WHAT IS ASSESSMENT ? Assessment means assessing or determining
tax liability. Goods are cleared from factory /warehouse by payment
of duty on self assessment basis by the manufacture. This is done
after the assessee has determined classification and valuation of
goods for determination of liability for payment of duty.
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WHO IS ASSESSEE? According to central excise rules 2002 an
assessee means any person who is liable for payment of duty
assessed or a producer or manufacturer of excisable goods or
registered person of a private warehouse in which excisable goods
are stored and includes an authorized agent of such person.
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TYPES OF ASSESSMENT SELF ASSESSMENT PROCEDURE: (Rule 6 of
central excise rules 2002) Under self assessment duty is paid by
manufacturer himself while clearing the goods from the market. It
has been introduced w.e.f. 1.10.96. Central excise is basically an
invoiced based self assessment and assesse is under obligation to
declare: (a)Details of goods produced with its classification and
exemption notification which he intends to avail.
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b) Correct assessable value either on invoice or by a separate
declaration, if invoice cannot show the assessable value.(excepts
in case of cigarettes ); The assessee has to pay duty before
removal of goods from factory. The assessee is required under the
act to submit monthly return in ER-1 form to superintendent,
central excise. Along withER-1, assessee files declaration
regarding correctness of ER-1, fair payment of duty and genuineness
of TR-6 challans.
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The following procedure is to be observed by assesse:- (1)
ascertainment of date and time of intended removal of goods from
factory/warehouse. (2) classification of such goods and rate of
duty at the time of removal. (3) quantity of goods. (4)valuation of
goods at that time. (5) assessing monthly return (in form ER-1) and
submit it to jurisdictional superintendent within 10 days of the
succeeding month.
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RULE 6 OF CENTRAL EXCISE, 2002 FOLLOWING STEPS ARE UNDER SAP :
o Assessee determines the date and time of removal of goods from
factory/warehouse. o Assessee determines rate of duty and tariff
classification by pursuing central excise tariff act,1985 o
Assessee, assess the value of goods as per section 4 of the central
excise act,1944
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Payment of duty by debiting PLA. Assessee is not required to
submit AR-1 for assessment. The goods can be removed at any time on
any day, except on budget day and after 5.00 p.m on pre budget day.
Duty will be charged on invoice and goods will be cleared from
factory under cover of an invoice. Assessee has to file monthly
return in for ER-1 to juristional superintendent within 10 days of
succeeding month under rule 10 of central excise rules 2002
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However SRP scheme is not applicable for cigarettes or goods.
So, assessee himself assess the duty payable on excisable goods, he
has to submit monthly return in ER-1 form.
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PROVISIONAL ASSESSMENT Provisional assessment is an assessment
made prior to final assessment. An assessee can request for
provisional assessment if he is unable to determine the value of
excisable goods or in unable to determine correct classification of
goods. The assessee should make a detailed written request
declaring rate of duty and value as proposed by him. After such
request, the DC/DA commissioner may direct, after enquiry, that
duty shall be assessed provisionally.
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Provisional assessment can be done Where an assessee is, for
any reason, unable to correctly estimate on the date of deposit of
tax, the actual amount payable towards service tax for any
particular month or quarter, as the case may be, he may make
payment of service tax on provisional basis [Rule 6(4)]. Necessity
of provisional assessment The provisional assessment may be
necessitated in certain cases, for instance, when assessee receives
composite fee and is unable to distribute between taxable and non
taxable service or where the assessee is not sure whether
particular fee received attracts service tax or not.
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Rule 7 of central excise rules 2002 states:- 1. 2. 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 duty deem
fit. 3. The assistant commissioner of central excise or the deputy
commissioner of central excise shall pass the order for final
assessment. Where the assessee is unable to determine the value of
excisable goods or determine the rate of duty applicable there to.
He may request the assistant commissioner of central excise in
writing giving reason for payment of duty on provisional
basis.
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5. 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 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. 4. The assessee shall be liable to pay the
interest on any amount payable to central govt.
