REGISTRATION UNDER CENTRAL EXCISE

REGISTRATION UNDER CENTRAL EXCISE INTRODUCTION: CA. Aravind Thangam aravind@aravindthangam.com Central Excise is a duty on the manufacture or production of all excisable goods in India. Excisable goods refers to movable and marketable goods which are listed in the Schedules to the Central Excise Tariff Act. A process shall be treated as manufacture if theprocess results in transformation, a new and different article emerges having a distinctive name, character or use[union of India v. Delhi Cloth and General Mills (1977) 1 E.L.T. J199]. The term manufacture includes both incidental (optional) and ancillary (compulsory) processes. In addition to the above, certain other activities are deemed to be manufacture even though the process may not satisfy the condition as laid down in the landmark judgement of Delhi Cloth and General Mills referred supra. The following are deemed to be manufacture: a) Specified in the section or chapter notes of the Central Excise Tariff Act as amounting to manufacture b) In respect of goods specified in the Third Schedule to the Central Excise Act, activities of i. packing or repacking of such goods in a unit container or ii. labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or iii. adoption of any other treatment on the goods to render the product marketable to the consumer REGISTRATION BY WHOM? Section 6 of the Central Excise Act, 1944 read with Rule 9 of the Central Excise Rules, 2002 enlists the persons who are compulsorily required to get registered. The Central Excise Act provides that every person engaged in manufacture or production of excisable goods shall get himselfregistered with the Central Excise department. In addition a trader, a warehouse keeper of private warehouse and a user of excisable goods are also required to get themselves registered with the department. Thus, the legislation provides a wide coverage that makes any person dealing with or using excisable goods obligated to get registered. But Sub-Rule (2) of Rule 9 empowers the Central Board of Excise and Customs (CBEC) to exempt persons from the requirement of registration. EXEMPTION FROM REGISTRATION: The CBEC has issued Notification No.36/2001 C.E.(NT) dt.26-6-2001. This notification has been amended as many as 7 times from the date of issue till date. The amended notification as on date provides that the following persons or classes of persons are exempted from getting registered: i. Manufacturer of fully exempted or NIL Rate goods A declaration has to be filed by this category of manufacturer. The format of declaration has been given as Annexure in the notification referred supra. The declaration has to be filed to the Assistant Commissioner/Deputy Commissioner. The schedule forming part of this

declaration requires basic information about the assessee and also about the description, classification of goods and the notification under which the exemption is claimed. ii. SSI Units Turnover less than Rs150 Lakhs An SSI Unit is a unit whose turnover in the preceding financial year is less than Rs.400 Lakhs. Such units have the option to avail full exemption from payment of duty upto turnover of Rs.150 Lakhs in the current financial year[notification No.8/2003]. In respect of such an unit, if the aggregate of home clearances(i.e.excluding export turnover) is less than Rs.150 Lakhs, then the unit need not get itself registered. For calculating the aggregate of home clearances, the total of clearances from all factories of the manufacturer and from any factory by one or more manufacturers must be taken into account. Eg.: A Pvt. Ltd. has factories in Sathyamangalam and Mettupalayam during the financial year 2012-13. The home clearances from both the factories must be aggregated. If the aggregate turnover from both the factories is less than Rs.150 Lakhs, then the unit need not get itself registered. During the financial year 2013-14, A Pvt. Ltd. expands and carries operations at a factory at Tirupur from October 2013. In such a situation, the aggregate of home clearances from Sathyamangalam, Mettupalayam and Tirupur must be aggregated. When taking the turnover of Tirupur factory, the clearances made during the entire year 2013-14 must be considered. Even though the factory was not used by A Pvt. Ltd. during the first 6 months, the turnover made by any other manufacturer in that period must also be taken into account. However, once the turnover crosses the specified limit [provided in Explanation to Notification No.36/2001], i.e. Rs.90 Lakhs, such units have to file the declaration to the Assistant Commissioner/Deputy Commissioner. CBEC Manual provides that genuine delays in filing the declaration should not be viewed seriously and the assessee shall still be allowed to enjoy the benefit of not requiring registration upto the turnover of Rs.150 Lakhs. After the turnover of Rs.150 Lakhs, the SSI unit shall be liable to get registered and start discharging duty liability. At that point of time, CENVAT Credit of raw materials lying in stock must be ascertained and the SSI unit shall be eligible for the benefit of set-off of CENVAT Credit against duty payable. iii. Principal Manufacturer where Job Worker agrees to discharge liability Principal Manufacturer is a person who gets goods manufactured from others (i.e. Job Worker). If the Principal Manufacturer gets goods manufactured on his own account, then he is the manufacturer who is required to get himself registered. But on fulfilment of the following conditions, the Principal Manufacturer need not get himself registered. Principal Manufacturer has authorised the Job Worker to comply with excise formalities Principal Manufacturer agrees to furnish information regarding the selling price or any other information required to arrive at the assessable value of the goods Job Worker agrees to discharge all liabilities under the Central Excise Act and rules made thereunder If all the above 3 conditions are satisfied, then the Principal Manufacturer need not get himself registered. iv. Job Worker manufacturing products enlisted under Chapters 61 & 62 of CETA

