Excise Duty is a type of indirect tax levied by the Government of India on the manufacture of certain goods within the country. While the Goods and Services Tax (GST) has subsumed many indirect taxes since its implementation in 2017, excise duty continues to apply to specific products like alcohol, tobacco, and petroleum products.
What is Excise Duty?
Excise duty is imposed on goods manufactured domestically. It is collected from manufacturers but ultimately passed on to consumers as part of the product’s price. The Central Board of Indirect Taxes and Customs (CBIC) administers this tax.
Types of Excise Duty
- Basic Excise Duty (BED): Levied under the Central Excise Act, 1944, on goods manufactured in India, excluding salt.
- Special Excise Duty (SED): An additional duty on specific goods, as specified in the Second Schedule of the Central Excise Tariff Act, 1985.
- Additional Excise Duty (AED): Imposed on certain items to distribute tax revenue between the Centre and States, under the Additional Duties of Excise Act, 1957.
- National Calamity Contingent Duty (NCCD): Levied on products like tobacco and pan masala to fund disaster relief efforts.
- Health and Education Cess: An additional levy on excisable goods to fund health and education initiatives.
Who is Liable to Pay Excise Duty?
Excise duty is payable by:
- Manufacturers of excisable goods.
- Entities that get goods manufactured by hiring labor.
- Entities that have goods manufactured by other parties.
When is Excise Duty Payable?
Excise duty is payable upon the removal of goods from the manufacturing facility or warehouse. According to Rule 8 of the Central Excise (Amendment) Rules, 2002:
- Offline Payment: Due by the 5th day of the following month.
- Online Payment via Net Banking: Due by the 6th day of the following month.
For goods removed in March, the payment is due by March 31st.
Steps to Pay Excise Duty Online
The Electronic Accounting System in Excise and Service Tax (EASIEST) facilitates online payment:
- Visit the EASIEST portal.
- Select “e-Payment (Excise & Service Tax)”.
- Enter your 15-digit Assessee Code provided by the jurisdictional Commissionerate.
- Verify the displayed details (name, address, Commissionerate code).
- Choose the type of duty/tax to be paid by selecting the appropriate accounting codes.
- Select your preferred bank from the list of authorized banks for net banking.
- Confirm the details and proceed to the bank’s net banking portal.
- Log in to your net banking account and complete the payment.
- Upon successful payment, a Challan Counterfoil with a Challan Identification Number (CIN) will be generated as proof of payment.
- Use the “Challan Status Inquiry” feature on the EASIEST portal to verify the payment status.
Consequences of Non-Payment
Failure to pay excise duty can lead to:
- Monetary Penalties: Fines ranging from 25% to 50% of the evaded tax amount.
- Interest on Delayed Payment: Daily interest charges on unpaid amounts.
- Legal Action: In cases where the duty evaded exceeds ₹50 lakh, imprisonment up to 7 years and additional fines may be imposed.
- Business Restrictions: Suspension of manufacturing licenses for repeated violations.
Excise Duty vs. GST
While GST has replaced many indirect taxes, excise duty remains applicable to certain products.
| Aspect | Excise Duty | GST |
|---|---|---|
| Applicability | On specific goods like alcohol, tobacco, petroleum | On supply of goods and services across India |
| Point of Levy | At the time of removal from manufacturing unit | At the time of supply to the customer |
| Taxpayer | Manufacturer | Supplier of goods/services |
| Tax Rates | Fixed rates as per Central Excise Tariff | Multiple rates: 0%, 5%, 12%, 18%, 28% |
| Input Credit | Limited to excise duty paid on inputs | Comprehensive input tax credit mechanism |
Understanding excise duty is crucial for manufacturers and businesses dealing with excisable goods to ensure compliance and avoid legal repercussions.
