CA Final – New
Syllabus – Indirect Taxes – November, 2007 Question Nos. 1, 6 and 9 are compulsory. Answer any two questions from
part A and any one question from part B. PART
– A Q
1(a) Briefly explain any two of the following with reference to the
provisions of the Central Excise Act, 1944 : (i) Manufacture and
processing (ii) Dutiability of site related activities (iii) Labelling
and branding activities. (b) Explain briefly the meaning of “Trade
parlance test” in matters relating to classification under the Central
Excise Act, 1944 and the Central Excise Tariff Act, 1985. (c) Discuss
the validity or otherwise of the following statements with brief
reasons: (i) An assessee would lose the benefit to pay duty in monthly
installments if he made a default in payment of duty by due date and the
same is discharged beyond period of 30 days from the due date in terms
of Rule 8 of the Central Excise Rules, 2002. (ii) Excise duty is payable
on intermediate goods, manufactured by factory A which are removed
without payment of duties of excise for use in the manufacture of
subject goods, namely machines, in factory B of a Large Tax Payer Unit
under Rule 12BB of the Central Excise Rules, 2002. (d) Answer briefly in
the context of refund of CENVAT credit under Rule 5 of the CENVAT Credit
Rules, 2004 the following. (i) Under what circumstances will the benefit
under the Rule be available for inputs or input services (ii) How is the
manufacturer or provider of output service allowed to utilize the CENVAT
credit in respect of inputs or the input services (4+4+6+6 = 20 marks) Q
2 (a) M/s KE Ltd., manufactured elastics with brand name of M/s XYZ
Ltd., who in turn used these elastics in the manufacture of other
excisable goods. These elastics were never sold in the open market. The
general public only received the manufactured excisable goods. M/s KE
Ltd., claimed the exemption based on value of clearances (SSI) in terms
of Notfn. No. 8/2003-C.E., dated 1.3.2003 on the ground that they did
not use the brand name on the final product and that the brand name was
used only in respect of the goods meant for captive consumption. This
claim was disputed by the Excise Department on the basis that it is
immaterial whether the ultimate customer got only the final product and
the use of the brand name even if not sold in the open market would
convey to the customer that the elastics had connection with the owner
of the brand name. Briefly discuss whether the stand of the Department
is valid in law? (b) With reference to the CENVAT Credit Rules, 2004
discuss briefly whether the following statements are correct or not. (i)
CENVAT credit cannot be taken on the inputs lying in stock on the date
when the final product becomes dutiable because the said product was
initially exempt (ii) CENVAT credit of duties of excise on inputs can be
availed on the basis of an invoice, while credit of service tax paid on
input services can be availed only upon payment of the full invoice
value including service tax. (iii) In case of transfer of ownership of
the factory by way of sale alongwith inputs and capital goods the
unutilized input credit shall lapse (c) Briefly answer with reference to
the provisions of the Central Excise Valuation (Determination of Price
of Excisable Goods) Rules, 2000 whether in the following cases any
notional interest on the advance received is includible in the value for
purpose of assessment : (i) Assessee sells his goods against full
advance payment to X. He also sells such goods to Y without any advance
payment at the same price per unit. (ii) A the assessee manufactures and
supplies certain goods as per design and specification of B. A takes 50%
of the price as advance against these goods and there is no sale of such
goods to any other buyer (5+6+4 = 15 marks) Q
3(a) M/s PQR Ltd. were granted a refund by the Appellate Authority under
the Central Excise Act, 1944. The jurisdictional Asst. Commissioner of
Central Excise has issued a notice under Section 11A of the Central
Excise Act, 1944 demanding the amount of refund on the ground that such
a refund is erroneous. Briefly discuss whether the action taken by the
Asst. Commissioner of Central Excise is valid in law. (b) Answer briefly
with reference to Rule 21 of the Central Excise Rules, 2002 (Regarding
remission of duty and destruction of goods) the following: (i) The
circumstances under which remission of duty may be ordered (ii) The
manner of destruction. (c) Briefly explain the procedure for removal of
goods by an hundred percent export oriented unit for domestic tariff
area. (d) Write a brief note on “electronic maintenance of records and
preparation of returns and documents” under the Central Excise Rules,
2002 (4+4+4+3 = 15 marks) Q
4(a) Section 35C(2) of the Central Excise Act, 1944 provides that the
Appellate Tribunal, may at any time within six months of the date of the
order, with a view to rectifying and mistake apparent from the record
amend any order passed by it. Briefly illustrate with two examples as to
what would constitute “mistake apparent from the record” for the
purpose of this provision (b) Briefly explain the provisions under the
Central Excise Act, 1944 relating to special audit in cases where credit
of duty availed or utilized is not within the normal limits (c) Write a
brief note on the following with reference to the Central Excise Act,
1944 and Rules made thereunder : (i) Cancellation of Export documents
(ii) Bond to be executed by 100% EOU’s for obtaining indigenous goods
without payment of duty (iii) Execution of bond by Government
undertaking (5+4+6 = 15 marks). Q
5(a) Discuss briefly the validity of the following statement with
reference to the powers of the Central Excise Department to launch
prosecution proceedings under Section 9 and Section 9AA of the Central
Excise Act, 1944 : “Confiscation and penalty in departmental
adjudication and prosecution in criminal proceedings are independent and
do not amount to double jeopardy.” (b) Write a brief note on the
procedure for warehousing of excisable goods removed from a factory or
warehouse with reference to Rule 20 of the Central Excise Rules, 2002.
