Assessment Procedure Excise

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.
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.
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.
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
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
• 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 is an assessment made prior to final
 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
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
The assessee shall be liable to pay the interest on
any amount payable to central govt.
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.
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.
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.
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
iii. By issuing certificate of district collector of revenue,
who is empowered to recover the amount as arrears of
land revenue.
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
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
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
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].
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.