Excise

Q1. What is the difference between Duty and Tax?

Ans. Taxes are levied on Transaction. (Examle! "#T on #ales$%&ere! #ale is a transaction.
Duty is levied on 'oods. (Examle! Excise Duty is levied on roduction ( manufacture of )oods$.
Q*. What is the Excise?
Ans. Excise is duty or tax which is levied on )oods or commodities roduced or sold within the
country of ori)in.
Q+. What is the Excise Duty?
Ans. Excise duty is an indirect tax which is levied on excisable )oods roduced or manufactured in
,ndia.
Q-. What is the difference between Direct Tax and ,ndirect Tax?
Ans. Direct taxation is defined as the tax which is directly levied on the citi.ens of a country. All
individuals and business concerns have to ay direct taxes to the )overnment on a re)ular basis. These
direct taxes are calculated on every source of income that accrues to the business of individual.
/n the other hand! the citi.ens of a country are char)ed certain levies indirectly as well. These indirect
levies are 0nown as indirect taxes. These are the taxes ayable on an activity or a commodity. #ome
common examles of indirect taxes are sales tax and excise tax.
Q1. What are the re% re2uisites for levyin) the excise duty?
Ans. 3ollowin) are the conditions for levyin) the excise duty4%
There must be )oods.
The )oods must be excisable )oods.
The )oods must have been roduced or manufactured.
#uch roduction or manufacture must be manufactured in ,ndia.
Q5. Which acts re)ulates the excise duty?
Ans. "entral Excise Act! 16-- and "entral Excise Tariff Act! 1671 re)ulates the excise duty.
Q8. What do you mean by 9oveability?
Ans. 9oveable means an article which can ordinarily come to the mar0et to bou)ht and sold.
Q7. What do you mean by 9ar0etability?
Ans. 9ar0etability is the caability of the )oods of bein) bou)ht and sold in to the mar0et! however!
actual sale is not necessary.
Q6. What do you mean by Excisable 'oods?
Ans. Excisable 'oods are those )oods which are secified in the schedule to central excise tariff
act! 1671.
Q1:. What do you mean by manufacturin)?
Ans. A rocess which carried out for resultin) in to a distinctly new roduct is called 9anufacturin).
Q11. What do you mean by ";D?
Ans. ";D refers to "ountervailin) Duty. ,t is an additional duty of customs levied on the imorted
)oods. ,t is e2uivalent to excise duty which was levied if imorted )oods or similar )oods have been
manufactured in ,ndia.
Q1*. When Excise Duty is <eviable?
Ans. The taxable event for the urose of "entral Excise is manufacture or roduction of excisable
)oods but a erson shall be liable to ay excise duty at the rate revalent at the time of clearance of
excisable )oods from the factory(warehouse and not at the rate revalent at the time of manufacture.
Q1+. What do you mean by "ative "onsumtion?
Ans. "ative "onsumtion means consumtion of )oods manufactured by one division or unit and
consumed by another division or unit of the same or)ani.ation.
Q1-. What do you mean by "lassification of 'oods?
Ans. "lassification of )oods means determinin) the headin)s or subheadin)s of the "entral Excise
Tariff under which the said )oods are covered. The actual amount of excise duty ayable deends uon
the value of )oods and rate of duty.
Q11. =y whom excise duty administrated?
Ans. The excise duty is administrated by 9inistry of 3inance and Deartment of >evenue throu)h
"entral =oard of Excise and "ustoms ("=E"$.
Q15. What do you mean by ;aluation under the "entral Excise Act! 16--?
Ans. ;aluation of excisable )oods is a essential and imortant ste before Assessment of Excise
Duty when rates of duty are based on value of )oods.
Q18. What do you mean by ad%valorem rate?
Ans. When excise duty levied by alyin) the )iven ercenta)e of the value of )oods then it is
0nown as ad%valorem rate. ,n other words ad%valorem rates are based on value of )oods.
Q17. What is the #ecific Duty?