(c) State briefly the procedure to be followed by the Authority for
Advance Ruling under Section 23D of the Central Excise Act, 1944 on the
receipt of an application (d) Write a brief note on the duty of excise
not levied or short levied as a result of general practice that is
notified as not recoverable under Section 11C of the Central Excise Act,
1944 (4+4+4+3 = 15 marks) PART –B Q
6(a) Explain briefly with reference to the provisions of the Customs
Act, 1962 any two of the following. : (i) “Import” and
“Importer” (ii) Meaning of “Assessment” (iii) “Home
consumption” and “Clearance for warehousing” (2 x 2 = 4 marks) Q6(b)
XYZ ice cream company imported cone containers made from printed
Aluminium foils which according to the assessee were classifiable under
Chapter 76 : “Aluminium and Articles thereof” in Section XV of the
first schedule to the Central Excise Tariff Act, 1975. According to the
revenue these were classifiable under Chapter 48 : “Paper and
Paperboard; articles of paperpulp, of paper or paperboard.” The
revenue’s view was that where composite goods are made of different
components and cannot be classified by reference to Rule 2 of the
Interpretative Rules, then the classification has to be according to the
principles contained in Rule 3, the classification has to be as if they
consisted of the material or components which gave them their essential
criteria. Since the contents of the material in this case was 70.7%
paper, that was the essential component of the cone containers for ice
cream and merit classification under Chapter 48. The chapter notes to
Chapter 48 read as follows: Notes : 1. -_
2. This chapter does not cover; (a) - -
- - (n) Metal foil
backed with paper or paperboard (Section XV). - - Discuss briefly
whether the action proposed by the Revenue is correct in law (4 marks) Q
6(c) Examine the validity of the following statements with reference to
the Customs Act, 1962 giving brief reasons (Answer any three). : (i)
Service charges paid to canalizing agent are not includible in the
assessable value of imports (ii) Design and engineering charges are
includible in the assessable value of the imported goods only if the
goods imported are specifically manufactured on the basis of the design
and engineering specification provided by the importer. (iii) Inspection
charges are not includible in the assessable value of the imported
goods, if contract does not specify for certification by an independent
agency (iv) Goods exempt from basic customs duty would automatically be
exempt from additional duty of customs (3 x 2 = 6 marks). Q6(d)
(i) With reference to Section 125 of the Customs Act, 1962 briefly
explain the following : (a) Option to pay fine in lieu of confiscation.
(b) Whether this fine once paid could be claimed as a refund if the
importer decides to abandon the goods (ii) Briefly explain the provision
of Section 89 of the Customs Act, 1962 with regard to supply of ship
stores (4 +2 = 6 marks) Q7(a)
M/s HIL imported copper concentrate from different importers. At the
time of import the seller issues a provisional invoice and the goods are
provisionally assessed under Section 18 of the Customs Act, 1962 based
on the invoice. When the final invoice is raised based on the price
prevalent in the London Metal Exchange on a predetermined date based on
the covenant in the contract between the buyer and seller the
assessments are finalized on such invoices. M/s HIIL had filed two
refund claims arising out of the finalization of the Bills of Entry by
the authorities on 1.3.2006 and on 15.3.2006. With effect from 14.7.2006
(Presidential assent on 13.7.2006) Section 18 of the Customs Act, 1962
was amended with the insertion of certain provisions in terms of which
it became necessary for the assessee to prove that they had not passed
on the amount to their customers. Based on this amendment the department
has rejected the refund claims. Discuss in the light of decided case
law, if any, whether the action of the department is correct in law? (b)
M/s RIL Ltd. claimed duty drawback in respect of its export products.
Over 97% of the inputs by weight of the product were procured
indigenously and were not excisable. All industry rates under the
Customs and Central Excise Duties Drawback Rules, 1995 were fixed taking
into account the incidence of customs duty on imported product inputs.
Explain briefly with reference to Rule 3(i)(ii) of the said rules
whether the claim of M/s RIL will merit consideration by the authorities
(c) In the context of Section 65 of the Customs Act, 1962 dealing with
waste or refuse during the manufacturing operations or other processes
done in the warehouse. : (i) Examine the validity of the following
statement with brief reasons: “If finished products are cleared for
home consumption on payment of appropriate import duty of customs, then
appropriate duty of customs should be levied on the imported goods
context in the waste or refuse.” (ii) Explain briefly “relevant
date” for determination of rate of duty leviable on the import
material content in the waste or refuse (5+4+6 = 15 marks) Q
8(a) Briefly explain the salient features of the Customs Act, 1962
relating to Special Economic Zones. (b) Explain briefly the provisions
of Section 28(1A) of the Customs Act, 1962 in respect of a person who
voluntarily deposits fully duty demanded along-with interest and
applicable penalty. (c) Write a brief note on the provisions of Section
28BA of the Customs Act, 1962 regarding property that may be attached
provisionally to protect the interest of revenue in certain cases (5 x 3
= 15 marks) PART
– C Q
9(a) Service Tax (Determination of Value) Rules, 2006 (Valuation Rules)
and Taxation of Services (Provided from outside India and received in
India) Rules, 2006 (Import Rules) came into force from 19.04.2006.
