OF EXCISABLE GOODS INTRODUCTION.
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1 FAQs Q1. What are the object and features of Central Excise Tariff Act, Ans. CLASSIFICATION OF EXCISABLE GOODS INTRODUCTION. Classification of a product, which means determination of heading or sub-heading under which the particular product will be covered. OBJECT OF CLASSIFICATION Determine excisability of goods manufactured Find out rate of duty applicable Verify whether any exemption is available Proper classification of goods ensures smooth functioning and avoids disputes. Q2. Explain first two rules for interpretation of goods. Ans. RULES FOR INTERPRETATION TO FIRST SCHEDULE TO CETA CETA, 1985 contains a set of six general rules for interpretation of the Tariff items. These rules are similar to those contained in HSN. 1. RULE 1 :- GENERAL RULE OF CLASSIFICATION The rules of interpretation need not be resorted to when classification is possible on the basis of classification. Example: - Heading of Chapter 84 refers to nuclear reactors, machinery etc. but even a hand pump falls under chapter RULE 2(a) CLASSIFICATION OF INCOMPLETE/ UNFINISHED ARTICLES.
2 Any particular heading refers to finished form of that article shall also be classified under the same heading if the incomplete/unfinished goods have the essential characteristics of the finished goods. Example: - 1. A motor vehicle not yet fitted with wheels or tires shall be classified under the head motor vehicle. 2. A leather belt with no holes and buckles shall be classified where the belt falls. Note:- Complete or finished goods include goods in disassembled form. RULE - 2(b) CLASSIFICATION OF MIXTURES/ COMBINATIONS OF A MATERIAL/SUBSTANCE WITH OTHER MATERIAL/SUBSTANCE This rule relates to goods consisting of two or more materials and substances. As per this rules headings in which there is reference to a material or substance also apply to that material or substance mixed or combined with other material or substance. Example: - 1. Article made of gold includes partly of gold. 2. Natural rubber will cover a mixture of natural and synthetic rubber.
3 Q3. Explain the following a. Eight Digit Classification b. Rules 4 th and 5 th for interpretation of goods Ans. a. EIGHT DIGIT CLASSIFICATION SYSTEM Effective from Excisable goods are classified under eight digit system. First two digits :- refer to the Chapter Number of the Tariff Next two digits: - refer to heading of the goods in that chapter. Next two digits: - indicate chapter sub-heading. Last two digits :- refer to the chapter sub-sub heading b. 4. RULE 4: AKIN RULE. If goods cannot be classified in accordance with rules discussed shall be classified under the heading appropriate to the goods to which they are most akin. Example: - Plastic films pasted on car glass windows does not have a specific entry in the tariff schedule, However, heading covers Builders wares of Plastic blinds therefore, it can be classified under blinds under as it is most akin to plastic blinds. 5. RULE 5: IN ADDITION TO THE FOREGOING PROVISIONS, THE FOLLOWING RULES SHALL APPLY IN RESPECT OF THE GOODS REFERRED TO THEREIN. (a) Camera cases, musical instrument cases, gun cases, necklace cases and similar containers specially shaped to contain a specific article or set of articles suitable for long term use shall be classified with such articles.
4 Example: - Camera case is classified as camera. (b) Packing material or packing container presented with the goods therein shall be classified with the goods if used for packing goods. Q4. State whether following statements are True or False. a. Third schedule contains items covered under MRP valuation which are covered under deemed manufacture provisions. b. The Central Excise Tariff Act, 1985 classifies all the goods under 98 Chapter of which Chapter 78 is kept blank for future use. c. Central Excise Tariff has adopted HSN based classification w.e.f , which has 8 digit nomenclatures. d. Classification of goods involves choosing the right heading or sub-headings of the tariff and determining the appropriate rate for a particulars product. Ans. [a. True, b. False, c. True. d. True.] Q5. Fill in the blanks. a. Central Excise Tariff Act came into force in the year.. b.. Rules are given in CETA 1985 for interpretation of goods. c. Burden of proof is on to establish that goods fall under the particular item. d. Manufactured goods are classified on the basis of. Ans. [a. 1985, b. 6, c. Central Excise Department. d. HSN]
5 Q6. Write notes on:- a. 3 rd rule of interpretation b. 6 th rule of interpretation Ans. a. 3. RULE 3: CLASSIFICATION IN CASE OF GOODS ARE CLASSIFIABLE UNDER TWO OR MORE HEADINGS. This rule applies when goods are primafacie classifiable under two or more headings. Classification shall be effected under three steps. I. Most specific description II. Essential character III. Heading which occurs last in numerical order. RULE 3(a) SPECIFIC OVER GENERAL The heading that provides a more specific description should be preferred over the heading that provides a general description. Example: - Football 1. The bladder inside a rubber product falling under chapter The outer cover is a leather product falling under chapter Football falling under chapter 95 as sports requisite. The general description of leather/rubber goods is ignored. RULE 3(b) ESSENTIAL CHARACTER PRINCIPLE If goods cannot be classified under sub rule (a) Composite goods should be classified on the basis of that material that gives it its essential character. Example: - i. Pen stand with clock: - The thrust is on pen stand ii. Emergency lamp with radio: - The emphasis is on radio.
6 RULE 3(c) LATTER THE BETTER. If goods cannot be classified as per sub-rule (a) and (b) then they shall be classified under the heading which occurs last in the numerical order. Example: - Transmission belt made of Nylon and Rubber can be equally classified as Nylon or Rubber. It was held to classify the same under the head Which occurs later? b. RULE 6: ONLY SUB-HEADINGS AT THE SAME LEVEL ARE COMPARABLE Sub-heading of one heading can be compared with sub-heading of the same heading. But sub-heading of one heading cannot be compared with sub-heading of a different heading. Note:- 1. When there are two possible views regarding classification, then classification beneficial to the assessee shall be adopted. 2. The rules of interpretation cannot be applied to interpretation of exemption notification.
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