Ans. #ecific duty means the duty ayable on the basis of some measure li0e len)th! wei)ht!
volume! thic0ness etc. This is a simle method to collect excise duty but the revenue earned by
)overnment does not increase even if sellin) rice of the roduct increases.
Q16. What do you mean by Tariff >ate?
Ans. Tariff >ate refers to rate of duty indicated a)ainst each headin) or sub%headin) in the "entral
Excise Tariff Act! 1671.
Q*:. What do you mean by "omound <evy #cheme?
Ans. "entral 'overnment may by notification! secify the )oods in resect of which an assessee
shall have otion to ay duty of excise on the basis of secified factors relevant to roduction of such
)oods i.e. si.e of e2uiment emloyed etc. and at secified rates. This is termed as "omound <evy
#cheme.
Q*1. What is the Transaction ;alue?
Ans. Transaction value means the rice actually aid or ayable for the )oods! when sold to the
buyer.
Q**. What do you mean by Time of >emoval?
Ans. Time of >emoval shall be deemed to the time at which the )oods are cleared from factory.
Q*+. What is the ?lace of >emoval?
Ans. ?lace of >emoval means4%
a factory or any other lace or remises of roduction or manufacture of the
excisable )oods@
a warehouse or any other lace or remises wherein the excisable )oods have
been ermitted to be deosited without ayment of duty! from where such )oods
are removed@
A deot! remises of a consi)nment a)ent or any other laces or remises from
where excisable )oods are to be sold after their clearance from the factory.
Q*-. ,f Excise Duty! ;AT and "entral #ales Tax ,ncluded in transaction value then for calculation of
Assessable ;alue what will be the treatment of above items?
Ans. Excise Duty! ;AT and "entral Excise Duty already included in the transaction value shall be
excluded from transaction value for calculation of assessable value.
Q*1. ,f excise duty included in sale value then is it excluded from the sale value for the urose of
calculation of ;AT?
Ans. Ao.
Q*5. What do you mean by 9>??
Ans. 9>? refers to 9aximum >etail #ale ?rice. ,t is the maximum rice at which the excisable
)oods in ac0a)e form may be sold to ultimate consumer and includes all taxes.
Q*8. What do you mean by Bob Wor0er?
Ans. #ometimes the raw sulies to a erson who have the manufacturin) facility and after the
manufacturin) of finished )oods the finished )oods returned to the rincial. The erson who have
manufacturin) facility in this case will called Bob Wor0er.
Q*7. What is the rule for valuation of )oods manufactured by a Cob wor0er?
Ans. The assessable value in resect of )oods manufactured on Cob wor0 basis by the Cob wor0er
will comrise the followin) values4%
;alue of materials! comonents(arts and similar items relatable to the )oods.
;alue of 9aterial consumed includin) ac0in) materials for the roduction of
such )oods.
?rocessin) "har)es of Bob Wor0er.
?rofit of the Bob Wor0er
Q*6. What is rule for valuation of )oods catively consumed?
Ans. ,f )oods catively consumed for manufacture of other roducts which are dutiable! then in such
situation the )oods which are catively consumed are exemt from excise duty. ,f the other roducts
are exemted then the value of catively consumed )oods shall be calculated at 11:D of the cost of
roduction.
Q+:. What is the ;aluation Audit?
Ans. ;aluation Audit ordered in comlicated cases of valuation where stoc0s involved are heavy.
When in the oinion of Assistant "ommissioner of "entral Excise! the value has not been correctly
declared or determined by a manufacturer! he may direct such to )et his accounts audited by a "ost
Accountant. This audit is called ;aluation Audit.
Q+1. What do you mean by "EA;AT #cheme?
Ans. "envat is the abbreviated form of "entral ;alue Added Tax. "envat scheme allows the credit
of the duty aid on the inuts and caital )oods and service tax aid on inut services a)ainst the
ayment of excise duty on final roducts or service tax on outut services to avoid cascadin) effect of
the duty or tax.
Q+*. What do you mean by "ascadin) Effect?
