The Central Excise (No 2) Rules 2001.
Short title, extent and
commencement
Definitions
Appointment and jurisdiction of Central Excise Officers
Duty payable on removal
Date for
determination of duty and tariff valuation
Assessment of duty
Provisional assessment
Manner of payment
Registration
Daily stock account
Goods to be removed on invoice
Filing of return
Duty on matches
Procedure for procurement
Special procedure for
payment of duty
Credit of duty on
goods returned to the factory
Removal of goods
Rebate of duty
Export without payment of duty
Warehousing provisions
Remission of duty
Access to a registered premises
Power to stop and search
Power to detain goods or
seize the goods
Confiscation and penalty
Penalty for certain offences
General penalty
On
confiscation, property to vest in the Central Government
Disposal of goods confiscated
Storage charges in respect of goods confiscated and redeemed
Power to issue
supplementary instructions
Transitional provisions
Rescinding of rules
The Central Excise (No. 2) Rules, 2001
- Short title, extent and commencement.-
- These rules may be called the Central Excise (No. 2) Rules, 2001.
- They extend to the whole of India.
- They shall come into force on the 1st day of July, 2001.
- Definitions.- In these rules, unless the context otherwise requires, –
- "Act" means the Central Excise Act, 1944 ( 1 of 1944);
- "assessment" includes self-assessment of duty made by the assessee
and provisional assessment under rule7; \
- "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;
- "Board" means the Central Board of Excise and Customs constituted
under the Central Board of Revenue Act, 1963 (54 of 1963);
- "duty" means the duty payable under section 3 of the Act;
- "notification" means the notification published in the Official
Gazette;
- "proper form" means the appropriate form as may be notified by the
Board;
- "warehouse" means any place or premises registered under rule
9; and
- words and expressions used herein but not defined and defined
in the Act shall have the meanings respectively assigned to them in the
Act.
- Appointment and jurisdiction of Central Excise Officers.-
- The Board may, by notification, appoint such person as it thinks fit
to be Central Excise Officer or to exercise all or any of the powers
conferred by these rules, on such officer.
- The Board may, by notification, specify the jurisdiction of a Chief
Commissioner of Central Excise, Commissioner of Central Excise or
Commissioner of Central Excise (Appeals) for the purposes of the Act and
the rules made thereunder.
- Any Central Excise Officer may exercise the powers and discharge the
duties conferred or imposed under the Act or these rules on any other
Central Excise Officer who is subordinate to him.
- Duty payable on removal.-
- 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:
Provided that the goods falling under Chapter 62 of the First Schedule
to Central Excise Tariff Act, 1985 (5 of 1986) produced or manufactured
by a job worker may be removed without payment of duty leviable thereon
and the duty of excise leviable on such goods shall be paid by the
person referred to in sub-rule (3), as if such goods have been produced
or manufactured by him, on the date of removal of such goods from his
premises registered under rule 9:
Explanation.- It is hereby clarified that where such person has
authorised the job worker to pay the duty leviable on such goods under
sub-rule (3), such duty shall be paid by the job worker on the date of
removal of such goods from his registered premises.
- 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.
- Notwithstanding anything contained in sub-rule (1), every person who
gets the goods, falling under Chapter 62 of the First Schedule to he
Central Excise Tariff Act, 1985 (5 of 1986), produced or manufactured on
his account on job work, shall pay the duty leviable on such goods, at
such time and in such manner as may be specified under these rules,
whether the payment of such duty be secured by bond or otherwise, as if
such goods have been manufactured by such person:
Provided that such person may authorise the job worker to pay the duty
leviable on such goods on his behalf and the job worker so authorised
undertakes to discharge all liabilities and comply with all the
provisions of these rules.