Answer the following with reference to the said Rules : (i) Expenditure
or costs incurred by the service provider as a “Pure agent” of the
recipient of service shall be excluded from the value of the taxable
service. Who is a ‘pure agent” under the Valuation rules? (ii) What
is the value of taxable service in the case of service provided from
outside India under the Valuation Rules? (iii) What are the three
categories specified in rule 3 of the Import Rules? (b) Answer the
following with reference to the Finance Act, 1994 and the Rules made
thereunder relating to Service tax : (i) Intimation regarding change in
details furnished by an assessee in Form ST-I. (ii) Cancellation of
registration certificate. (iii) Adjustment of excess amount paid toward
service tax liability for the subsequent period. (c) Answer any three of
the following with reference to the Finance Act, 1994 as amended
relating to applicability of service tax : (i) Manpower recruitment
agency services in respect of staff not contractually employed by the
recipient of service but who come under his direction. (ii) Business
support services in the context of “Outsourced services” (iii)
Construction of roads, airports, railways bridges, tunnels in the
context of “site preparation and clearance, excavation earth moving
and demolition services” (iv) Clearing and Forwarding Agent’s
Services (6+3+6 = 15 marks). CA Final – New
Syllabus – Indirect Taxes – May, 2007 Question Nos. 1, 6 and 9 are compulsory. Answer any two questions from
part A and any one question from part B. Part – A Q 1 (a) Briefly explain any two of the following with reference to the provisions of Central Excise Act, 1944 : (i) Adjudicating Authority (ii) Central Excise Officer (iii) Duty paid under protest. (b) What is the period of validity of registration certificate granted by the Appropriate Excise Authority? (c) Discuss the validity or otherwise of the following statements, with reasons : (i) Input cleared as such to a job worker on 01.10.2006, was not returned in 180 days, assessable value being Rs. 20,000, Excise duty @ 16.32%, 50% of the inputs were received on 1.04.2007. In this situation, no Cenvat will be allowed in the year ending on 31.03.2007. (ii) Captive consumption of excisable goods should always be valued on the basis of sale price of similar goods manufactured by others. (d) State the offences under Rule 25(1) of Central Excise Rules. (e) A2Z & Co., manufactured Shikai Powder. They purchased Shikai seeds, crushed them and sold the same. The assessee did not pay excise duty on such powder contending that such powder was not an excisable goods. However, the Central Excise department treated the said goods as excisable goods by classifying under the chapter heading “3305.99 - Cosmetic or toilet preparations, essential oil etc – preparations for used on the hair – other.” Discuss on the validity of the contention of the assessee. (4+2+6+4+4 = 20 marks) Q 2 (a) M/s P Ltd. manufactured concentrates of non-alcoholic beverages and sold it to various bottlers. The bottlers after processing the concentrates bottled the outcome and sold the same. Under the agreement between P. Ltd. and the bottlers, P Ltd. was required to advertise the finished products. Subsequently, the bottlers formed S Ltd. to work as a centralised agency for the advertisement of the finished products. The shareholders as well as the directors of S Ltd. were the representatives of the bottlers. Determine whether or not the expenses of advertisement incurred by S Ltd. to advertise aerated products manufactured by the third party i.e. bottlers, is includible in the assessable cost of concentrate manufactured by P Ltd. (b) Examine the validity of the following statements.(i) Purchased a plant for Rs. 1,16,320 cum-duty price. Excise duty rate 16.32% on 12.12.2006 and received the plant into the factory on 05.04.2007 Cenvat allowed will be only Rs. 8,160 for the year ended on 31.03.2007. (ii) An assessee purchased inputs weighing 400 tons. The duty paid on inputs was Rs. 4,000. During transit, 20 tons of the inputs were destroyed. The destroyed quantity of ‘inputs’ does not qualify to be ‘inputs’ within the meaning of Cenvat Credit Rules, 2004. (c) Explain the non-applicability of “Transaction value” with reference to Section 4 of Central Excise Act, 1944. (d) What is “Exempted goods” under Cenvat Credit Rules? (4+4+5+2 = 15 marks) Q 3 (a) The appellants were the manufacturers of rubber products. Some of the defective goods were returned by the buyers and the appellants took Cenvat credit of the duty originally paid under Rule 16 of Central Excise Rules, 2002. Defective goods were reprocessed, which activity however yielded only scrap and scrap was cleared on payment of duty. Department claimed that Cenvat credit taken by the appellants should be reversed since reprocessing did not amount to ‘manufacture’ whereas appellants argued that the process cannot be anything other than ‘manufacture’ in as much as the defective goods returned by their buyers were put to normal process of manufacture. Offer your comments to the appellants referring to decided case law. (b) What are the provisions regarding general exemption to SSI units? (c) M/s P. Ltd. used to label its products with a foreign brand and claimed exemption under a notification. The classification list was approved by the department after carrying out verifications and all returns were regularly filed. The invoice containing description of goods were also regularly approved by the department. The department denied the benefit of exemption to the assessee by