BY REHNAMOL S (3511110449) SOORYA SATHYAN S(450) DEEPIKA BABURAJ(455) ROSLIN VARGHEESE(547) RAHUL CHANDRAN R(444) RAJESH B(445) RINU

RILAM(448)

Central excise duty liability arises at the point of manufacture of excisable goods Its not strictly possible to discharge the liability when these goods are manufactured For convenience, excise duty permits postponement to a point of time when the goods are actually removed from the place of manufacture

So excise depts. has evolved a mechanism to ensure that there is no risk of illegal removable of excisable goods without payment of duty Thus elaborate procedures have been prescribed keeping this risk in mind

Clearance means removal of excisable goods from the factory In CCE Vs Govind Rubber Ltd. 1998 (102) ELT 67 CEGAT, it was held that clearance means removal of both dutiable and exempt goods from approved premises.

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Clearance under physical control Clearance under compound levy scheme Clearance under Self removal procedure

Under this system, Central excise offers are posted at the factory or warehouse of assessee to strictly supervise physically the Manufacturing Storing & Clearance of excisable goods Assessment is done by the authority prior to removal of the goods. This system is currently in vogue in respect of cigarettes only

The assessee is required to make an application in Form AR-1 to the inspector atleast 12 hours before the removal of goods The inspector assesses the amount of duty on AR-1 The goods are cleared on approval by the inspector on production of the receipt copy of the TR-6 Challan

In case of frequent removal of goods, the assessee is allowed to maintain Account current known as personal ledger account (PLA) whereby the assessee makes a periodic deposit in such account to cover the duty on goods intended to be removed

In the case of unorganized sector, the illiterate assesses are unable to maintain accounts of production & clearance This happens in the case of cottage industries In order to facilitate assessees, the assessees are allowed to pay duty on the basis of specific period as well as the productive capacity of the factory

This type of clearance is allowed in the case of marble slabs, stainless steel patti/patta & cotton fabrics produced on power looms

For clearing goods, the assessee has to file Form ASP to the Commissioner The duty payable is decided on the basis of some identifiable equipment like number of cold rolling machines for production of stainless steel patta/patti

Under SRP method of removal, the assessee can bring into factory raw materials & other requirements, convert them into finished product & effect clearance of the same without physical control or prior permission of the Central excise authorities This doesnt mean physical checks are completely ruled out as selective periodic visits by officers have been laid down to ensure proper compliance of the regulations

Removable for export, whether under bond or under claim for rebate of duty Removal, in bond, of finished or semi finished goods Removals for destruction of goods unfit for consumption without payment of duty Receipt of duty paid damaged goods or reprocessing or repairs

Goods which physical control system & compound levy scheme are applicable Goods removed from Free Trade Zone (FTZ) or 100% Export oriented Unit (EOU) for home consumption

Self assessment The assessee is required to finalise classification & valuation of goods & pay duty Periodic returns A monthly return of production & removal of goods is to be submitted to superintendent of Central by 10th of the following month The return is required to be in quintuplet in form ER-1

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return is to be accompanied by two copies of PLA & relevant TR-6 Challan evidencing payment of duty Selective control Since SRP is featured by self-determination of duty by the assessee & uninterrupted removal of goods from factory, production based control & record based control are facets of the SRP scheme

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Production based Control (PBC) Under this system, the excise officers carryout checks at different stages of production to ensure that the production of a manufacturer is fully accounted for The assessee is required to maintain different registers for finished goods, raw materials etc. This system is applicable to large number of manufacturers in the less organised sectors

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Return based Control (RBC) Under RBC system the department accepts the books of accounts, invoices, despatch documents and raw materials accounts as maintained by the assessee This system is applicable for organised sector like mineral products, manufacturers of motor vehicles etc.

Declaration The assessee is required to file a declaration regarding the full description of excisable goods like excise tariff sub-heading, invoice declaration & personal ledger account, daily stock account & filing of monthly ER-12 returns