The Central Excise duty is an indirect tax levied on the goods manufactured in India, except Alcohol, which is under State List.
In 2000, instead of making payments before each clearance of the goods the fortnightly payment of the duty system was introduced for all commodities. The system of the monthly payment was introduced the previous year for the small scale industry. In 2001, new Central Excise (No. 2) Rules, 2001 have replaced the Central Excise Rules, 1944 with effect form 1st July 2001. Other rules have also been notified namely, CENVAT Credit Rules, 2001 Central Excise Appeal Rules, 2001 etc. With the introduction of the new rules several changes have been effected in the procedures. The new procedures are simplified in as much as there are only 32 rules, as compared to 234 under earlier enactment. Classification declaration and Price declarations have also been dispensed with, the CENVAT Declaration having been earlier dispensed with in 2000 itself.
The important feature of Indian Fiscal Policy has been the high reliance that was traditionally placed on indirect taxes for raising revenues. At one time Excise an Customs duties contributed roughly to 80 percent of the tax revenue of the Central Government. In 1948-49 share of direct taxes in the Central Tax Revenue was about 52.7 per cent and the share of indirect taxes about 43.3 percent which kept on increasing in favor of indirect taxes. This trend has been reversed over the years. In a developing country with low per capita income it was but natural that more and more reliance was placed on indirect taxes to raise revenue to meet the various objectives of the country. However, with the development of Indian economy the contribution of direct and indirect taxes to the exchequer has reached now, almost in the ratio of 50:50. This is an indication of the developing economy heading towards a developed economy.
The growth of Central Excise revenue over the years has been truly phenomenon. From the revenue yield are about Rs 23.5 Crore, from only few items subjected to Excise duties in 1920-21 (excluding revenue from salt which was Rs 6.76 Crore) the yield went up to Rs 50.62 Crore in 1946-47. There has been tremendous growth in industrial output since independence especially due to our five year development plans. To begin with, in 1950-51 the Central Excise Revenue collected was to the tune of Rs 67.54 Crores. The growth of Central Excise Duties has also been steadily upward. In 1955-56 the yield of Central Excise duty from 24 items was Rs 145.25 Crore. It rose further to Rs 897.25 Crores from 67 Items in 1965 -66 and to Rs 11049.63 Crores form 140 items in 1984-85. The Central excise Duty Collection has been steadily rising over the year reaching to a total of Rs 122938.85 Crores during 2007-08. It was only during 2008-09 that for the first time since independence, the Central Excise Revenue collection was less than previous year, mainly due to global economic melt down as also the fiscal adjustment made in the tax structure by the government to keep the Indian economy afloat. The trend this year has been quite encouraging. In 2007-08 the departmental collected a combined revenue of the Customs and Central Excise Duties to the tune of over Rs 23,78,000 crores. The former chairman of Central Board of Excise and Customs had once sated that as per present indications, the indirect tax revenue is likely to exceed Rs 600,000.00 crores by the year 2014-15