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. 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. 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. 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. 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. 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 • 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 • 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. 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. 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. Rule 7 of central excise rules 2002 states:1. 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. 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. 4. The assessee shall be liable to pay the interest on any amount payable to central govt. 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. 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. 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. 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, 5th day of succeeding calendar month. 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. Section 11 Recovery of sums due to Government Section 11 A Recovery of Duties Section 11 B Levy of interest on delayed payment of duty Section 11 AC Levy of penalty for short levy/ non-levy of duty in certain cases. Section 11 C Power not to recover duty of excise not levied or short paid as a result of general practice Section 11 D Duties of Excise collected from the buyer to be deposited with the Central Government Section 11 DD Interest on the amount collected in excess of duty. 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. The amount due to the department can be recovered by following methods: 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. i. Meaning of show cause notice The expression ‘show cause’ connotes an opportunity of leading evidence in support of one’s 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. 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. 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). 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 misstatement 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 misstatement 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. 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. 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. 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. 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. 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. 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. 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 BB Interest on delayed refund Section 12 A Price of goods to indicate the amount of duty paid thereon Section 12 B Presumption that incidence of duty has been passed on to the buyer 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]. 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.
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