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Central Excise Duty is an indirect tax. It is a tax on manufacture of goods. The manufacturers pay this duty at the time of removal of their goods from the factory where it is manufactured. As such the manufacturers of goods act as agents to the government in the collection of this duty and ultimately it is the end customer who bears the tax.

Manufacture includes and process -

• incidental or ancillary to the completion of a manufactured product; and

• which is specified in relation to any goods in the Section or Chapter Notes of the Schedule to the Central Excise Tariff Act, 1985 as amounting to manufacture,and the word " Manufacture" shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account.

It has been held that in order to be a new article of manufacture the article must have a different name, character and use.

The Definition of manufacturer as laid down in the act states that a manufacturer is a person who produces goods himself in his own account and also a person who gets his goods manufactured through hired labour.

Exemptions given by the government to the small scale units with regard to Excise Duty may help them to compete effectively though caution must be taken to ensure that there the company is not a front company generated only to evade tax.

Section 3 of the Central Excise Act states that, Central Excise Duty on all excisable goods shall be levied and collected at the rates set out in the Central Excise Tariff Act, 1985.

The classification of the excisable goods manufactured in India and its maximum rate of duty are codified and presented as an enactment known as Central Excise Tariff Act, 1985 which is based on the International Nomenclature known as Harmonized System of Nomenclature. The tariff is divided into twenty sections with ninety-six chapters. It begins with raw materials and ends with the finished product.