1. EXCISE DUTY ACT
1.1. Concept of Excise Duty
Excise duty is principally levied in the conversion of natural items to commercial items. Excise duties were levied within intermediate production i.e. transferring from one process to another process too. These days, excise is levied at the factory gate under physical control mechanism or self-issuance (self-removal) mechanism. In case of import of goods and services, excise is levied as same as domestic production.
Although the rates at which VAT is levied is limited in number, excise is levied with different rates/amounts for different items. If there is not any realistic costing mechanism for valuation, specific rate is preferred, which is controlled through physical stock which is relatively easier to count.
1.2. Price determination for Excise Duty
The price for levying excise duty is determined as under:
| Particulars | Determination of Price |
|---|---|
| On Production of Goods | The factory price determined by the producer for excisable goods for sale from the factory; or the price determined by IRD on the basis of production cost of the goods. |
| On import of excisable goods | Price determined for the purpose of custom duty plus the amount of custom duty charged on the goods.
|
| On service provided | The invoice price for the service rendered |
| Reference Price | Excise Officer may fix the price for the purpose of excise |
| In case | Responsibility to determine/collect price |
|---|---|
| Manufacturer producing excisable goods | The responsibility to determine and collect excise duty shall be in the manufacturer producing goods and services attracting excise duty. |
| On import of excisable goods | The responsibility to determine and collect excise duty shall be in the manufacturer producing goods and services attracting excise duty. |
| Excise duty is levied at retail level | In case of import of goods, the responsibility is vested to the custom offices from where the goods are imported. |
| In case of | Time to levy Excise duty |
|---|---|
| Issue of Goods under Physical Control System | Excise duty shall be levied at the time of issuance after production from the enterprises for the purpose of sales. |
| Issue of Goods & Services under Self-Removal System | Excise duty shall be levied at the time of issuance of invoice |
| Import of Goods | The custom office shall level excise duty at the custom entry point at the time of import. |
| Import of Services | The time to levy excise duty shall be as prescribed by IRD |
| In case | Time to levy Excise duty |
|---|---|
| Goods being issued under Phys1cal Control System | At the time of issuance |
| Goods are issued or manufactured under self - removal system, | Within 25th of the month immediately following the month of issuance of invoice |
| Import of Goods | At the time of import |
| Import of Services | As prescribed by IRD |