Literature Review

1. Sales Tax and Cloud Computing in India, Khagesh Gautam, volume 68, Tax Law.
671 (2015)

In this article the author talks about an interesting subject that is very much important in
this 21st century that is how a software company sells its work to its customers and how
can the government impose taxes upon such working companies majorly sales tax and
this author has helped me out in finding out various technicalities in corporate field that
are interlinked with the Central Excise and Tariffs Act, 1985.

2. Readings in International Economics- Prof. Kishore G. Kulkarni, ISBN

8183874991,Published by Serials Publications 2011

In this book there are serial of things that I would like to describe about those are Firstly,
He talks about historical evolution of the CEA, 1944 to CETA 1985. Secondly talks about
his publications in Inter tax regarding the commentaries on the amendments that were
brought to the act.

3. Central Excise Law & Practice

V. S. Datey, ISBN 8171945708, 9788171945702, Published by Taxmann Publications Pvt.
Limited, 2009
In this book author talks about the procedure that is laid down in Central Excise and Tariffs
Act, 1985 regarding the confiscation of goods under certain legal provisions and imposition
of penalty by the departmental adjudication and also, regarding Launching of prosecution in
the court of law. He even talks about the Evaluation of the working of Adjudicating
Authorities, their Function, their powers and jurisdiction.

OVERVIEW
There are certain provisions of this Law, 1944, which are much lower. But more effective
with respect to the purpose of the law. Consequently, the brief title and extension, as well as
the beginning of the work in the Law, were contemplated in the first and last sentence of the
Law. With respect to the special taxes imposed by the Central Tax Law (Law No. 1) of 1944)
and respecting the various provisions contained therein, the different rates are specified in
Table I and Annex II attached to this legislation. The tax event is under the Central tax law, is
the "manufacture" & responsibility on the Central Tax, on consumption arise once on the
goods are manufactured directly from the day outside the factories / raw materials. The CE
officers are also now entrusted to collect the other types of duties which are levied under the
additional duties (Goods of Special Importance) Act, additional duties on (Textiles and
Textiles Articles) act, cess1.
Goods can be non-excisable in certain situations2:
a) If it is immoveable in nature.
b) If it is non-marketable in nature.
c) If it has not been specified in any of the related schedules to CETA,1985
They’re of 5 types of excise duties that are covered under this act. They are as follows3:
1. Basic Excise Duty
2. Special Duty of Excise
3. Cess
4. National Calamity Contingent
5. Additional Duty.

However, this Act also refers to current and impossible obligations to comply with certain
provisions under article 3 of the Central Vacuum Act of 1944, with regard to any product
manufactured or collected for the production of another product. If the central government is
in the opinion of the consumer tax increase that really benefit the consumer, there must be
immediate action by that name, then directed by the central government that the first list and
the second list will be the annex to this legislation. Shall be amended to replace tariff rates in
respect of such goods, instead of those originally provided in Annex I and Annex II to this
Act. The amendment instructions shall be delivered to the Central Govt. through notifications
published in the Official Gazette. However, there are conditions to such amendments, in
which in case when the rate of duty was either nil earlier to such amendment, as specified in
the said 1st Schedule and the 2ndSchedule then 50 % of the in proportion to the estimated
value of goods expressed in any form or method, can be taken as rate of duty by such
amendment and in case of already specified rate of duty in the First Schedule and Second
Schedule is given to certain extend, then by such amendment there should not increase the

