Short notes on Central Excise Act and Central Excise Tariff Manual,

Notes covering Chapter 24 of Section IV and Chapter 27 of Section V of the Central Excise Tariff Manual, including provisions under the Central Excise Act, 1944 and the Central Excise Tariff Act, 1985:

Chapter 24: Tobacco and Manufactured Tobacco Substitutes (Section IV)

This chapter covers the excise duties imposed on tobacco and manufactured tobacco substitutes. It includes a wide range of products, and the focus is on how these goods are classified under various sub-headings for excise purposes.

Key Provisions:

  1. Scope and Coverage:

    • Chapter 24 is primarily concerned with tobacco and its derivatives, including both raw and processed forms of tobacco.
    • It includes cigarettes, cigars, chewing tobacco, snuff, and tobacco substitutes (such as herbal cigarettes).

  2. Tariff Classifications: The chapter is structured around several tariff sub-headings to classify different types of tobacco products. These include:

    • Heading 2401: Unmanufactured tobacco, whether or not stemmed or stripped.
    • Heading 2402: Manufactured tobacco (e.g., cigarettes, cigars, cheroots).
    • Heading 2403: Other forms of manufactured tobacco, including chewing tobacco, snuff, etc.

  3. Excise Duty Rates:

    • The excise duties on tobacco are specific duties based on the quantity or volume of the product, rather than ad valorem (percentage-based).
    • Cigarettes attract the highest excise duties due to their large market size and potential health hazards. The rate varies based on the length, weight, and type (e.g., hand-rolled or machine-made).
    • Cigars and cheroots have distinct duties compared to cigarettes, often depending on size and weight.
    • Other tobacco products (chewing tobacco, snuff) attract different duty structures, usually lower than manufactured tobacco but still substantial due to health implications.

  4. Exemptions and Concessions:

    • Some tobacco products may be exempted from excise duty if they are intended for export.
    • Small-scale manufacturers may be eligible for reduced duties or other exemptions based on production thresholds.
    • The Government periodically announces schemes for reducing duties on certain tobacco products or lower tax rates for specific types of tobacco under the National Tobacco Control Programme.

  5. Adverse Health and Environmental Impact:

    • Due to the harmful effects of tobacco on health, the excise duties aim to serve as a regulatory mechanism to discourage consumption. Tobacco companies are subject to strict advertising restrictions and health warnings on packaging.

  6. Manufacturing and Packaging Regulations:

    • Tobacco products are required to be properly packaged and labeled with statutory health warnings as per regulations under the Cigarettes and Other Tobacco Products Act (COTPA), 2003.
    • The Central Excise Department is empowered to inspect and ensure compliance with these packaging and labeling rules.

Chapter 27: Mineral Fuels, Mineral Oils, and Products of Their Distillation (Section V)

This chapter pertains to mineral fuels and oils, which are crucial for both domestic and industrial use. It includes the products derived from crude oil and natural gas, along with solid fuels like coal and coke.

Key Provisions:

  1. Scope and Coverage:

    • Mineral Fuels: Includes coal, coke, and peat, which are major energy sources.
    • Mineral Oils: Covers products like petrol, diesel, kerosene, and liquefied natural gas (LNG), which are essential for transportation, industrial activities, and households.
    • Distilled Products: Covers a wide range of derivatives from crude oil, such as naphtha, aviation turbine fuel (ATF), and lubricating oils.

  2. Tariff Classifications: The chapter divides the products under various sub-headings:

    • Heading 2701: Coal, briquettes, ovoids, and similar solid fuels from coal.
    • Heading 2702: Lignite (brown coal).
    • Heading 2703: Peat (including peat litter).
    • Heading 2707: Oils obtained from bituminous minerals.
    • Heading 2710: Petroleum oils and oils obtained from bituminous minerals (including crude oil and refined products).
    • Heading 2711: Petroleum gases and other gaseous hydrocarbons (liquefied or natural gas).
    • Heading 2713: Petroleum coke, petroleum bitumen, and other residues from petroleum refining.