Explanation I.- For the purposes of this sub-rule, the expression "job
worker" shall be deemed to mean the person who undertakes the process or
processes that brings into existence the finished goods, complete in all
respects, falling under Chapter 62 of the said First Schedule, in his
factory. For the removal of doubt, it is further clarified that the
job-worker may also get part of the processing required for the
manufacture of the said goods done by another person but should bring
back the same for the completion of the manufacturing process in his
factory.
Explanation II.- For the purposes of this rule, excisable goods
manufactured in a factory and utilised, 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 utilisation.
- Date for determination of duty and tariff valuation.-
- The rate of duty or tariff value applicable to any excisable goods ,
other than khandsari molasses, shall be the rate or value in force on
the date when such goods are removed from a factory or a warehouse, as
the case may be.
- 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.
- The rate of duty in the case of goods falling under Chapter 62 of
the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986),
produced or manufactured on job work, shall be the rate in force on the
date of removal of such goods by the person referred to in sub-rule (3)
of rule 4 from his premises registered under rule 9.
- 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.
- Provisional assessment.-
- Where the assessee is unable to determine the value of excisable
goods or determine the rate of duty applicable thereto, he may request
the Assistant Commissioner of Central Excise or the Deputy Commissioner
of Central Excise, as the case may be, in writing giving 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 order allowing payment of duty on provisional basis at such
rate or on such value as may be specified by him.
- The payment of duty on provisional basis may be allowed, if the
assessee executes a bond in proper form 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.
- 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 the relevant information, as
may be required for finalizing the assessment, is available, but within
a period not exceeding six months from the date of the communication of
the order issued under sub-rule (1):
Provided that the period specified in this sub-rule may, on sufficient
cause being shown and the reasons to be recorded in writing, be extended
by the Commissioner of Central Excise for a further period not exceeding
six months and by the Chief Commissioner of Central Excise for such
further period as he may deem fit.
- The assessee shall be liable to pay interest on any amount payable
to Central Government, consequent to order for final assessment under
sub-rule (3), at the rate of twenty four percent per annum from the
first day of the month succeeding the month for which such amount is
determined, till the date of payment thereof.
- Where the assessee is entitled to a refund consequent to order for
final assessment under sub-rule (3), subject to sub-rule (6) there shall
be paid an interest on such refund at the rate of fifteen percent per
annum from the first day of the month succeeding the month for which
such refund is determined, till the date of refund.
- Any amount of refund determined under sub-rule (3) shall be credited
to the Consumer Welfare Fund:
Provided the amount of refund, instead of being credited to the Fund, be
paid to the applicant, if such amount is relatable to-
- the duty of excise paid by the manufacturer, if he had not
passed on the incidence of such duty to any other person, or
- the duty of excise borne by the buyer, if he had not
passed on the incidence of such duty to any other person.
- Manner of payment.-
- 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 by the
5th of the following month:
Provided that in the 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 by
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.
- The duty of excise shall be deemed to have been paid for the purpose
of these rules on the excisable goods removed in the manner provided
under sub-rule (1) and the credit of such duty allowed, as provided by
or under any rule.
- If the assessee fails to pay the amount of duty by due 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 date till the date of
actual payment of the outstanding amount.
- If the assessee defaults,-
- 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
- in payment of installment by the due date for the third time in
a financial year, whether in succession or otherwise,
then, the assessee shall forefeit the facility to pay the dues in
instalments 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.
- Registration.-
- Every person, who produces, manufactures,
carries on trade, holds private store-room or warehouse or otherwise
uses excisable goods, shall get registered:
Provided that a registration obtained under rule 174 of the Central
Excise Rules, 1944 shall be deemed to be as valid as the
registration made under this sub-rule for the purpose of these
rules.
- 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.
- The registration under sub-rule (1) shall be subject to such
conditions, safeguards and procedure as may be notified by the
Board.
- Daily stock account.-
- 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.
- The first page and the last page of each such account book shall
be duly authenticated by the producer or the manufacturer or his authorised agent.
- All such records shall be preserved for a period of five years
immediately after the financial year to which such records pertain.
