Useful for CA CS CMA ICWA November/ December 2015 exams

1. Central Excise Tariff Act,1985
(CETA)
• Ajay Babu Bandi
 Practising Chartered Accountant
 M.Com, FCMA,ACA,IFRS(Certified)

2. Classification -Meaning
Classification of Goods refers to
determination of HEADINGS or
SUB-HEADINGS of the Central
Excise Tariff Schedules, under
which the goods produced are
covered

3. Significance of Classification
 Determination of Rate
 Eligibility for exemption

4. Features of CETA
1) Comprehensive
2) HSN coding system (Harmonised System of
Nomenclature formulated under GAAT)
3) Grouping
4) Sub-division based on type of Goods
5) Clarificatory Notes

5. Features..contd..
6) Structure …
(a) Schedules – 2 schedules
1) First schedule –Basic Excise Duties
(CENVAT)
1) Second Schedule– Special Excise Duty

6. Features..contd..
6) Structure …
(b) structure of Schedules – 98 groups in 21 chapters
1) For some chapters—No rates have been
specified
2) Some chapters kept blank for future use

7. Features..contd..
 7) system of classification –8 digit pattern
 8) Example (given for understanding)
 9) Residuary Entries

9. Column Headings in CETA Schedule
(4 columns)
1 Tariff Item 8 digit Description
2 Description of
Goods
Names & Classification
3 Measurement
Units
Kilograms,Meters,Units
, Litres, etc
4 Rate of Duty 10%, 4%, Nil etc

10. Principles of Classification
Following steps are adopted sequentially in
classifying the Goods….
1. Tariff Entry
2. Trade Parlance (as they are known in
Trade and Commerce) (popular meaning)
3. Technical Definition
4. General interpretative Rules—if cannot be
done as above (6 rules similar to HSN)

11. End Use – Relevant
If the Tariff entry itself is connected to the
function then , usage theory becomes
relevant
Example : Marker Ink –treated as Marker Pen

12. Rate of duty
 CETA specifies the rate of duty in respect of each tariff
entry given in the chapters there upon
 The rate of duty may either be a specific rate i.e.,
quantified in terms of money..or
 ad valorem i.e., % of assessable value of
goods