Ans. "ascadin) effect means when tax is levied on tax amount also. ,n other words when tax aid
on raw materials etc. included in cost of the raw materials then it is called cascadin) effect of tax.
Q++. &ow "EA;AT #cheme remove the "ascadin) effect of duty or tax?
Ans. Ender "envat scheme duty aid on inut and caital )oods and service tax aid on inut
services are eli)ible for set off a)ainst the excise duty ayable on final roducts and service tax
ayable on outut services therefore the taxes aid on earlier sta)es is not included in cost however the
taxes aid on earlier sta)es ta0e as a current assets.
Q+-. What do you mean by ,nut 'oods?
Ans. ,nut means all )oods used in or in relation to the manufacture of final roduct! either directly
or indirectly! whether contained in the final roduct or not.
The li)ht diesel oil! hi)h seed diesel oil and motor sirit! commonly 0nown as etrol! shall not be
treated as an inut for any urose whatsoever.
,nuts include )oods used in the manufacture of caital )oods which are further used in the factory of
the manufacture.
Q+1. What do you mean by "aital 'oods?
Ans. "aital 'oods means e2uiment or aliances used in the factory of the manufacturer in
roduction of the final roducts! but does not include any e2uiments or aliances used in office.
Q+5. What do you mean by Exemted 'oods?
Ans. Exemted )oods means excisable )oods which are exemt from the whole of the duty of excise
leviable thereon! and includes )oods which are char)eable to Ail rate of duty.
Q+8. What do you mean by 3irst #ta)e Dealer?
Ans. 3irst #ta)e Dealer means a dealer who urchases the )oods directly from 9anufacturer or
,morter.
Q+7. What do you mean by #econd #ta)e Dealer?
Ans. #econd #ta)e Dealer means a dealer who urchases )oods from a first state dealer.
Q+6. What is the difference between Dealer and 9anufacturer?
Ans. Dealer means a trader who urchases the excisable )oods and sale the same. 9anufacturer
means a manufacturer who roduced or manufactured excisable )oods and sale the same.
Q-:. What is the difference between Excise 9anufacturin) and Excise Tradin)?
Ans. ,n Excise 9anufacturin) a manufacturer roduce or manufacture excise able )oods and sale
them. 9anufacturer liable to ay duty on )oods manufactured by him. /n the other hand in the excise
tradin) a trader tradin) in excise able )oods and ass on the excise duty (3irst #ta)e Dealer and #econd
#ta)e Dealer$.
Q-1. What do you mean by ?ass on the Duty?
Ans. ?ass on the duty means when one trader who aid the excise duty on the urchase of )oods
when sale the same )oods to a manufacturer then he should ass the duty earlier aid by him on the
urchase of )oods to the manufacturer. ,n this case manufacturer is eli)ible for ta0in) cenvat credit of
duty aid. Ender the "envat #cheme only the first sta)e dealer and second sta)e dealer can ass on the
cenvat credit.
Q-*. 'ive the name of duties which are eli)ible for "envat "redit.
Ans. The cenvat credit of followin) is allowed4
=asic Excise Duty(=ED$
#ecific Excise Duty(#ED$
Additional "ustom Duty
Education "ess and &i)her Education "ess only for ayment of eduction cess
and hi)her education cess on final outut or outut services.
Aational "alamity "ontin)ent Duty (A""D$ can be utili.ed for ayment of
A""D only.
#ervice Tax on inut #ervices.
Q-+. 'ive the rocedure for availin) cenvat credit for )oods removed for Bob Wor0.
Ans. ,f the inuts are sent to the Cob wor0er for further rocessin) testin)! reairin)! reconditionin)
or any other urose and are received bac0 in the factory within 17: days! then no cenvat credit shall
be reversed. &owever! as and when the inut or caital )oods are received bac0! the credit so reversed
can be a)ain ta0en! when the )oods is returned bac0. ,n case of inuts which are directly sent to Cob
wor0er! credit can be availed only after receit of rocessed )oods from the Cob wor0er.