1
Akhileshwar Pathak, Legal Aspects of Business, 4th edition 2010, Tata Mc Graw Hill
2
Indirect Tax Assessment in year 2016-17: for CA, CS, CMA, Bcom and Mcom- Mansi Jain, CA MK Jain,
2016 p.p144.
3
Excise taxation in India: an economic analysis- M.M. SuryCommonwealth Publishers, 1988, p.p174
rate more than twice the existing rate of duty4. Further, the provision under s. s - 4 of this act
are providing for the consequential amendments by virtue of this Act and its aforesaid
provisions. It is made clear in the said provision that the reference to the 1stSchedule annexed
with the CEA, 19445, whenever mentioned in that Act the same to be replaced with the
Schedule annexed to the present enactment and the original First Schedule in that Act of 1944
here sought to be omitted by such substitution. And not only this, the references to that First
Schedule which was annexed to that Act of 1944, in any laws were also sought to be taken
effect and in place of that the reference of schedule annexed to this Act was added. And there
was also sought to amend the interpretation clause of the Act of 1944 so as to insert the
definition of the term ‘Manufacture’, then the section 5 of the Act provides that it can do so
to its satisfaction that doing the amendments is necessary in the interest of public. Such
Amendments as sec-5, like in emergency case, will also to be stated in the official gazette6.
ADMINISTRATION PART UNDER THIS ACT, 1944:
The Central Board of Excise and Customs (CBEC or Board) administering the Central Excise
law, through its field offices, the Central Excise Commissionerate’s. For this purpose our
country, divided into 10 zones, and a Chief Commissioner of CE will be the head in their
zone7. There are total of 61 Commissioner Offices in these zones headed by the
Commissioner of Central Excise. Divisions and Ranges are the subsequent formations under
this act, headed by various Dy./Asstt. Commissioners of CE and Suptd’s of Central Excise
who are heads at their strata of occupations, respectively. For enforcing the central excise law
and for collection of central excise duty the following types of procedures are to be followed
by the central excise dept.:
a. Physical Control – It shall be applicable only to cigarettes.

b. Self-Removal Procedure – It shall apply to all other goods manufactured or produced

within the country through various manufacturers.

The Central Govt’s has enacted an enactment which provides with the name and title as the
CETA, 1985 (Act 5 of 1986) for the object and purpose that to make provisions as to tariff
for Central Duties of Excise. The present enactment was passed out by the India Parliament
in 36th year of republic of India and same has received the assent on 19th day January, 1986
from the honorable President of India. The whole territories of India were made subject to
this Act as it is shown in extension clause. The 28th day of February, 1986 was the day on
which the present enactment was brought in to force by the notification of the Central Govt.

4
V.S.Datey, Central Excise, law practice &procedure 2009, TaxMann’sAlhed Service (P) Ltd., New Delhi, p.2
5
Government of India Ministry of Finance Budget Volume for 2008-2009
6
Accounting & Analysis: The Indian Experience- GDSIL, 2004.
7
Taxation- Jaya Prakash Reddy, APH Publishing, 2004 p.p.34
published in the Official Gazette. The above mentioned overview might majorly be common
in various aspects in both the acts i.e., 1944 and 1985 also.

AMENDMENTS
Central Excise Law is not just a single act but consists of various other acts, rules and
notifications. Some provisions of Customs Act, Criminal Procedure Code, Indian Penal Code,
Legal Metrology Act 2011, have been made applicable to Central Excise. Following is the
gist of important acts and rules applicable to Central Excise.
Excise Act, 1944:It is the basic Act providing for charging of duty, manufacture, valuation of
the goods for the purpose of payment of excise duty, powers of officers, provisions for
penalty, adjudication and appeal, settlement commission etc8. presently the Act consists of 40
sections. The Central Excise Act 1944 and Central Excise Tariff Act 1985 are linked together
in the following way:
1. Sec.3(1) of the CE Act, 1944 it specifies that the duty which shall be levied and
collected on all excisable goods, which are produced or manufactured in India as, and
at the rates, set forth in the schedule to the CETA,1985.

2. Sec.2 of the CETA,1985 specifies certain rates at which these duties of excise are
being levied under are as specified in schedule to Act.

CETA, 1985.
CETA, 1985 provides classification on various excisable goods into ninety six chapters. A
‘section’ is called a grouping no. of chapters which sums up in a particular classes of good.
Every of these provisions are related to broader class of goods and ‘chapter’ contains goods
of one class. Specific code is assigned to each excisable item 9. The structure and coding
system is based on the Harmonious Nomenclature system (HNS) which has been worldwide
accepted.
RULES
Central Excise Rules, 2001
Highlights of Cenvat Credit Scheme:
1. The act intends to avoid the cascading effect of the Excise Duty and Service Tax.