- Goods to be removed on invoice.-
- 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.
- The invoice shall be serially numbered and shall contain the
registration number, description, classification, time and date of
removal, rate of duty, quantity and value, of goods and the duty
payable thereon.
- The invoice shall be prepared in triplicate in the following
manner, namely:-
- the original copy being marked as ORIGINAL FOR BUYER;
- the duplicate copy being marked as DUPLICATE FOR TRANSPORTER;
- the triplicate copy being marked as TRIPLICATE FOR ASSESSEE.
- Only one 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.
- The owner or working partner or Managing Director or Company
Secretary shall authenticate each foil of the invoice book, before
being brought into use.
- Before making use of the invoice book, the serial numbers of the
same shall be intimated to the Superintendent of Central Excise
having jurisdiction.
- Filing of return.- Every assessee shall submit to the
Superintendent of Central Excise a monthly return in proper form, of
production and removal of goods and other relevant particulars,
within ten days after the close of the month to which the return
relates:
Provided that where an assessee is availing of the exemption under a
notification based on the value of clearances in a financial year,
he shall file a quarterly return in proper form, of production and
removal of goods and other relevant particulars, within twenty days
after the close of the quarter to which the return relates.
- Duty on matches.- The duty on matches shall be paid by affixing
to each box or booklet a Government Central Excise Stamp of a value
appropriate to the rate of duty, and where such boxes or booklets
are issued in packages, each package shall be reckoned by the
manufacturer as his minimum unit of distribution and shall bear the
manufacturer’s trade label and a mark clearly showing the class of
matches contained in the package.
- Procedure for procurement of central excise stamps and
maintenance of records for production and removal of matches.- The
Board may, by notification, specify the procedure for procurement,
accounting and disposal of Central Excise Stamps and matters
pertaining to production, storage, control, removal and payment of
duty on matches.
- Special procedure for payment of duty.-
- The Central
Government may, by notification, specify the goods in respect of
which an assessee shall have the option to pay the duty of excise on
the basis of such factors as may be relevant to production of such
goods and at such rate as may be notified for this purpose, subject
to such limitations and conditions, including those relating to
interest or penalty, as may be specified in such notification.
- The Central Government may also specify by notification the
manner of making an application for availing of the special
procedure for payment of duty, the abatement, if any, that may be
allowed on account of closure of a factory during any period, and
any other matter incidental thereto.
- Credit of duty on goods returned to the factory.-
- Where any
goods on which duty has been paid at the time of removal thereof are
subsequently returned to the factory for being re-made, refined,
re-conditioned or for any other reason, the assessee shall state the
particulars of such return in his records and shall be entitled to
have CENVAT credit of the duty paid as if such goods are received as
inputs under the CENVAT Credit Rules, 2001 and utilise this credit
according to the said rules.
- If the process to which the goods are subjected before returning
does not amount to manufacture, the manufacturer shall pay an amount
equal to the CENVAT credit taken under sub-rule (1) and in any other
case the manufacturer shall pay duty on goods returned under
sub-rule (1) at the rate applicable on the date of removal and on
the value determined under sub-section (2) of section 3 or section 4
or section 4A of the Act, as the case may be.
- If there is any difficulty in following the provisions of
sub-rule (1) and sub-rule (2), the assessee may receive the goods
for being re-made, refined, re-conditioned or for any other reason
and may remove the goods subsequently subject to such conditions as
may be specified by the Commissioner.
- Removal of goods by a unit in the Free Trade Zone or by a
Hundred per cent. Export-Oriented undertaking or by a unit in the
Special Economic Zone for Domestic Tariff Area.-
- Where any goods
are removed from a unit in a Free Trade Zone or a hundred per cent.
export-oriented unit or a unit in the Special Economic Zone, to
domestic tariff area, such removal shall be made under an invoice by
following the procedure specified in rule 11, and on payment of
appropriate duty before removal of goods by debiting the account
current required to be maintained for this purpose.