  3. Excise Duty Rates:

    • Petroleum Products: The excise duties on petroleum products are ad valorem (percentage-based) on the retail sale price or specific duties depending on the product.
    • The duties are aimed at regulating the oil sector and preventing price distortions in key markets like transportation fuel and domestic cooking gas.
    • Specific Duties: Crude oil and refined products are taxed based on volume, and the duty structure can vary by product. For instance, petrol and diesel attract higher duties compared to kerosene and liquefied petroleum gas (LPG).
    • Crude Oil: The Government often fixes a base price for domestic crude oil production, and duties are calculated based on this.
    • Natural Gas: The excise duty on natural gas is generally minimal, with the main focus on liquefied petroleum gas (LPG) and cooking gas.

  4. Exemptions and Concessions:

    • Export Exemption: Petroleum products exported from India are usually exempted from excise duties to encourage global trade.
    • Special Concessions: In some cases, products like LPG used for cooking in domestic households may be eligible for reduced duties.
    • Subsidy Programs: The Government also provides subsidies on certain fuels (like LPG) through the Direct Benefit Transfer (DBT) scheme.

  5. Regulation and Control:

    • The Ministry of Petroleum and Natural Gas (MoPNG) and the Ministry of Finance jointly regulate excise duties and provide guidelines for the pricing and distribution of petroleum products.
    • The Oil and Natural Gas Corporation (ONGC) and other public sector undertakings are key players in the extraction and refinement of petroleum, and they work in coordination with the government to ensure compliance with tax policies.

  6. Environmental Concerns:

    • The excise duty on petroleum products also acts as a mechanism to address environmental concerns, particularly in the case of carbon emissions from fuels like diesel and petrol.
    • The Government promotes alternate energy sources and implements policies to reduce the dependency on petroleum products, including through incentives for electric vehicles (EVs).

  7. Impact on the Economy:

    • The excise duties on mineral oils and fuels play a critical role in India’s fiscal policy, as revenues from these sectors contribute substantially to the central government’s finances.
    • The pricing structure of petroleum products is regularly reviewed to balance domestic requirements and international oil prices.

Conclusion:

The provisions under Chapter 24 and Chapter 27 of the Central Excise Tariff Act focus on regulating excise duties on key sectors like tobacco and mineral fuels. The government uses these regulations not only to raise revenue but also to control consumption, address health and environmental issues, and promote sustainable practices. Understanding the tariff classifications, duty rates, and exemptions is crucial for businesses and policymakers in managing these sectors effectively.



The Central Excise Act, 1944 and Central Excise Tariff Act, 1985 govern the levy and collection of excise duties on goods manufactured or produced in India. Here's a breakdown of the provisions you mentioned:

Chapter 24 of Section IV – Central Excise Tariff Act:

This chapter deals with the classification of goods related to "Tobacco and Manufactured Tobacco Substitutes". The goods falling under this section include:

  • Cigarettes
  • Cigars
  • Cheroots
  • Tobacco in various forms such as snuff, chewing tobacco, and other manufactured substitutes.

Provisions under this chapter are designed to impose excise duties on tobacco-based products. The key points under this chapter are:

  • Tariff Heading: The specific classification and sub-headings for tobacco products.
  • Rates of Duty: Defines the excise duty applicable to different forms of tobacco products, which may be different for manufactured tobacco products like cigarettes, cigars, and snuff.
  • Exemptions: Certain forms of tobacco may be exempt from excise duty or may have a reduced duty, depending on the nature and quantity.

Chapter 27 of Section V – Central Excise Tariff Act:

This chapter deals with the classification of "Mineral Fuels, Mineral Oils, and Products of Their Distillation; Bituminous Substances; Mineral Waxes". The key areas covered are:

  • Crude Petroleum and Natural Gas
  • Petroleum Products such as diesel, petrol, and kerosene.
  • Coal and Coke.
  • Liquefied Propane and Butane.
  • Bitumen and Lubricating Oils.

This section deals primarily with the excise duty applicable to petroleum products, fuels, and related derivatives, which are critical for industrial use and as consumer goods. Key provisions under this chapter include:

  • Classification of Petroleum Products: Specific sub-headings for crude oil, petrol, diesel, and other related products.
  • Excise Duties: The central excise duties imposed on petroleum products, which may vary depending on the product and its usage.
  • Exemptions and Concessions: In some cases, certain products may be exempt from excise duty or may have reduced rates.

These chapters provide an understanding of how the excise duties are imposed on specific industries such as tobacco and petroleum, with emphasis on their classification and applicable duties.

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