8
http://www.cbic.gov.in/resources//htdocs-cbec/excise/cxt-2016-17-revised/cxt-act-2016
17.pdf;jsessionid=9F32D79151A39A18840F32564BF24454 page-2 last visited on 9th FEB 2019.
9
http://www.cbic.gov.in/resources//htdocs-cbec/excise/cxt-2015-16/cxt-act-2015
16.pdf;jsessionid=DCD1C0A4434D4B96C4F9DE482B088ABC- LAST VISITED ON 9TH FEB 2019.
2. Credit of duty paid on inputs, input services and capital goods available to manufacturer of
excisable goods and provider of taxable output services10.
3. Removal of used capital goods as scrap or second-hand capital goods on payment of
appropriate amount.
4. Credit on motor vehicles available to specified output service
5. Credit on basis of specified documents.
6. Credit available instantly in case of input goods and input services11.
7. Cenvat credit of capital goods in two stages, up to 50% in the year of receipt and balance

Central Excise Rules, 2002

Under the powers given under Sec 37 of the CEA 194412and in this case the company has not
paid excise duty which is levied upon them for selling electricity, the Government has framed
Central Excise Rules to carry out into effect of the CEA. These Rules provide for various
procedures to be followed for clearance of goods, accounting of goods, registration,
procedural aspects, payment of excise duty, export, refund, etc.,

Cenvat Credit Rules, 2004.

Sec. 37 of the CEA, 194413 gives powers to Central Government to make rules to It provides
for the credit of duty paid or deemed to have been paid on goods used in or in relation to
manufacture of excisable goods . It provides for giving some credit in form of sums of money
with respect to raw materials used in manufacture of excisable goods. It provides for credit of
service tax leviable under Chapter V of the Finance Act, 199414, paid or payable on taxable
services used in , or in relation to, the manufacture of excisable goods. Under these powers,
Modvat Scheme was introduced in 1986. Cenvat was introduced in 2000 in place of Modvat.
However, in 2001, separate Cenvat credit rules were introduced. These were replaced by
Cenvat Credit Rules, 2002 and later by Cenvat Credit Rules 2004, with effect from
10.09.2004 wherein Cenvat credit and service tax has been integrated.

10
Reports on India's Tax Reforms /c[chairman, Vijay L. Kelkar ; Chairman, Parthasarathy Shome ; Chiarman,
Raja J. Chelliah], Academic Foundation-2003

11
CCE v. Hindustan National Glass & Industries Ltd. (2005) 3 SCC 489

12
Godhra Electricity Co. Ltd. and Ors. v. The State of Gujarat and Ors

13
International Trade Operations- Excel Books India

14
Union of India and another v Mohit Mineral Private Limited and another 2018 Indlaw SC 915
Changes in Conditions For allowing Cenvat Credit 2017:
Rule 6 & 8 provides the conditions for allowing credit as detailed below-
 The manufacturer shall not take credit after one year of the date of issue of any of the
documents specified in Rule 11(1)15.

 The credit on inputs shall be allowed even if any inputs as such or after being partially
processed are sent to job worker and from there subsequently, sent to another job worker
and likewise, for further process, necessary for the manufacture of final products and such
inputs or the products produced there from are received back within 180 days of their
being sent from the factory16.

 The credit shall be allowed even if any inputs are directly sent to a job worker without
their being first brought to the premises of the manufacturer and in such a case the period
of 180 days shall be counted from the date of receipt of the inputs by the job worker.

 If the inputs are sent to a job worker by an order of the Dy. Commissioner/Assistant
Commissioner of Central Excise, having jurisdiction, by an order, the period shall be
valid for three financial years in respect of removal of such input or partially processed
input and subject to such conditions as he may imposed in the interest of revenue.