Q--. What do you mean by Cob wor0 issue and Cob wor0 receit?
Ans. Bob wor0 issue means when a rincial manufacturer sent the )oods to the Cob wor0er for
further rocessin) then it is called Cob wor0 issue or labour Cob issue. /n the other hand when a
manufacturer receives the )oods on Cob wor0 basis then it is called Cob wor0 receit or labour Cob
receit.
Q-1. 'ive the rovisions of excise duty for availin) cenvat credit on ,nuts.
Ans. "envat credit may be ta0en immediately on receit of inuts in the factory or the remises of
service rovider. &owever! this does mean that if manufacturer(service rovider does not ta0e credit as
soon as inuts are received in the factory(remises of service rovider! he would be denied benefit of
cenvat credit.
Q-5. What do you mean by 9onthly "redit(?ostin) and Daily "redit(?ostin)?
Ans. 9onthly "redit means manufacturer can utili.e the amount of cenvat credit available as on last
day of the month for ayment of duty while in case of Daily "redit manufacturer can utili.e the
amount of cenvat credit available on a articular day.
,t is to be noted that while utili.in) the credit for ayment of excise duty on the 1
th
of the next month!
the credit available only on the last day of the revious month should be utili.ed. ,n other words the
credit earned from 1
st
to 1
th
of the month cannot be utili.ed for clearances made durin) the revious
month.
Q-8. 'ive the rovisions of excise duty for availin) centvat credit on "aital 'oods.
Ans. ,n resect of caital )oods only 1:D of the duty aid is allowed as credit on receit and the
balance credit can be ta0en only in the subse2uent financial years! if such caital )oods are in
ossession.
Q-7. When "envat "redit refunded to the assessee?
Ans. When inuts used in the final roducts which are cleared for exort! the cenvat credit in resect
of the inuts so used shall be refunded.
Q-6. "an Enavailed "envat "redit should be refunded to the assessee?
Ans. Enavailed "eavat "redit can not be refund (excet when it is a case of exorts$.
Q1:. What do you mean by >eversal of "envat "redit?
Ans. "envat "redit is available when inuts will be used for manufacturin) of dutiable final roduct.
"envat "redit is ta0en as soon as )oods enter factory remises. 3inal roduct may be cleared later. ,t
may haen that the final roduct may be subse2uently exemt. ,n this case cenvat credit availed on
stoc0 is re2uired to be reversed. This is call >eversal of "envat "redit.
Q11. 'ive the list of records which is to be maintained for availin) cenvat credit.
Ans. 3ollowin) records should maintain4%
F >' *+ A ?art%, 4 3or recordin) of 2uantity of ,nuts
F >' *+ A ?art%,, 4 3or recordin) of value of duty aid on ,nuts
F >' *+ " ?art%, 4 3or recordin) of 2uantity of "aital 'oods
F >' *+ " ?art%,, 4 3or recordin) of value of duty aid on "aital 'oodsG
F ,nut #ervice
"redit >e)ister 4 Details of the credit availed! utili.ed and the balance to be utili.ed
Q1*. What do you mean by #ulementary ,nvoice?
Ans. A #ulementary ,nvoice is an additional invoice which is followed by an ori)inal invoice and
issued by a manufacturer or imorter of inuts or caital )oods if additional amount of excise duties
has been aid.
Q1+. 'ive the name of documents on the basis of which one can avail cenvat credit.
Ans. The cenvat credit of excise duty or service tax aid would be available on the basis of
followin) documents.
Excise ,nvoice
,nvoice issued by re)istered imorter
,nvoice issued by first sta)e or second sta)e re)istered dealer
#ulementary ,nvoice
,nvoice! bill or challan issued by rovider of inut service.
Q1-. What is the Excise ,nvoice?
Ans. 3or removal of any excisable )oods! a very imortant document that has to be issued is referred
as ,nvoice! thou)h it was bein) referred as 'ate ?ass for a lon) time.
