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1. Introduction
Excise duty is imposed on the consumption of selected goods such as alcoholic beverages and tobacco products. Historically, these duties had constituted one of the largest sources of tax revenue in Nepal. It had covered a wide range of domestic products (more than fifty commodities) accounting for 14.3 percent of total tax revenue during 2048/49. But in recent years as follows the almost universally accepted norms, excise duties are restricted to a narrow range of domestic products. It covers tobacco products, liquor, beer, flavored soft drinks, cement and plastic goods. It contributed 9.9 percent of total tax revenue during 2058/59. The effect of excise duty is also faced by narrow range of population. At present, large sales volumes, few producers, limited consumer, inelastic demand and lack of close substitutes are the basic charm of excise system in the country. The basic relatively simple administrative efforts provides limited opportunities for tax evasion. The excise duty is very helpful instrument to control the consumption which is regarded as lacking merit or as likely to cause negative externalities. 2. Features A striking feature of present structure of excise duty is that excise duties on liquor, beer and tobacco have been progressively increased at their importance as revenue sources over the years. The levies on tobacco products and alcoholic beverages have been accounted for over ninety five percent of excise duty receipts. Given the relative inelasticity of demand for these commodities, the duties have contributed to generate substantial revenues with frequent increase in tax rate over the years. 3. Controlling Excise The excise duty has been governed and regulated by the Excise Act 2058, Excise Regulation 2059, and Alcohol Regulation 2033. As provisioned in the law, the excise commodities are closely controlled and supervised by the Government from their production to selling stage. Licensing requirement is adopted for all excise commodities and it is given by both department as well as field offices. Excisable commodities are realized for sale with an excise stamp to assure the sales of taxed commodities. Among the excise commodities, special provision is made for alcoholic beverages and tobacco because of high sensitivity with respect to the revenue as well as negative externalities. They are controlled and supervised physically from their starting stage of manufacturing to last selling stage. The excise personnel are stationed in the factory to maintain controls of production and sales. The deployed persons have been responsible to control, supervise and monitoring the products. In respect of less sensible goods such as cement, soft drink and some plastic products they have been regulated by self-removal system. 4. License Required No one is allowed to manufacture, import, sell and store excisable goods without taking license. Likewise, the Act prohibits to import excisable services without having license. Person, firm or institutions who need such license may submit a prescribed application form before excise officer at concerned IROs. 5. Credit Claim Liquor/Beer producers are allowed to claim input tax credit for excise duty paid on raw materials used for providing excisable goods/services. Provision is made for an Administrative Review at IRD if the decision made by excise officer is not acceptable to the taxpayer. In such case, taxpayer has to submit and appeal within 35 days from the date of receipt of the decision made by excise officer. Taxpayer can approach to Revenue Tribunal if he is not satisfied with the Department`s decision. 6. Export is exempt from Excise tax. 7. Offences Failure to comply with the Excise Act shall be liable to penalties. In general, following are applicable to have committed offences : A. Engaged on manufacturing, selling and storing excise goods or providing excisable services without license. B. False statement or documents in connection with excise liability. C. Under reporting of excise liability. |