CASE ANALYSIS-I

1. Case Tittle and Citation: Indian Farmers Fertilizer Cooperative Limited v Collector of
Central Excise Ahmedabad (1996) 5 SCC 488
2. Topic: Central Excise and Salt Act, 1944
3. Scope/Chapter: The Central Excise Act, 1944 contains the provisions about the levy,
collection, &assessment, of duty, Valuation of goods for the purpose of charging of duty,
powers &duties of Central Excise officers, Advance Rulings, Settlement of cases,
Appeals &adjudication of confiscations & penalties. S.S 37 of The Central Excise Act,
1944 empowers the Central Government to issue Rules for procedures to be adopted by
Central Excise officers for levy & Collection of duty & procedures to be followed by
manufactures for production, storage & removal of goods, valuation of goods, availing
the benefit of cenvat credit & payment of duty.

15
Dy, CST vs. Thomas Stephen & Co. Ltd 1988 Indlaw SC 913

16
https://indiacode.nic.in/ViewFileUploaded?path=AC_CEN_2_2_00038_194401_1523354126456/rulesindivid
ualfile/&file=CENVAT+CREDIT+RULES%2C+2017.pdf last visited on 10th Feb 2019.
4. Provision of Law: Rule-8 of the Central Excise Act, 1944 It talks about the 1st schedule
and in it there are other list of things that the government mentions upon which there is
prescribed excise duty is levied upon those items mentioned in the list of 1st schedule and
it explains certain exceptions issued under the notification.
5. Brief Facts of the Case: The appellants are manufacturing urea, It is a fertilizer, at a
plant at Kalol in the State of Gujarat and utilize for the purpose raw naphtha. The raw
naphtha was obtained at the concessional rate of duty and was used for producing
ammonia which, in turn, was use, partly, directly in the urea plant and, partly, indirectly,
in the submission of the appellants, in the production of urea by being employed in off-
site plants, namely, the water treatment plant, steam generation plant, inert gas generation
plant and effluent treatment plant, all of which were part of the integral process of the
Manufacturer of urea. The appellants required water of a high degree of purity in the
High pressure boilers and heat exchangers in the ammonia and urea plants. Ammonia was
used therein for purifying the water. The use of ammonia in the water treatment and
steam generation plant was, therefore, also an integral part of the process of manufacture
of fertilizers. Their treatment could not be said to be directly linked to the process of
manufacture of fertilizers and the effluent treatment plant could not be said to be an
integral part of the process of manufacture of fertilizers. In appeal by the appellants, the
Collector of Central Excise and Customs upheld the contention of the appellants insofar
as the ammonia was used in the appellants insofar as the ammonia was used in water
treatment plant, steam generation plant and inert gas generation plant. This was no the
basis that the inert gas generated in The demand upon the appellants, insofar as it related
to the effluent treatment plant, was therefore, upheld.
6. Preliminary Issues: Whether these raw material naphthalene used to produce the
ammonia which has been used in the effluent treatment plant which is eligible for the said
exemption?
7. Judgment: For delivering the judgment the bench has talked about that leaves us to
consider whether the raw naphtha used to produce the ammonia which is used in the
effluent treatment plant is eligible for the said exemption, It is too The emphasis that has
rightly been laid in recent years upon the environment and pollution control requires that
all plats which emit effluents should be so equipped as to rid the effluents of dangerous
properties. The apparatus used for such treatment of effluents in a plant manufacturing a
particular end product is part and parcel of the manufacturing process of that end product,
The ammonia used in the treatment of effluents from the urea plant of the appellants has,
 therefore to be held to be use in the manufacture of urea and the raw naphtha used in the
manufacture of such ammonia to be entitled to the said exemption.
8. Grounds for Appeal: It is regarding that whether the raw naphtha used to produce the
ammonia which is used in the effluent treatment plant is eligible for the said exemption.
9. Cases Referred:

1. “C.C.E Calcutta-II V. M/s Eastend Paper Industries Ltd (1989) 4SCC 244.”
2. “C.C.E New Delhi, vs. M/s Ballarpur Industries Ltd. (1984) 4 SCC 566”

10. Order: The said order in appeal is set aside. It was held by the bench that the raw
naphthalene which is used to produce the product called ammonia also used in the
treatment of water, generation of steam, generation of inert gases and plants of effluent
treatment of urea plant of appellants is hereby exempted by notification vide no. 187/61
which can amend from the time to time. Hence, appeals were considered by the court.
11. Comment: This case has actual certain loop holes in the part of the investigation team
that has been put forth that is they have negligently didn’t collect the samples of
Ammonia in various parts factory that were used and also in the nearby field.