invoking extended period of limitation under Section 11A on the ground that it failed to declare the particulars regarding affixing of labels. Is the department justified? (5+5+5 = 15 marks) Q 4 (a) Explain whether a person who is neither a producer nor a curer not a manufacturer of excisable goods, but he only stores such goods in a warehouse, can be called upon to pay the duties of excise on such goods? (b) “The value of price support incentives received from the raw materials supplier should be included in the assessable value of the final products”. Do you agree? Explain. (c) Briefly explain the procedure to be adopted in respect of exported goods subsequently re-imported and returned to factory. (d) Explain the concept of ‘Provisional Assessment’ under Rule 7 of the Central Excise Act, 2002. (3+3+4+5 = 15 marks). Q 5 (a) Discuss the power of Central Government to amend first and second schedules of Central Excise Tariff. (b) What would be the outcome, if retail price is not indicated or wrongly indicated at the time of removal? (c) State the non-application of provisions of unjust enrichment under Section 11B(2) of Central Excise Act, 1944. (d) State the powers of Settlement Commission under Section 32 of Central Excise Act, 1944 (3+3+4+5 = 15 marks). PART – B Q 6 (a) Explain briefly with reference to the provisions of the Customs Act, 1962 any two of the following : (i) Conveyance (ii) Dutiable goods (iii) India. (b) State the situation in which the proper officer is authorized to issue show-cause notice under Section 28 of Customs Act, 1962 and also time limit. (c) The assessee M Ltd. entered into a joint venture with a foreign collaborator N for promotion and selling antennas, accessories and other communication equipment. The agreement between them indicates that N owned majority of equity shares in M Ltd. Technical services were provided by N to M Ltd. for various functions that were carried out in respect of manufacture of antenna system in India, for which technical service fee was paid to N by M Ltd. Based on the above facts, the department opined that both M Ltd. and N were related person in terms of Rules 2(2)(1) and 2(2)(iv) of the Customs Valuation (Determination of Price of Imported goods) Rules, 1988 and that the technical fee paid by M Ltd. was includible in the assessable value of the imported components in terms of Rule 9(1)(c) of the Rules. Decide referring to decided case law. (d) From the following particulars, calculate assessable value and total custom duty payable? (i) Date of presentation of bill of entry : : 20.06.2006 [Rate of BCD 25%; Exchange Rate : Rs. 43.60 and rate notified by CBEC Rs. 43.80]. (ii) Date of arrival of goods in India: 30.06.2006 [Rate of BCD 20%; Exchange Rate : Rs. 43.90 and rate notified by CBEC Rs. 44.00]. (iii) Rate of Additional Customs Duty : 16%. (iv) CIF value 2,000 US Dollars; Air Freight 500 US Dollars, Insurance cost 100 US Dollars [Landing charges not ascertainable]. (v) Education cess applicable 2%. (vi) Assume there is no special CVD (4+5+5+6 = 20 marks) Q 7 (a) After visiting USA, Mrs. & Mr. X brought to India a lap-top computer valued at Rs. 80,000, personal effects valued at Rs. 90,000 and a personal computer for Rs. 52,000. What is the customs duty payable? (b) Write a brief note on the following with reference to the Customs Act, 1962: (i) Remission of duty on imported goods lost; (ii) Pilfered goods. (c) State the requirements to be satisfied to accept ‘transaction value’ under rule 4(2) of Customs Valuation Rules (3+6+6 = 15 marks). Q 8 (a) Enumerate the penalties in respect of improper exportation of goods under Section 114 of Customs Act. (b) State the difference between transit and transshipment of goods under the provisions of Customs Act. (c) State the ingredients in the case of seizure under Section 123 of Customs Act. (d) Explain the provisions under Section 15 of the Customs Act for determining the rate of duty and tariff valuation of imported goods (3+4+4+4 = 15 marks). PART – C Q 9 (a) State whether in the following cases service tax is payable, with reason (i) Temporary transfer of any intellectual property right. (ii) Canteens in office run by the canteen contractor providing service directly to employees/workmen. (iii) Business auxiliary service provided by commission agents in relation to sale of agricultural produce. (b) M/s TCCL, providing management consultancy to its client, do not maintain any separate accounts and have paid Rs. 1,00,000 as service tax and excise duty towards input services and input material/capital goods used by them. They have used the inputs for partially exempted and partially taxable services. They are now providing the output services for which current tax liability is Rs. 1,40,000. How much credit out of Rs. 1,00,000 can be availed by them for paying output service tax liability, if they do not maintain any separate accounts. (c) Mr. AJAR, a Charted Accountant, raised an Invoice for Rs. 28,060 (25000+3060 service tax) to a client on 20.01.2007. The client, however, has paid a lump-sum of Rs. 26,000 on 28.04.2007 for full and final settlement: (i) How much service tax Mr. AJAR has to pay and when does this tax become due for payment? (ii) What will be his liability, if client refuses to pay service tax and pays only Rs. 25,000 in total? (d) (i) The service provider is abroad. He renders service to a subsidiary of an Indian Company located abroad. Payment to him is done by holding Indian Company. Does this attract service tax? (ii) What do you understand by ‘Centralised Registration’? (3+4+4+4 = 15 marks).