#ince the assessees are wor0in) under self removal rocedure! they are allowed to carry out
manufacture! stora)e and removal of the )oods on their own without any hysical suervision by the
excise authorities. &owever! no excisable )oods can leave the factory remises unless accomanied by
the crucial document called excise invoice. The Excise ,nvoice shall be reared in trilicate.
Q11. What is the difference between Excise ,nvoice and "ommercial ,nvoice?
Ans. Excise invoice is distinctly different from commercial invoice. Excise invoice has to be
reared at the time of removal of excisable )oods indicatin) the duty ayable whereas commercial
invoice is normally reared subse2uent to the removal for reali.ation of the sales roceeds.
Q15. Who are re2uired to re)ister under the "entral Excise Act! 16--?
Ans. #ection 5 of the "entral Excise Act! 16-- deals with re)istration and in terms of this section!
any erson who en)a)ed in the roduction of excise able )oods as well as the erson en)a)ed in the
wholesale urchase or sale or the stora)e of any excise able )oods is re2uired to )et himself re)istered.
3urther! the followin) ersons are re2uired to be re)istered4%
?erson holdin) rivate warehouse! where )oods are stored without ayment of
duty.
Exorters! manufacturin) exort )oods who used duty aid inut in
manufacturin) and wants to claim rebate of such duty aid on inut.
Q18. &ow an assessee )ets re)istered under the "entral Excise Act! 16--?
Ans. Any erson re2uirin) re)istration with "entral Excise Deartment shall submit the alication
in the rescribed format 3orm A%1 after comletin) in all resects. The 3orm A%1 shall be submitted in
dulicate alon)with the attested coy of ?AA allotted by the income tax deartment. The alication
shall be submitted to the Burisdictional Deuty(Assistant "ommissioner.
Q17. 'ive the name of ersons which are exemt from re)istration under the "entral Excise Act!
16--.
Ans. The followin) ersons are exemt from obtainin) >e)istration under the "entral Excise Act!
16--4%
?ersons who manufacture the excisable )oods! which are char)eable to A,< rate
of excise duty or are fully exemt. &owever he is re2uired to file a declaration
in rescribed form.
#mall #cale Enit (##,$ availin) the slab exemtion based on value of clearances.
The sulier of raw material who )ets his )oods manufactured on his account
from any other erson.
Q16. What do you mean by E"" Ao.?
Ans. E"" Ao. refers to Excise "ontrol "ode Aumber. /n receit of alication for re)istration each
assessee shall be )iven an assessee code by excise deartment. ,t is 11 di)it code number out of which
first 1: di)it are ?AA of the assessee and next characters reresent the status of asseessee i.e.
manufacturer or dealer. <ast three di)its relates to classification of )oods. Assessee should mention the
E"" in his invoice! 'A>%8! "hallans etc.
Q5:. What do you mean by >ecord?
Ans. >ecord shall include account! a)reement! invoice! ricelist! return! statement or any other source
documents whether in writin) or in other form.
Q51. 'ive the list of >ecords and Documents to be maintained by an asseessee under the "entral
Excise Act! 16--.
Ans. 3ollowin) is the list showin) the various records to be maintained by an Assessee4%
F >'% 1 4 Daily #toc0 Account (D#A$
F >'% + 4 >e)ister of #toc0 and >eceits o "entral Excise #tams ("ash$
F >'%+ "redit 4 >e)ister of #toc0 and >eceits of "entral Excise #tams ("redit$
F W>' 4 Warehouse >e)ister
F >'%*+A
?art , H ,, 4 Accounts of ,nuts and Entry boo0 of duty credit
F >'%*+"
?art , H ,, 4 #toc0 Account of "aital 'oods and Entry boo0 of duty "redit
F >'%*+D 4 >e)ister to be maintained by Dealer issuin) "EA;ATA=<E invoice
Q5*. What do you mean by ?<A?