Chapters 61 & 62 of CETA deal with textile products both woven and non-woven. Generally, it is the job-worker who is liable to discharge duty liability. But in respect of these goods, the Principal Manufacturer i.e. the person who is getting the goods manufactured on job-work basis is liable to pay excise duty. Hence, the job worker is exempt from registration. v. Manufacturer under Customs Bonded Warehouse An activity of manufacture undertaken in a Customs Bonded Warehouse is exempted from levy of excise duty. This is subject to the condition that all final products manufactured must be exported or destroyed to the satisfaction of AC/DC. Even scrap should not be sold in India and must be exported or destroyed. In addition, the units should not rebate of duty paid or duty drawback. Such units need not get themselves registered under Central Excise provisions. This is because the notification provides that such EOU units which are licenced or appointed under Customs Act are deemed to be registered under Central Excise. However, the declaration as mentioned supra must be filed in triplicate for getting this exemption. vi. vii. viii. ix. Traders other than First Stage and Second Stage Dealer The Act and the rules provided generally that a trader in excisable goods shall get himself registered. But the Notification, to the relief of the trading community, provides that only a dealer who wishes to pass on CENVAT Credit needs to get himself registered. A dealer in excisable goods can pass on CENVAT Credit if he gets himself registered with the Central Excise department as a dealer. A dealer can be either a first stage dealer or a second stage dealer. These terms have been defined in the CENVAT Credit Rules. As per the rules, a first stage dealer is one who purchases directly from a manufacturer; a second stage purchases from a first stage dealer. Other than these dealers, other dealers need not get themselves registered. Users of excisable goods Most of the goods that we use are excisable goods. Pen, Pencil, Mobile Phone and every single product is excisable. And all of us are hence users of excisable goods. But do we have to get ourselves registered. No. But yes If we intend to purchase excisable goods at Concessional Rate of duty, then we have to get registered. Hence other users are not required to get registered. Units in SEZ The charging section Section 3 of the Central Excise Act itself excludes units in Special Economic Zone on chargeability under Central Excise. Accordingly, an unit in SEZ is exempted from registration also. EOU having no linkage with DTA EOU units need not get themselves get registered with Central Excise department. The notification provides that EOU, since licensed under the Customs Act, are deemed to be registered under Central Excise. However if they procure or remove excisable goods to Domestic Tariff Area(i.e. other than export and to an area other than to another EOU/SEZ) unit, they should get registered with Central Excise.