CA Final – New Syllabus – Indirect Taxes – November, 2006 Question Nos. 1, 6 and 9 are compulsory. Answer any two questions from part A and any one question from part B. PART – AQuestion Nos. 1, 6 and 9 are compulsory. In addition, thereto, Answer any two questions from Part—A and one question from Part—B. PART—A Q 1(a) Briefly explain any two of the following with reference to the provisions of the CENVAT Credit Rules, 2004: (i) Job work (ii) Principal inputs (iii) Deemed Cenvat Credit (2 x 2 = 4 marks) (b) Briefly examine the correctness or otherwise of any two of the following statements with reference to the Central Excise Act, 1944 giving reasons to support your answers : (i) Parts used for repair or replacement during warranty period are excisable. (ii) In case of samples distributed free, valuation should be adopted on the basis of Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 i.e. cost of production plus 10%. (iii) Exemption from duty does not mean exemption from registration (3 x 2 = 6 marks).(c) M/s. Super Pipes Ltd. is engaged in the manufacture of m.s. galvanized pipes. The excise department has required the assessee to include the cost of galvanization in the assessable value of the m.s. galvanized pipes for the purposes of determination of excise duty. The assessee claims that as the process of galvanization does not amount to manufacture, the cost of galvanization is not includible in the assessable value of the said pipes made from H.R. coils. Briefly discuss whether the stand taken by the assessee is correct with reference to the provisions of the Central Excise Act, 1944 (5 marks). (d) "Everything that is sold is not necessarily a marketable commodity chargeable to excise duty under the provisions of the Central Excise Act, 1944." (5 marks) Q2.(a) Answer in brief the following questions relating to provisions made under rule 6 of the Central Excise (Removal of Goods at Concessional Rate of Duty for manufacture of Excisable Goods) Rules, 2001 : (i) What will be the consequences in case the goods received at concessional rate are not used for the intended purpose ? (ii) Whether a manufacturer receiving the subject goods can return such goods to the original manufacturer. (iii) When will the subject goods be deemed as not having been used for the intended purpose (2 x 3 = 6 marks) (b) Discuss briefly whether refund effected by the Central Excise Department pursuant to orders of court in respect of a bank guarantee towards disputed excise duty encashed by the department, would be subject to the provisions of Section 11B of the Central Excise Act, 1944 relating to "unjust enrichment." (4 marks) (c) A manufacturer of cameras sells leather cases/soft cases and instruction manuals along with the cameras. The cost of such cases and manuals were being charged separately apart from the cost of the camera. The excise department has claimed that the cost of such cases and manuals should be included in the assessable value of the camera. According to the excise department as per Rule 5 of the Interpretative Rules for Central Excise Tariff brought into force from 28-2-2005, cases for camera, musical instruments, drawing instruments, necklaces etc. specially shaped for that article, suitable for long-term use will be classified along with that article, if such articles are normally sold along with such cases. Examine briefly with the help of decided case law, if any, whether the stand taken by the department is correct in law (5 marks) Q 3(a) Briefly explain the provisions relating to compounding of offences with reference to section 9A of the Central Excise Act, 1944 and Rule 6 of the Central Excise (Compounding of Offences) Rules, 2005 dealing with the power of the Compounding authority (3 marks).(b) M/s. Solid Cement Ltd., is engaged in the manufacture of Cement. Explosives are used for blasting the mines in order to excavate limestone, which is used in the manufacture of cement/clinkers in the factory situated at some distance away from the mines. Cenvat Credit on explosives has been denied by the excise department on the ground that the explosives are not used as inputs "within the factory of production". You are required to advise with reference to the Cenvat Credit Rules, 2004 whether the stand taken by the department is correct. (c) A Small Scale Industrial unit (SSI) is required to pay the following Central Excise duties by January 15, 2006 for clearances effected from its factory in respect of final products manufactured during the month of December, 2005 - Basic Excise Duty (B.E.D.) : Rs. 36,000; Special Excise Duty (S.E.D.) : Rs. 18,000; National Calamity Contingent Duty (N.C.C.D.) : Rs. 1,000; Education Cess (E.C.) : 2% of B.E.D. + S.E.D. + N.C.C.D. Balances available as credit at the beginning of the month i.e. December, 2005 were as follows : B.E.D. : Rs. 24,000, N.C.C.D. Rs. 2,000, E.C. Rs. 600. No inputs were received during the month. However, certain inputs were received on January 1, 2006 on which total duty paid by the suppliers of input was as follows : B.E.D. : Rs. 16,000, E.C. : Rs. 320. Excise duty paid on Capital goods received during the month was as follows : B.E.D. : Rs. 40,000, E.C. : Rs. 800. For the month of December, 2005 you are required to determine : (i) the credit available for utilisation; (ii) the permissible extent to which such credit available may be utilised against payment of B.E.D., S.E.D., N.C.C.D. and E.C; and (iii) the B.E.D., S.E.D. and E.C. payable through account current (P.L.A.) (4+2+2 = 8 marks). Q4 (a) Write a brief note on the powers of review to be exercised by Committee of Chief Commissioners under section 35B and section 35E of the Central Excise Act, 1944 (3 marks)..(b) With regard to exports under the Central Excise Act, 1944 write a brief note on : (i) Who is authorised to sanction rebate claim ? (ii) The time limit for the filing of such rebate claim (2x2 = 4 marks).