CASE ANALYSIS –II

1. Case Tittle and Citation :Hindustan Zinc Limited v. Commissioner of Central

Excise, and Service Tax, Udaipur and another2018 Indlaw CESTAT 1013
2. Topic: CESA, 1944
3. Scope/Chapter: The CEA, 1944 contains the provisions about the levy, collection, &
assessment, of duty, Valuation of goods for the purpose of charging of dutySection 37 of
The Central Excise Act, 1944 empowers the Central Government to issue Rules for
procedures to be adopted by Central Excise officers for levy & Collection of duty &
procedures to be followed by manufactures for production, storage & removal of goods
valuation of goods, availing the benefit of cenvat credit & payment of duty.
4. Provision of Law: It is regarding Chapter 26, 79 and 28 of the Central Excise Act, 1944
It talks about the 1st schedule and in it there are other list of things that the government
mentions upon which there is prescribed excise duty is levied upon those items mentioned
in the list of 1st schedule and it explains certain exceptions issued under the notification
and it majorly talks about the materials used in making a biproduct out of them.
5. Brief Facts of the Case: The appellant has is engaged in manufacture of lead and zinc
concentrates, zinc cathode and sulfuric acid falling under chapter 26, 79 and 28 of
1stschedule of CETA. The appellant had availed cenvat credit on cement used in mines
for filling pits after extraction of ore. The same is denied by the department to be termed
as input for the manufacture of the final product. Resultantly the respective cenvat credits
have been disallowed and have been proposed to be recovered respectively for such an
amount. Appellants have accepted that they have availed the cenvat credit on the cement
used for filling the open pits of the mines prior initiating the subsequent extraction of ore
in the said mine that too in compliance of the condition of the mining. It is even
mentioned that definition of input has been amended in the year 2011. Finally, it is
alleged that the adjudicating authority below has wrongly held the cement to have been
used only for maintenance and repair of mines, thereby denying the cenvat credit.
6. Preliminary Issue: Whether the cement used by the appellant who were asked to extract
ore from the proposed ore block but only after conducting stopping operations of the said
ore blocks, can be called as input?
7. Judgment: For delivering the judgment the bench has taken certain cases and along with
this they have delivered their judgment, and what they have actually delivered are as
follows: \We are of the opinion that the final product thus the use of cement was very
much in relation to the manufacture which was extraction of ore in the impugned cases.
Therefore, we hold that the appellant is entitled to treat the same as input. And it also
stated that the grounds taken before the Hon’ble Apex Court were not taken before
CESTAT hence were not allowed to be taken for the first time in appeal even before of
the High Court.
8. Grounds for Appeal: Is that the appellant herein is engaged in manufacture of lead and
zinc concentrates, zinc cathode and sulfuric acid falling under chapter 26, 79 and 28 of
first schedule to Central Excise and Tariffs Act.
9. Cases Referred:

1. Fertilizer Cooperation Ltd. Vs. CCE Ahmadabad 1996 (86) ELT 177
2. New Delhi v. M/s. Ballarpur Industries Ltd.- 1989 (43) E.L.T. 804.

10. Order: It was held that refusing of special leave by a non-speaking order does not attract
the doctrine of merger. As a result of entire above discussion we hereby set aside all the
impugned orders under challenge. Resultantly, all 6 appeals stands allowed.
11. Comment: In this case the tribunal was unable to draw a clear relation between the
materials that were used in the manufacturing and the materials that were extracted from
the ore are the same that were mentioned in the above said chapters under the Central
Excise and Tariffs Act.

