Which of the following defines 'excise duty'?

The definition of 'excise duty' pertains specifically to a tax imposed on particular goods, primarily those that are deemed to have a higher social cost, such as alcohol and tobacco. This form of taxation is levied at the point of manufacture or sale and is intended to both generate revenue for the government and discourage the consumption of substances that can lead to negative health effects or social issues.

This makes the second choice the correct answer, as it accurately captures the nature of excise duty as being targeted at certain goods rather than applying broadly to all imports, retail sales, or being a local tax charged to businesses. The focus on specific goods allows for the regulation of industry practices and the management of public health concerns, aligning tax policy with societal goals.

In contrast, the other options either incorrectly specify the application of excise duty, reflect a more generalized taxation structure, or pertain to local taxation mechanisms rather than the specific framework of excise duties.