Duty based on capacity of production in respect of notified goods [Section 3A] :
(1) The Central Government in order to safeguard the interest of the revenue may notify goods on which excise duty shall be levied and collected in accordance with the provisions of this section. The Government may notify the goods having regard to the nature of the process of manufacture or production of excisable goods of any specified description, the extent of evasion of duty in regard to such goods or such other factors as may be relevant. Pan masala, Gutkha, Tobacco etc. are notified under this section.
(2) Where the goods are so notified, the Central Government may, by rules,—
(a) provide the manner for determination of the annual capacity of production of the factory by an officer not below the rank of Assistant Commissioner of Central Excise. Such annual capacity shall be deemed to be the annual production of such goods by such factory; or
(b) (i) specify the factor relevant to the production of such goods and the quantity that is deemed to be produced by the use of a unit of such factor; and
(ii) provide for the determination of the annual capacity of production of the factory in which such goods are produced on the basis of such factor by an officer not below the rank of Assistant Commissioner of Central Excise and such annual capacity of production shall be deemed to be the annual production of such goods by such factory:
However, where a factory producing notified goods is in operation during a part of the year only, the annual production thereof shall be calculated on proportionate basis of the annual capacity of production:
Further, in a case where the factor relevant to the production is altered or modified at any time during the year, the annual production shall be re-determined on a proportionate basis having regard to such alteration or modification.
(3) The duty of excise on notified goods shall be levied, at such rate, on the unit of production or, as the case may be, on such factor relevant to the production, as the Central Government may, by notification in the Official Gazette, specify, and collected in such manner as may be prescribed:
However, where a factory producing notified goods did not produce the notified goods during any continuous period of 15 days or more, the duty calculated on a proportionate basis shall be abated in respect of such period if the manufacturer of such goods fulfils such conditions as may be prescribed.
(4) The provisions of this section do not apply to goods produced or manufactured, by a 100% export oriented undertaking and brought to any other place in India.
For the purposes of section 3 of the Customs Tariff Act, 1975, the duty of excise leviable on the notified goods shall be deemed to be the duty of excise leviable on such goods under the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985, read with any notification for the time being in force.
“Factor” relevant to production, as mentioned in sub -sections (2) and (3) includes “factors” relevant to production.