x. Godown or retail outlet of duty paid shop When a godown or retail outlet of duty is appointed or licenced under the Customs Act, then that godown or retail outlet is deemed to be registered as a warehouse under the Central Excise provisions. Hence separate registration would not be required under Central Excise. WHEN SHOULD REGISTRATION BE TAKEN? Registration under Central Excise must be made before the production of excisable goods or in the case of a dealer, before the issuance of CENVAT invoice. WHAT IS TO BE REGISTERED ASSESSEE OR FACTORY? Registration under Central Excise is factory-wise and NOT assessee-wise. In the example quoted above, A Pvt. Ltd. has factories at Sathyamangalam, Mettupalayam and Tirupur during the financial year 2013-14. All three factories belong to the same company. Still, registration is to be obtained separately for every factory i.e. A Pvt. Ltd. will have to take 3 registrations. Only when two or more factories are separated merely by public road, railway line or canal, then the company may get single registration. But even in such a situation, the processes must be interlinked or must fall under the same management, using the same resources, etc. Only in such conditions, two or more factories together can opt for single registration. WHAT IS FACTORY? Factory has been defined under Section 2(e) of the Central Excise Act. It means any place including precincts of the place where manufacture of excisable goods is ordinarily carried on. Including the precincts of the place is crucial, not for the provisions under Registration but more so under the concept of CENVAT Credit. The CENVAT Credit Rules provide that CENVAT Credit shall be eligible in the case of a manufacturer, only when the inputs and capital goods are brought into the factory. Hence even if the goods are brought into the factory gate and kept at the cycle stand, then CENVAT Credit can be claimed. Even the rules relating to payment of duty(rule 8 of Central Excise Rules, 2002) provide that the Central Excise duty provide that duty liability has to be discharged when goods are removed from factory. Hence for all purposes, the precincts of the place where manufacturing is carried on is to be also treated as part of factory. What is factory has to be specified at the time of registration itself. In addition, the words used in the definition of factory ordinarily carried on must be well understood. When a place is occasionally used out of necessity, then that place may not be treated as a factory. FORM FOR REGISTRATION AND VALIDITY OF REGISTRATION: Forms prescribed for registration are A1, A2 or A3 depending on class of manufacturer. (a) A 1 General form for manufacturer/dealer/warehouse (b) A 2 Powerloom weavers, hand processors, dealers of yarn and fabrics and manfacturers of readymade garments (c) A 3 Manufacturers of hand rolled cheroots of tobacco The application form will require the name of the business, address, PAN, boundaries of the premises to be registered, property holding rights (owned or rented), estimated investment in land, plant and machinery, name and details about the authorised person, details of registration from

other departments likes Sales Tax, details of partners/directors, contact details, etc. In addition to these, the assessee it to mention the major excisable goods to be manufactured and the major excisable goods used. Registration is one time. It need not be renewed. Any change in details given at the time of registration must be informed to the department. PRACTICAL PROCEDURE TO OBTAIN CENTRAL EXCISE REGISTRATION: Registration under Central Excise is completely online. The Central Government has come up with Automation of Central Excise and Service Tax. The online portal is www.aces.gov.in. This website provides us to create a user name and login into the account using the password sent to us by e- mail. Once we are logged in, we shall go to the Registration Tab and choose the option Apply. After duly filling up the form, it has to be submitted online. Then a copy of the signed application form has to be produced to the department with PAN. After the satisfaction of AC/DC, the AC/DC shall sign and issue the registration certificate. As such, the provisions under Central Excise have not prescribed any fee for registration. However, in all cases, costs will have to be incurred for obtaining registration. EXCISE REGISTRATION NUMBER: The Registration Certificate will contain the Excise Registration Number which is PAN based 15 digit code. The format of Excise Registration Number is AAAAA1111A XM 001. XM after the PAN denotes it is that of a manufacturer. If the letters are XD, it denotes that it is that of a dealer. CONSEQUENCES OF NON-REGISTRATION: Registration under Central Excise is mandatory. A manufacturer who is obligated to get registered, if does not get registered, then penalty will be imposed under Rule 25(1)(c) of the Central Excise Rules, 2002. This penalty will be equal to the amount of duty unpaid or Rs.10,000/- whichever is higher. In addition to the penalty, the goods manufactured without registration can also be confiscated. Prosecution under the Central Excise Act wherein, imprisonment upto 7 years can also be imposed for non-registration. CONCLUSION: Hence timely registration under the Central Excise provisions will have to be made by every assessee.