(c) Write short note on "submission of list of records" under Rule 22(2) of the Central Excise Rules, 2002 (4 marks) (d) With reference to Rule 8(3) and Rule 8(3A) of the Central Excise Rules, 2002 explain in brief the consequences, if duty is not paid fully on the due date or within 30 days after the due date (4 marks). Q5 (a) Briefly comment with reasons on any two of the following statements : (i) Section 35C(2A) of the Central Excise Act, 1944 curtails the power of the Appellate Tribunal to grant stay beyond six months. (ii) Two factories located in the same premises are to be considered as one factory for the purpose of arriving at the "aggregate value of clearances" in terms of Small Scale Exemption Notification No. 8/2003-C.E., dated 1-3-2003. (iii) The Central Excise Officer in-charge of a warehouse may permit export without physical storage of the goods in the warehouse (3 x 2 = 6 marks).(b) (i) Briefly explain with reference to Section 11A of the Central Excise Act, 1944 as to who is authorised to issue a show cause notice (ii) A show cause Notice under section 11A of the Central Excise Act, 1944 was issued by Superintendent of Central Excise and the case was adjudicated by a Deputy Commissioner. This was inspite of their being in existence a circular of the Central Board of Excise and Customs to the effect that the same ought to be done by a Commissioner. Explain briefly whether the action in the present case is sustainable in law (2+3 = 5 marks)..(c) Explain briefly the provisions relating to charging of interest under section 11DD of the Central Excise Act, 1944 (4 marks). PART—B Q6 (a) Explain briefly with reference to the provisions of the Customs Act, 1962 any two of the following : (i) Customs port (ii) Goods (iii) Stores (2 x 2 = 4 marks) (b) Examine briefly the powers of the department, if it is not satisfied with an order made under section 47 of the Customs Act, 1962 pursuant to which goods have been cleared. (3 marks).(c) An importer imported certain inputs for manufacture of final product. A small portion of the imported inputs were damaged in transit and could not be used in the manufacture of the final product. An exemption notification was in force providing exemption in respect of specified raw materials imported into India for use in manufacture of specified goods, which was applicable to the imports made by the importer in the present case. Briefly examine whether the importer could claim the benefit of the aforesaid notification in respect of the entire lot of the inputs imported including those that were damaged in transit (3 marks).(d) Write short notes on the following with reference to the provisions of the Customs Act, 1962 : (i) Relevant dates for submission of refund application (ii) Prohibition and regulation of drawback (3 x 2 = 6 marks).(e) State briefly the provisions of section 17 of the Customs Act, 1962 relating to assessment of goods (4 marks). Q7 (a) What will be the dates of commencement of the definitive anti-dumping duty in the following cases under section 9A of the Customs Tariff Act, 1975 and the Rules made thereunder : (i) where no provisional duty is imposed; (ii) where provisional duty is imposed (iii) where anti-dumping duty is imposed retrospectively from a date prior to the date of it of provisional duty (2 x 3 = 6 marks).(b) M/s. Pure Energy Ltd. is engaged in oil exploration and has imported software containing seismic data. The importer is entitled to exemption from Customs duty subject to the condition that an "essentiality certificate" granted by the Director General of Hydrocarbons is produced at the time of importation of the goods. The certificate was not made available to the importer within a reasonable time by the Director General of Hydrocarbons. The Customs department rejected the importers claim for exemption. Examine briefly whether the department's action is sustainable in law (4 marks)..(c) (i) Briefly explain the powers of officers of Customs under section 5 of the Customs Act, 1962. (ii) With reference to section 6 of the Customs Act, 1962 examine briefly whether the Central Government could entrust any functions of the Central Board of Excise and Customs or any officer of Customs to any officer of any other department (2+3 = 5 marks).. Q 8. (a) Write a brief note on any two of the following with reference to the Customs Act, 1962 : (i) Fine and Penalty (ii) Rules and Regulations (iii) Power to search persons under section 100 and section 101 (3 x 2 = 6 marks).(b) Explain briefly if the Authority for Advance Ruling could entertain applications from residents with specific reference to section 28E(C) of the Customs Act, 1962 (3 marks)..(c) Write a brief note on "remission of duty in case of volatile goods" under section 70 of the Customs Act, 1962 (3 marks).(d) Briefly explain "standard unit of quantity" with reference to the First Schedule to the Customs Tariff Act, 1975 (3 marks). PART—C Q 9(a) Export of Services Rules, 2005 were made effective from March 15, 2005. Answer the following questions with reference to the said Rules :(i) What are the three categories of taxable services dealt with under Rule 3 ? (ii) What are the three options available to exporter of taxable services under these Rules for claiming exemption or rebate of service tax ? (3 x 2 = 6 marks).(b) With reference to the Finance Act, 1994 as amended and the rules made thereunder relating to service tax, state whether registration is required or not in the case of the following persons or class of persons : (i) Input service distributor (ii) Small service provider whose aggregate value of taxable service is Rs. 3,50,000 per annum (iii) Indian based recipient of taxable services provided from abroad by a non-resident not having any place of business in India (1 x3 = 3 marks).