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BEST JUDGEMENT ASSESSMENT It is used when assessable value
cannot be finalised. Best judgement assessment is done when the
assesse does not submit necessary data and information assessment
is not possible due to other reason. If because of fabricated
accounts, the assessing officer fails to find out precisely the
turnover suppressed, he can only make an estimate of the same on
the basis of material before him.
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PAYMENT OF EXCISE DUTY The liability for payment of excise duty
is discharged by the assessee following the under mentioned
procedure:- 1) Maintenance of PLA. PLA denotes Personal Ledger
Account which is to be maintained by the assessee. It has the
following particulars:- Serial no. and date Details of each
debit-entry on consignment Details of each credit on the basis of
TR-6 challan Balance. Excise duty liability is discharged only if
the amount payable is credited to the central government by the due
date specified.
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2) Payment through TR-6 challan/ GAR-7 (for e-payment) serves
the purpose of having proof/evidence of deposit of Excise duty. It
contains the following particulars:- o Serial No. o Name, address
and code number of assessee o Excise commissionerate Division and
Range o PLA number and name of commodity. o Amount deposited in
cash or by cheque/draft. Manner of Payment of duty: A. Payment by
non SSI units: Non SSI Units not availing of any concession of duty
which is based on value of turnover, have to pay duty on
fortnightly basis. B. Payment by SSI- Units: SSI units shall pay
duty on monthly basis by, 5 th day of succeeding calendar
month.
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Recovery The assessee has to pay the amount due within
specified time, once the demand of duty, penalty or other dues is
confirmed by excise authority. if the assessee refuses to pay the
amount, Excise officers has power to recover the amount due under
Sec 11 and 11A.
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Section 11Recovery of sums due to Government Section 11
ARecovery of Duties Section 11 BLevy of interest on delayed payment
of duty Section 11 ACLevy of penalty for short levy/ non-levy of
duty in certain cases. Section 11 CPower not to recover duty of
excise not levied or short paid as a result of general practice
Section 11 DDuties of Excise collected from the buyer to be
deposited with the Central Government Section 11 DDInterest on the
amount collected in excess of duty.
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Recovery of sums due to government(Sec 11) In respect of duty
& any other sums of any kind payable to the central government
under this act, the officer empowered to levy such duty or require
the payment of such sums may deduct the amount so payable from any
money owing to the person from whom such sums may be recoverable or
due which may be in his hands or under his disposal or control, or
may recover the amount by attachment and sale of excisable goods
belonging to such person & if the amount payable is not so
recovered, he may prepare a certificate signed by him specifying
the amount due from the person liable to pay the same and send it
to the collector of the collector of the district in which such
person resides or conducts his business and the said collector, on
receipt of such certificate, shall proceed to recover from the said
person the amount specified therein as if it were an arrear of land
revenue.
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The amount due to the department can be recovered by following
methods: i. By attachment and sale of excisable goods belonging to
the assessee.(no such provision in new rules). ii. By adjusting the
amount against any money payable to him. iii. By issuing
certificate of district collector of revenue, who is empowered to
recover the amount as arrears of land revenue.
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Meaning of show cause notice The expression show cause connotes
an opportunity of leading evidence in support of ones allegations
and controverting the charge or allegations as are made against the
person called upon to show cause. Requirement of show cause notice
i. It must be in writing. ii. It must be specific and not
ambiguous. iii. It must specify the exact amount. iv. Notice must
be served in the manner specified in the Central Excise Rules.
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Time limit for issue of show cause notice Acc. To sec 11 A (a
show cause notice has to be served)within 1 year from the relevant
date. However, the period will extend upto 5 years if the
non-payment or short payment of duty or refund or duty is by reason
of fraud, collusion, wilful mis-statement or supression of facts or
contravention of any provision of Excise act or rules made with the
intention to evade payment of duty. As per sec 11 A if the court
has issued stay order for recovery of amount,the period during
which the stay order is in operation will be excluded for the
calculation of time limit.
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Notice with prior approval Provision to Sec 11 A (1) provides
that show cause notice shall not be issued without prior permission
of commissioner/Chief commissioner. Only commissioner or a
subordinate officer with prior approval of commissioner can serve
notice if the amount involved is 1 crore or less. If more than a
crore then approval of chief commissioner is required.(inserted by
Finance Act 2000).