- The unit shall maintain in proper form appropriate account
relating to production, description of goods, quantity removed, duty
paid and each removal shall be made on an invoice.
Form AC-1 (Rules 17(2)
- The unit shall submit a monthly return to the Superintendent of
Central Excise, within ten days from the close of the month to which
the return relates, in respect of the goods removed to domestic
tariff area in such form as may be notified by the Board for this
purpose.
- Rebate of duty.- Where any goods are exported, the Central
Government may, by notification, grant rebate of duty paid on such
excisable goods or duty paid on materials used in the manufacture or
processing of such goods and the rebate shall be subject to such
conditions or limitations, if any, and fulfillment of such
procedure, as may be specified in the notification.
Explanation.- "Export" includes goods shipped as provision or stores
for use on board a ship proceeding to a foreign port or supplied to
a foreign going aircraft.
- Export without payment of duty .-
- Any excisable goods may be
exported without payment of duty from a factory of the producer or
the manufacturer or the warehouse or any other premises, as may be
approved by the Commissioner.
- Any material may be removed without payment of duty from a
factory of the producer or the manufacturer or the warehouse or any
other premises, for use in the manufacture or processing of goods
which are exported, as may be approved by the Commissioner.
- The export under sub-rule (1) or sub-rule (2) shall be subject
to such conditions, safeguards and procedure as may be notified by
the Board.
- Warehousing provisions.-
- The Central Government may by
notification, extend the facility of removal of any excisable goods
from the factory of production to a warehouse, or from one warehouse
to another warehouse without payment of duty.
- The facility under sub-rule (1) shall be available subject to
such conditions (including penalty and interest), limitations
(including limitation with respect to the period for which the goods
may remain in the warehouse) and safeguards and procedure (including
in the matters relating to dispatch, movement, receipt, accountal
and disposal of such goods) as may be specified by the Board in this
behalf.
- The responsibility for payment of duty on the goods that are
removed from the factory of production to a warehouse or from one
warehouse to another warehouse shall be upon the consignee.
- If the goods dispatched for warehousing or re-warehousing are
not received in the warehouse, the responsibility for payment of
duty shall be upon the consignor.
- Remission of duty.- Where it is shown to the satisfaction of the
Commissioner that goods have been lost or destroyed by natural
causes or by unavoidable accident or are claimed by the manufacturer
as unfit for consumption or for marketing, at any time before
removal, he may remit the duty payable on such goods, subject to
such conditions as may be imposed by him by order in writing:
Provided that where such duty does not exceed one thousand rupees,
the provisions of this rule shall have effect as if for the
expression "Commissioner" , the expression " Superintendent of
Central Excise" has been substituted:
Provided further that where such duty exceeds one thousand rupees
but does not exceed two thousand five hundred rupees, the provisions
of this rule shall have effect as if for the expression
"Commissioner" , the expression " Assistant Commissioner of Central
Excise or the Deputy Commissioner of Central Excise, as the case may
be," has been substituted:
Provided further that where such duty exceeds two thousand five
hundred rupees but does not exceed five thousand rupees, the
provisions of this rule shall have effect as if for the expression
"Commissioner", the expression " Joint Commissioner of Central
Excise or Additional Commissioner of Central Excise, as the case may
be, " has been substituted.
- Access to a registered premises.-
- An officer empowered by
the Commissioner in this behalf shall have access to any premises
registered under these rules for the purpose of carrying out any
scrutiny, verification and checks as may be necessary to safeguard
the interest of revenue.
- Every assessee shall furnish to the officer empowered under
sub-rule (1), a list in duplicate, of all the records prepared or
maintained by the assessee for accounting of transactions in regard
to receipt, purchase, manufacture, storage, sales or delivery of the
goods including inputs and capital goods.
