Central Excise post independence and liberalization

In the year 1945, a duty was levied on Cigarettes in addition to the existing duty on Tobacco, excise duty was imposed afresh on Mill made Cotton cloth in 1949, which was earlier withdrawn in 1924-25. Cements, Footwear, rayon and Art silk fabrics and Soap made in power operated factories were added to the tariff in 1954 and in 1955. Excise duties were imposed on Woolen fabrics, Electric lighting bulbs, Electric batteries, Boards, Paper and Paints & Varnishes. In 1956, the duty was extended also to Soap produced without the use of power and new duties wee levied on Vegetable non-essential oils, Refined Diesel oil, Rayon and Synthetic Fibers & yarn and the larger Motor cars. In 1957 rates of duty on several commodities were increased and some earlier exemptions were either adjusted or withdrawn.

In 1960, new duties were levied on Rims and Flywheels for bicycles Internal Combustion Engines, Electric motors, Cinematograph films, Aluminium, tinplates, Silk fabrics and Pig iron. In 1961, excise duties wee levied on several activities which included both raw materials and intermediates like Soda ash, caustic soda, Glycerin, Coal tar, Dyes & derivatives, Zinc, Glass & Glassware and finished products like patent & proprietary medicines, cosmetics & Toilet preparations, cellophane, Chinaware and Porcelain wares, air conditioning machinery Wireless receiving sets and Refrigerators & parts thereof. The levy of Central Excise duty was progressively by now covered the entire gamut of goods being manufactured in the country.

On the eve of independence there were few industries and practically no planning for economic development. The total Central Excise revenue in the country at that time was merely Rs 50.62 crore. The growth of industry since then has been phenomenal. It was at this crucial moments of our national history that Pt Jawaharlal Nehru defined the pattern according to which our growth was to be reshaped through Five year plans. Within the broad frame work outlined by him, the trade and industries have developed along with development of the department of the Customs & Central Excise.

Under the original Act of 1944, the tax rates were prescribed in the prescribed in the First schedule of the Act, containing Tariff Items 1 to 67. The tariff Item 68 was introduced with the description all other goods not elsewhere specified commonly known as T.1.68 which the industry started describing as Terror Items 68. However in 1985 the aid tariff scheme, including the controversial Tariff Item 68 was abolished and a new Tariff Act known as the Central Excise Tariff act 1985 which was based on H S N international nomenclature was introduced.

Initially the Central Excise duties were collected under physical control wherein each clearance of goods manufactured from the factory was done under the supervision of Central Excise Officer, subsequently the introduction of the Self Removal procedure called SRP was a water shed in the procedure of excise collection. Now, the assessees were allowed to quantifying the duty on the basis of approval Classification and Price lists and goods allowed to be cleared on payment of duty at the factory gate. In 1994, the gate pass system way to the invoice based system and all clearances allowed to be effected on the manufacturers’ own invoice. Another major change was brought in 1996, when the Self Assessment system was introduced. This system is continuing even today also, wherein the assessee himself assesses his tax return and the department scrutinizes it subsequently and conducts selective audit to ascertain correctness of the duty payment. Even the classifications and value of the goods have to be merely declared by the assessee, instead of obtaining approval of the same from the department.

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