(c) Answer any three of the following with reference to the Finance Act, 1994 as amended relating to applicability of service tax : (i) Entrance fee and life membership fee paid by members of a club providing various services and facilities and organising get togethers and functions for its members (ii) Construction of residential complex having ten bungalows (iii) Selling of SIM (Subscribers Identification Module) Card and the process of activation thereof by mobile cellular telephone companies (iv) Study material or written test provided by Commercial Training and Coaching Centre (2 x 3 = 6 marks) CA Final – New Syllabus – Indirect Taxes – May, 2006 Question Nos. 1, 6 and 9 are compulsory. Answer any two questions from part A and any one question from part B. PART – AQ 1 (a) Briefly explain any two of the following with reference to the provisions of Central Excise Act, 1944 : (i) Wholesale dealer (ii) Factory (iii) Dutiability of Waste and Scrap. (b) With reference to Cenvat Credit Rules, 2004, discuss giving reason whether the following statements are True or False: (i) Credit of duties of excise on inputs will not be available if inputs are used in intermediate product, which is exempt from duty, even though the final product is dutiable (ii) A manufacturer can sell the inputs on which Cenvat has already been availed of, as they are, provided he pays the amount equal to the credit availed. (iii) A manufacturer is eligible for Cenvat Credit in the cases stated below: (1) Inputs used in trial runs (2) Materials used for maintaining factory building (c) With reference to Central Excise Act, 1944 and the rules thereunder, whether the following persons require registration or not? Explain briefly : (i) Persons, who manufacture excisable goods chargeable to ‘nil’ rate of duty (ii) Central Government undertakings manufacturing excisable goods (iii) 100% EOU. (d) ABC Company imported medicines in pallets with one big box containing assorted medicines in smaller units which were, then, repacked in thermocole boxes of different sizes which again were put into cardboard boxes. The cardboard boxes were in turn labelled containing, interalia, the name of the medicine, the name of the manufacturer, the quantity, batch no., manufacturing date, expiry date and name of the marketing agency. The department relying upon note 5 to chapter 30, claimed that the activities as aforesaid amounts to manufacture i.e. bulk pack to retail pack. Decide whether the above activities tantamount to manufacture (4+6+6+4 = 20 marks). Q 2 (a) The assessee was a manufacturer of I. C. Engine parts like piston and gudgeon pins. He used to procure from the market piston rings and circlips and supply along with the items that he had manufactured to the buyers. He was also selling these procured items separately. The department contended that those bought-out items and supplied along with the manufactured items were part of piston assembly and therefore, their value should be included with the value of the piston assemblies cleared by him. But, the assessee contented that the piston rings and circlips were all different part of I. C. Engine and therefore they are not to be considered as parts of another item. Decide whether the contention of the department is correct or not (b) Explain whether an application from an NRI for advance ruling under Sec. 23C regarding determination of whether a certain process would amount to manufacture is maintainable? (c) State the procedure for valuing excisable goods that are to be sold from Depot/branch or a consignment agent under Central Excise Valuation Rules, 2000 (6+4+5 = 15 marks). Q 3 (a) Explain the provision regarding maintenance of daily stock account of stored goods under rule 10(1) of Central Excise Rules. (b) Write a short note on the procedure in respect of exported goods subsequently re-imported and returned to factory (c) Comment on the following: (i) Excise department cannot challenge the responsibility of MRP printed on the package (ii) If any excisable goods are exempted from duty of excise absolutely, the manufacturer of such goods will be bound to avail of the exemption (iii) SSI units whose turnover exceeds Rupees 90 lakhs per annum have to give a declaration in the prescribed form (iv) Annual Financial Information Statement (ER-4) is required to be submitted by the assessees paying duty of Rs. 4 crores or above per annum through PLA (d) What is CT-1 certificate? [4+5+4+2 = 15 marks] Q 4 (a) A SSI unit has effected clearances of goods of the value of Rs. 475 lacs during the Financial Year 2005-06. The said clearances include the following: (i) Clearance of excisable goods without payment of excise duty to a 100% EOU unit. Rs. 120 lacs (ii) Job work in terms of notification no : 214/86 CE, which is exempt from duty – Rs. 75 lacs (iii) Export to Nepal and Bhutan – Rs. 50 lacs (iv) Goods manufactured in rural area with the brand name of the others – Rs. 90 lacs. Examine with reference to the notification governing SSI, under the Central Excise Act whether the benefit of exemption would be available to the unit for the Financial Year, 2006-07 (b) (i) Whether provisional assessment can be initiated by the department of excise? (ii) What is the remedy available with the department in case Assessing Officer does not find the self-assessment filed by the assessee in order? (c) State the provisions relating to confiscation and penalty under Cenvat Credit Rules, 2004 [5+5+5 = 15 marks]. Q 5 (a) Write a note on duty payment ‘Under Protest’ with reference to the Central Excise Act, 1944 and the rules made thereunder (b) What are the orders that are appealable to Supreme Court under Central Excise Act, 1944? (c) Explain briefly the provisions relating to ‘Special Audit’ in certain cases under Section 14A of the Central Excise Act, 1944. (d) What is Consumer Welfare Fund? How