Excise Duties in pre-independence era

In fact, the duties of Excise were know to the human being, since ancient times, dating back to the 6th Century B.C and are found mentioned in the Roman Law as “Vectiqual rerum vanalium” (which means toll levied on commodities sold by auction, or in public market). In India the history of Excise duties could be traced to the period when the Maurayas levied a tax up to 1/10th to 1/20th of the liquor and salt produced. Traces of Seemingly Customs seals were found even before in the Indus Valley Civlization too. Kautiliya, the another of “Arthashashastra” has discussed many aspects of excisable goods and import restrictions in his magnum pous. During the Mughal period the tax on manufactured goods was levied in the kingdom, and was extended to perfumery, Indigo, cotton carding, soap making, edible oil, printed cloth, tobacco and salt. This revenue was realized by means of imposts on the privilege of manufacturer and by duties on its transportation from the place of manufacture to the interior of the country. Under the Sikh rule in Punjab salt was one of the eight articles which were liable to customs town, or transit duties. In fact, the Roman Excise was mild compared to the duties collected in medieval and modern times, being never more than 1 per cent of the value of the articles taxed.

The duty of Excise was levied for the first time in modern India, on the manufacturer of salt in the year 1870. The salt continued to be an important of revenue for the British Government. However this became an issue of serious political significance when Mahatma Gandhi took the Dandi march and broke the law on impost of taxes on salt, a commodity of common use. In fact the legacy of levy of duty on salt continued even after the Independence. However there was a separate exemption notification incorporated in each Finance act to the effect that no duty on salt shall be levied this year. Much later the word salt was dropped altogether from the law, which was rechristened as the Central Excise act 1944.

Slowly with the growing needs of British Governments, the scope of Central Excise levies was also extended. In 1894 a duty of Excise was levied on cotton yarn of finer counts. Two years after this was replaced by duty on Indian mill woven cloth. In 1917 duty was levied on Motor spirit, followed by a duty on kerosene and several other commodities. It was in 1934 that the step in the rationalization of excise levies was taken and that their coverage extended. Excise duties were imposed then mainly as a revenue measure on Sugar, Matches, steel ingots and mechanical lighters. Duty on Pneumatic Tires & Tubes as levied in 1941 and on Vegetable products in 1943. During the period prior to 1944 the practice was to have a self contained piece of legislation as and when a commodity was subjected to Central Excise duty.

February, 24th is celebrated every year as “Central Excise Day”. The significance of this day, lies in the fact that it was on the February 24th 1944, the then Viceroy of India gave assent to the bill so that the Central Excise & Salt Act was enacted and brought into force as a complete codified law. It is not that before this date the Central Excise duties were not collected, but these were levied as per the different enactment pertaining to a specific commodity. The Central Excise duty is an indirect tax levied on the goods manufactured in India, except Alcohol, which is under State List. The tax is administered by the Central Board of Excise & Customs, under the authority of Entry 84 of the Union List ( List 1) under the Seventh Schedule, read with Article 246 of the Constitution of India.