Ans. ?<A refers to ?ersonal <ed)er Account and 0nown by the account current name also. ,n order to
ay excise duty! it is necessary for every manufacturer to maintain a ?<A wherein details of deosit
made and details of debit entries towards ayments are reflected.
Q5+. ,s there any rovision for ta0in) searate number for ?<A?
Ans. After introduction of ?AA based re)istration number for the excise assessee! it is clarified that
the ?AA based re)istration number will also serve the urose as ?<A number. ,n other words there will
not be any need to have searate ?<A number and the re)istration number itself will be used as ?<A
number.
Q5+. &ow one can maintain the ?<A?
Ans. Every assessee is re2uired to indicate the ?<A number in the 'A>%8 challan while deositin)
the excise duty. After deosit of excise duty throu)h 'A>%8 challan in the nominated ban0! credit entry
shall be made in the relevant column a)ainst reference of 'A>%8 challan. 3or ma0in) monthly ayment
?<A should be debited.
,t may be noted that this is the only record under the "entral Excise <aw which still stiulates use of
indelible encil and double sided carbon.
Q5-. What is the last date for monthly ayment of excise duty?
Ans. 9onthly ayment of excise duty should be made by 1
th
of the followin) month. 3or the month of
9arch! duty should be remitted on or before +1
st
of 9arch.
Q51. "an a erson ta0e cenvat credit for inuts urchased in between 1
st
to 1
th
day of a month for the
debit entry of revious month?
Ans. Ao! he can ta0e credit for this urchase at the end of the month in which urchase was made.
Q55. What is the 'A>%8 "hallan?
Ans. 'A>%8 challan is used for ayment of excise duty and service tax. Earlier T>%5 was used for the
same urose.
Q58. 'ive the name of various returns to be file under the "entral Excise Act! 16--.
Ans. E>%1! E>%*! E>%+! E>%-! E>%1!and E>%5.
Q57. 'ive the last dates of excise returns to be filed and name of assessees by who returns to be filed.
Ans. ER-1:
Every Assessee on or before 1:
th
of every month ertainin) the transactions of revious month.
##, units availin) exemtion are however! rescribed to submit this return on 2uarterly basis on or
before *:
th
of the month after the exiry of 2uarter.
ER-2:
This is also a monthly return to be filed by E/Es who are rocurin) inuts and caital )oods from
Domestic Tariff Area (DTA$ and also sell their finished )oods to DTA units. This return file on or
before 1:
th
of every of month ertainin) the transactions of revious month.
ER-3:
This is a 2uarterly return to be filed by ##, (#mall #cale ,ndustries$ units availin) exemtion. ##, units
submit this return on 2uarterly basis on or before *:
th
of the month after the exiry of 2uarter.
ER-4:
This is an Annual 3inancial #tatement to be filed by assessees who have aid excise duty above >#. 1
crore in the revious financial year throu)h ?<A and this is to be filed every year before +:
th
Aovember.
ER-5:
This is also an Annual Declaration of ?rincial inuts to be filed by only those manufacturers who have
aid >s. 1 crore or more as Excise duty throu)h ?<A in the recedin) financial year and this is to be
filed every year before +:
th
Aovember.
ER-6:
This is a monthly return to be submitted by 1:
th
of every month by the manufacturers who have
submitted E>%1.
Q56. What do you mean by e%3ilin) of returns?
Ans. All asseesees and re)istered dealers who have been allotted 11% di)it excise control code are
entitled to avail the facility of e%filin). Assessees and re)istered dealers who intend to avail the facility
of e%filin) of excise returns and 'A>% 8 challans are re2uired to submit an alication in the rescribed
form to their Curisdictional Assistant ( Deuty "ommissioner of "entral excise indicatin) their e%mail
address and ostal address of communication to which the user lo)%in ,D! assword and the location
code are to be intimated.
Q8:. What do you mean by e%?ayment of Duty?
Ans. ,t rovides the convenience of ma0in) online ayment of "entral Excise Duty throu)h =an0Is
,nternet ban0in) service. This scheme facilitates anytime! anywhere ayment and an instant cyber
receit is )enerated once the transaction is comlete.