- Every assessee shall, on demand make available to the officer
empowered under sub-rule (1) or the audit party deputed by the
Commissioner or the Comptroller and Auditor General of India,-
- the records maintained or prepared by him in terms of sub-rule
(2);
- the cost audit reports, if any, under section 233B of the
Companies Act, 1956 ( 1 of 1956); and
- the Income-tax audit report, if any, under section 44AB of
Income-tax Act, 1961 ( 43 of 1961),
for the scrutiny of the officer or audit party, as the case may be.
- Power to stop and search .- Any Central Excise Officer, may
search any conveyance carrying excisable goods in respect of which
he has reason to believe that the goods are being carried with the
intention of evading duty.
- Power to detain goods or seize the goods.- If a Central Excise
Officer, has reason to believe that any goods, which are liable to
excise duty but no duty has been paid thereon or the said goods were
removed with the intention of evading the duty payable thereon, the
Central Excise Officer may detain or seize such goods.
- Confiscation and penalty.-
- Subject to the provisions of
section 11 AC of the Act, if any producer, manufacturer, registered
person of a warehouse or a registered dealer, —
- removes any excisable goods in contravention of any of the
provisions of these rules or the notifications issued under these
rules; or
- does not account for any excisable goods produced or
manufactured or stored by him; or
- engages in the manufacture, production or storage of any
excisable goods without having applied for the registration
certificate required under section 6 of the Act; or
- contravenes any of the provisions of these rules or the
notifications issued under these rules with intent to evade payment
of duty,-
then, all such goods shall be liable to confiscation and the
producer or manufacturer or registered person of the warehouse or a
registered dealer , as the case may be, shall be liable to a penalty
not exceeding the duty on the excisable goods in respect of which
any contravention of the nature referred to in clause (a) or clause
(b) or clause (c) or clause (d) has been committed, or rupees ten
thousand, whichever is greater.
- An order under sub-rule (1) shall be issued by the Central
Excise Officer, following the principles of natural justice.
- Penalty for certain offences.-
Any person who acquires
possession of, or is in any way concerned in transporting, removing,
depositing, keeping, concealing, selling or purchasing, or in any
other manner deals with, any excisable goods which he knows or has
reason to believe are liable to confiscation under the Act or these
rules, shall be liable to a penalty not exceeding the duty on such
goods or rupees ten thousand, whichever is greater.
- General penalty.- A breach of these rules shall, where no other
penalty is provided herein or in the Act, be punishable with a
penalty which may extend to five thousand rupees and with
confiscation of the goods in respect of which the offence is
committed.
-
On confiscation, property to vest in the Central Government.-
- When any goods are confiscated under these rules, such thing
shall thereupon vest in the Central Government .
- The Central Excise Officer adjudging confiscation shall take and
hold possession of the things confiscated, and every Officer of
Police, on the requisition of such Central Excise Officer, shall
assist him in taking and holding such possession.
- Disposal of goods confiscated.-
Goods of which confiscation has
been adjudged and in respect of which the option of paying a fine in
lieu of confiscation has not been exercised, shall be sold,
destroyed or otherwise disposed of in such manner as the
Commissioner may direct.
-
Storage charges in respect of goods confiscated and redeemed.-
If the owner of the goods, the confiscation of which has been
adjudged, exercises his option to pay fine in lieu of confiscation,
he may be required to pay such storage charges as may be determined
by the adjudicating officer.
- Power to issue supplementary instructions.- (1) The Board or the
Chief Commissioner or the Commissioner, may issue written
instructions providing for any incidental or supplemental matters,
consistent with the provisions of the Act and these rules.
- Transitional provisions.- Any circulars, instructions, standing
orders, trade notices or other orders issued under the Central
Excise Rules, 1944 by the Board, the Chief Commissioner or the
Commissioner of Central Excise, and in force as on 30th June, 2001,
shall, to the extent they are relevant and consistent with these
rules, be deemed to be valid and issued under the corresponding
provisions of these rules.
- Rescinding of rules.- The Central Excise Rules, 2001 is hereby
rescinded.