CASE ANALYSIS-III

1. Case Tittle and Citation :Tata Chemicals Limited v. Collector of Central Excise
Ahmedabad (2016) 1 SCC 263
2. Topic: CESA, 1944
3. Scope/Chapter: The Central Excise Act, 1944 contains the provisions about the levy,
collection, & assessment, of duty, Valuation of goods for the purpose of charging of
duty,. Section 37 of The Central Excise Act, 1944 empowers the Central Government to
issue Rules for procedures to be adopted by Central Excise officers for levy & Collection
of duty & procedures to be followed by manufactures for production, storage & removal
of goods valuation of goods, availing the benefit of cenvat credit & payment of duty.
4. Provision of Law: Section-4 of The CEA, 1944 talks about The Valuation of excisable
goods for purposes of charging of duty of excise.
5. Brief Facts: In this batch of appeals, the appellant calls in question the assail ability of
judgment and order dated 6.9.2000 passed by the Customs, Excise and Gold Control
(Appellate) Tribunal, New Delhi, whereby the tribunal has not accepted the letters dated
15.12.1970, 01.02.1971 and 02.04.1971 to bring out the arrangement for the return of
durable packing, namely, gunny bags, for reuse as packing material for selling the soda
ash in bulk. The tribunal has further opined that assesses effort to establish that there was
an arrangement between the manufacturer and their customers to return the above said
things manufactured by them should be excluded in finding out the assessable value was
unsustainable and hence, unacceptable. There are certain background facts. Dispute with
regard to these gunny bags between the assesses and revenue have arisen for the period
from 1970 to 1985. As is evident, in proceedings for the entire period were taken in three
compartments, namely, 1970-75, 1976-1980 and 1981-1985. Initially the dispute related
to payment of duty of excise on the value of goods manufactured i.e. soda ash, after
exclusion of post-manufacturing expenses. the matters were remanded by this Court for
reconsideration. It was for 1stperiod, that is 1970-75, the matter was given to the Assistant
Commissioner to decide. The claim of the assesse was eventually rejected. That
 compelled the assesses to prefer. The said appeal has been disposed of by this Court vide
judgment and order dated 21.8.2014.
6. Preliminary Issue: Does it mean physically capable of being returned or does it postulate
an arrangement under which the packing is returnable?
7. JUDGMENT: In this case the court has said that, the appellant has failed to establish any
arrangement between itself and the buyers regarding the returnability of the used gunny
bags. Therefore, the appellant is hereby directed to pay the total amount of the gunny
bags which are excisable under the Act. The credit notes dated 12.3.1988 and 31.3.1988
cannot be relied upon present case, since the credit notes relate to the year 1988, whereas
the present case is concerned with the period 1981 to 1985. The counsel for the appellant
with regard to its claim that there has been a deduction on account of packing in the
durable and returnable gunny bags, the same have been produced before us for our
perusal. The CEGAT has rightly not considered the same as they do not support the claim
of the appellant that the gunny bags were reclaimed by the appellant under an
arrangement between the appellant and the buyers for the return of the used gunny bags. \.
Therefore, the tribunal has rightly rejected the claim of the appellant so far as the
exclusion of the cost of packing material with the value of soda ash is concerned and
hence, it is liable to pay the tax liability for the same in the light of the findings and
observations made in this judgment. The appeals are dismissed.
8. Grounds for Appeal: The stand of the appellant on the ground that it is not an
arrangement and on that basis has remanded the matter to the adjudicating authority for
computation of the Actual amount of duty payable by the appellant.
9. Cases Referred:1. Triveni Glass Limited vs. Union of India and Ors 2005(3) SCC 484

2.K. Radha Krishnaiah v. Inspector of Central Excise and others (1987) 2 SCC 457.

10. Order: The tribunal has rightly rejected the claim of the appellant so far as the exclusion
of the cost of packing material with the value of soda ash is concerned and hence, it is
liable to pay the tax liability for the same in the light of the findings and observations
made in this judgment. The appeals are dismissed.
11. Comment: This case is one of its kind with proper reasoning given by the bench. But
there is a huge delay in the court for such a simple matter and the hon’ble S.C. should
take proper and reasonable measures so that this doesn’t happen in case of poor and
common man.