Excise is a tax levied by the Central Government. The tax is applied on the clearance of goods from the factory. The rate of excise depends on the items manufactured and these rates vary as per the decisions of the Government. The penalties under the Excise Act for non-compliance are very severe and can create a lot of difficulties for the enterprise.
Excise Rules
In order to encourage small Industries, the central government has introduces a policy of not levying any excise duty up to a specific value of the clearance. This excise free limit again is changed from time to time. The entrepreneur is to ascertain whether his product attracts excise duty.
Excise duty has to be paid at a specific rate. It may be in Rupee per Kg or a specific percentage of value of unit of the goods cleared. It requires to be ascertained at what rate the excise duty is payable.
In order to avoid cumulative effect of excise, the central government gives set off on the purchase made by enterprise, if an excise duty has been paid by the supplier. The entrepreneur should find out the amount set off and conditions to be satisfied for availing of the set off.
Whenever a business subject to excise levy, certain formalities like getting the license, maintenance of the clearance records, system of the Gate Pass, etc., are to be observed. The entrepreneur should follow these laid down procedures to avoid legal action.
In view of the complexity of the excise rules, the entrepreneur must see the concerned official in the excise department or to consult who is well aware of the excise rules.
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