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Section 11 A: Sec 11 A deals with the recovery of duties not
levied or not paid or short levied or short paid or erroneously
refunded in two circumstances as detailed below: o Other than
reason of fraud or collusion or any willful mis- statement or
suppression of facts or contravention of any of the provisions of
this act or of the rules made there under with intent to evade
payment of duty; o For the reason of fraud or collusion or any
willful mis- statement or supression of facts or contravention of
any provisions of this act or of the rules made there under with
intent to evade payment of duty.
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In the former case the central excise officer shall, within 1
year from the relevant date, serve notice on the person chargeable
with the duty which has not been so levied or paid or which been so
short levied or short paid or to whom the refund has erroneously
been made, requiring him to show cause why he should not pay the
amount specified in the notice.
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In the latter case the period to serve notice is, within five
years from the relevant date, other provisions and procedure
remaining same. The period to determine the amount of duty of duty
of excise within 1 year from the date of notice.
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Interest on delayed payment of duty Section 11 AA deals with
the interest on delayed payment of duty. Section 11 AA (1) provides
that notwithstanding contained in any judgement, order or direction
of the Appellate Tribunal or any court or in any other provision of
this Act. Section 11 AA (2) prescribes the rate of interest between
10% - 36% per annum after the due date. Section 11 AA (3) provides
that no interest shall be payable where- The duty becomes payable
consequent to the issue of an order, instruction or direction by
the board under Sec. 37B; and Such amount of duty is paid in
full.
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Penalty for short levy or non levy or non payment or erroneous
refund of duty in certain cases (Section 11 AC) The amount of
penalty shall be as follows: Where any duty of excise has not been
levied or paid or short levied or short paid or erroneously
refunded etc the person who is liable to pay duty under sec. 11A
(10) shall also be liable to pay a penalty equal to the duty so
determined. Where details of transactions available in the
specified records reveal that any duty of excise has not been paid
levied etc the person who is liable to pay duty shall also be
liable to pay penalty equal to 50% of the duty so determined.
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Where any duty as determined under sec 11A (10) and the
interest payable thereon under sec 11AA in respect of transactions
referred to in (b) is paid within 30 days of the date of
communication or order of the Central Excise Officer who has
determined such duty. Where the authority modifies the amount of
duty then the amount penalties and interest payable shall stand
modified accordingly the person who is liable to pay duty as
determined shall also be liable to pay such amount of penalty or
interest so modified.
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Doctrine of Unjust Enrichment No person can be allowed to use
the power of court for unjustly enriching himself. Where the
manufacturer has collected duty from the buyer he cannot claim
refund of the same from the state on the ground that it was
collected contrary to legal provision. Law does not permit unearned
and unjustifiable windfall to assessees under this doctrine.
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Refund (Section 11B) Refund includes rebate of duty of excise
on excisable goods exported out of India or on excisable materials
used in the manufacture of goods which are exported out of India.
Section 11 B Claim for Refund of Duty and Interest Section 11
BBInterest on delayed refund Section 12 APrice of goods to indicate
the amount of duty paid thereon Section 12 BPresumption that
incidence of duty has been passed on to the buyer
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Who can claim refund? An assessee who has paid duty or a buyer
who on whom the burden of duty has been passed, can file claim for
refund. Any person claiming refund of any duty of excise may make
an application for refund of such duty to the Assistant
Commissioner of Central Excise or deputy commissioner of central
excise before expiry of 1 year from the relevant date in such form
and manner prescribed and the application shall be accompanied by
such documentary or other evidence including documents referred in
sec 12A as the applicant may furnish to establish that the amount
of duty of excise in relation to which such refund is claimed was
collected from, or paid by, him and the incidence of such duty had
not been passed on by him to any other person[sec 11B].
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Procedure Refund application should be filed in prescribed form
R in duplicate in the office of AC/DC but a copy should be sent to
Range Suptd. It should be for a refund claim of at least rs.100.
the application should be accompanied by supporting documents like
original TR-6 Challan (PLA) invoices etc. as per guidelines in CBE
& C Manual 2001. The application should be signed by claimant
and pre-receipted.