,t should be noted that it is a statutory obli)ation on the art of the assessees who have aid excise duty
of >s. 1: lacs or more in the recedin) financial year! to ma0e the ayment of excise duty electronically
throu)h internet ban0in).
Q81. What do you mean by >emission of duty?
Ans. >emission of duty imlies waiver of duty liability in resect of the finished )oods which are
manufactured but not removed from the factory remises.
Where it is shown to the satisfaction of the "ommissioner that )oods at any time before removal! have
been4%
<ost or destroyed by natural causes or by unavoidable accident@
Enfit for consumtion@
Enfit for mar0etin)
Q8*. What do you mean by =ond?
Ans. A bond is an instrument by which the obli)ation to ay the money is created. The rimary
urose of bond is to secure due comliance with rules and rocedures.
Q8+. What is the difference between #urety and #ecurity =ond?
Ans. Ender the #urety =ond another erson stands as surety to )uarantee the erformance on the art
of the obli)ator whereas under the #ecurity =ond! securities are furnished either in cash! )overnment
romissory notes! ost office savin) ban0 deosits etc.
Q8-. What is the 3orm A.>.E.1?
Ans. A.>.E.1 is an alication for removal of excisable finished )oods for exort whether without
ayment of duty or on ayment of duty with a claim for rebate.
Q81. What is the 3orm A.>.E.*?
Ans. ,t is an alication for removal of )oods for exort under claim for rebate of duty aid on inuts
used in the manufacture of such )oods as well as removal of excisable finished )oods under claim for
rebate.
Q85. What is the "T%1?
Ans. "T%1 is a certificate on the basis of which a merchant exorter can rocure excisable )oods for
exort without ayment of duty.
Q88. What is the "T%*?
Ans. "T%* is used for rocurement of excisable )oods without ayment of duty under rocedure for
exort warehousin).
Q87. What is the "T%+?
Ans. "T%+ is similar to "T%* but issued by #uerintendents in "har)e of E/Es. /nly on receit of
"T%+ certificate! the manufacturers can commence sulies without ayment of duty to the E/E.G
Q86. What is <etter of Enderta0in)?
Ans. A manufacturer exorter who is desirous of removin) )oods for exort without ayment of duty
has the otion of furnishin) a letter of underta0in) in form ET%1 in lace of executin) a bond. #uch an
otion of furnishin) a letter of underta0in) instead of executin) a bond is available only to a
manufacturer merchant exorter. <etter of underta0in) )enerally valid for 1* moths.
Q7:. What is the difference between 9erchant Exorter and 9anufacturin) Exorter?
Ans. 9erchant Exorter means an exorter who urchase the )oods from a manufacturer or trader for
exort the same whereas 9anufacturin) Exorter means a exorter who manufacture the )oods and then
exort the same.
Q71. What do you mean by ##, units?
Ans. ##, refers to #mall #cale ,ndustries. 'overnment has )iven concession for ssi units. ,ndustries
which have the turnover u to >s. - crore covered under the ##,. The most imortant notification issued
by the )overnment is notification no.7(*::+ .
Q7*. What is the Aotification Ao.7(*::+?
Ans. The salient features of Aotification Ao. 7(*::+ briefly summari.ed below4
Value of Clearances Rate of Duty
(1$ 3irst clearance u to >s. 11: la0hs in a financial year A,<
(*$ 3or subse2uent clearances from >s. 1:: la0hs to >s. -:: la0hs Aormal rate of duty
Aote4 % Ao "envat credit u to >s. 11: la0hs.
After crossin) turnover of >s. 1.1 crores! the ##, unit wil be re2uired to ay excise duty. &owever!
normal ayment of duty on the clearances after crossin) >s. 1.1 crores is restricted u to uer limit of
>s. - crores. ,n other words! on crossin) >s. - crore turnover! the unit becomes ineli)ible for claimin)
exemtion in the next financial year.