Meaning of excise duty:

Excise is derived from the Latin word “Excisum / Excidere which means to cut out”.

Excise, according to the Federal Court and Privy Council is a tax attracted by the event of manufacture but collected at some convenient stage which may be after the said event, which is only for administrative convenience. [Province of Madras v. Boddu Paidanna & Sons 1978 (2) E.L.T. J272 (FCI)]

It is a duty levied upon goods manufactured and not upon sales or the proceeds of sale of goods. [Council v. Province of Madras, 1978 (2) E.L.T. J280 (PC)]

Therefore the duty of excise is levied on a manufacturer or producer in respect of the commodities produced or manufactured by him. It is a tax upon manufacture of goods and not upon sales or proceeds of sale of goods.

‘Duty of excise‘ has been renamed as Central Value Added Tax (CENVAT). CENVAT includes „duty‟, „duties‟ „duty of excise‟ or „duties of excise‟.

Although excise started as a pure duty on manufacturing activity, over a period of time it has included deemed manufacture and is tending towards a value added tax and the changed nomenclature indicates the same. In future, it would be subsumed into the GST.