the following manner, namely:-

i)      The original copy being marked as ORIGINAL FOR BUYER

ii)      The duplicate copy being marked as DUPLICATE FOR TRANSPORTER

iii)     The triplicate copy being marked as TRIPLICATE FOR ASSESSEE

4) Only a copy of invoice book shall be in use at a time, unless otherwise allowed by the Assistant Commissioner of Central Excise, or the Deputy Commissioner of Central Excise, as the case may be, in the special facts and circumstances of each case.

5) The owner or working partner or Managing Directory or Company Secretary shall authenticate each foil of the invoice book, before being brought into use.

  1. Monthly return – Every assessee shall submit to the Superintendent of Central Excise a monthly return of production and removal of goods and other relevant particulars in the proper form within ten days after the close of the month to which the return relates.

 

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