is this fund utilised? [3+3+5+4 = 15 marks] Part – BQ 6 (a) Briefly explain with reference to the provisions of the Customs Act, any two of the following: (i) Indian customs waters (ii) Person-in-charge (iii) Foreign going vessel or aircraft (b) M/s AJ imported some inputs and paid Basic Customs duty Rs. 5 lakhs, surcharge on customs duty Rs. 50,000 and CVD Rs. 1 lakh. Calculate the amount that he can claim as Cenvat credit. Would it make any difference, if the assessee is not a manufacturer, but a service provider? (c) Explain the meaning of : (i) Similar goods (ii) Identical goods (d) Briefly elucidate the meaning of “Importer” under the Customs Act. (e) (i) If the applicant does not co-operate or obtains order by fraud, whether the Settlement Commission is empowered to send the case back to the officer for further action as per law? Answer in the light of amended provisions of Sec. 127 MA of Customs Act, 1962 (ii) What is meant by ‘Boat notes’? (4+3+6+2+5 = 20 marks] Q 7 (a) What is the purpose of Interpretation rule regarding Customs Tariff? Do they form part of the tariff schedule? Explain the ‘Akin Rule’ of interpretation (b) What do you understand by first appraisement and second appraisement systems under the Customs Act 1962? (c) State the procedure for clearance of goods imported by post (d) Can the rate of drawback by exporter be determined provisionally? Briefly explain [4+4+5+2 = 15 marks]. Q 8 (a) M/s XYZ Ltd. were liable for the duty assessed and payable on certain import which, it paid under protest and filed a claim for refund of duty on the ground that duty had been wrongly levied. On rejection of claim for refunds, the assessee filed an appeal before Tribunal which was also dismissed on the ground that as no appeal had been filed against the assessment order, the refund claim was not maintainable. Assessee seeks your advice for remedy. Discuss whether the stand taken by the Tribunal is correct (b) Write a note on warehousing period under Section 61 of the Customs Act, 1962. (c) What is residual method of valuation? Bring out your answer with reference to the Customs Valuation (determination of price of Imported Goods) Rules, 1988 [5+4+6 = 15 marks]. Part – CQ 9. (a) Explain whether the following activities come under the service tax liability (i) Reimbursement of expenses like Cess, Customs duty, port dues claimed by Customs Housing Agents (ii) Surveillance fee collected by a Credit rating agency (iii) Transporters who are rendering “Express Cargo Service” for door delivery (b) (i) M/s Renu Consultants are a labour contractor of manpower to M/s. Sanu Creations. They charge to the principal employer for the wages of their labour which amounts to Rs. 1,20,000 plus their service charges of Rs. 12,000 for arranging the labour. The issue is whether service tax is payable on the gross amount charges by them or only their charges for labour. Examine the case and advice suitably (ii) For providing Beauty Treatment Services, a parlour uses materials such as cosmetics and toilet preparations. Whether the cost of such materials will be included in the value of taxable service? Whether any abatement is admissible on account of the value of materials consumed in providing the service? (c) (i) What is the time limit under Rule 4A for raising/issuing an Invoice for services? (ii) What is the due date for monthly/quarterly payment of Service tax? (6+7+2 = 15 marks] C.A. FINAL – Group II - (New Syllabus) November 2005 Question Nos 1, 6 and 9 are compulsory. PART – AQ 1 (a)(i) Discuss in brief the concept of ‘Deemed Manufacture’. (ii) TCL purchases duty paid metal rods and draws them into wire of a thinner gauge. Both the items fall under different tariff headings. The assessee claims that the process undertaken by him does not amount to manufacture. You are required to advise with reference to the present position of law in this regard (b) With reference to Cenvat Credit Rules, 2004, discuss giving reason whether the following statements are true or false (i) Credit of duties of excise on inputs can be availed irrespective of whether payment is made or not against the invoice, whereas credit of service tax on input services can be availed only after making payment of the invoice (ii) An input service distributor is comparable to dealers under the CENVAT Scheme of inputs and capital goods (iii) The manufacturer shall not be allowed to transfer unutilized input credit in case of transfer of ownership of the factory by way of sale along with the inputs and capital goods (iv) A manufacturer availing Cenvat Credit on inputs without ensuring that excise duty indicated in the invoice has been paid on such inputs, is liable to a penalty. (c) ABC, an assessee availing the SSI exemption scheme paid Central Excise duty of Rs. 10,000 for the goods cleared in the month of March, 2005 on April 15, 2005. Discuss whether any interest will be charged from ABC for late payment of duty. If yes, what will be the interest liability? (8+8+4 = 20 marks) Q 2 (a) (i) Define retail sale price in the light of provision of Section 4A of Central Excise Act, 1944 (ii) What are the conditions under which MRP based valuation shall apply under Central Excise (iii) What legal / penal actions can be taken in case the retail sale price is not mentioned or is unduly tampered after the removal? (b) Asha Ltd., supplies raw material to a job worker Kareena Ltd. After completing the job-work, the finished product of 5,000 packets are returned to Asha Ltd. putting the retail sale price as Rs. 20 on each packet. The product in the packet is covered under MRP provisions and 40% abatement is available on it. Determine the assessable value under Central excise law from the following details : * Cost of Raw material supplied Rs. 30,000/- * Job worker’s charges including profit Rs. 10,000/- * Transportation charges for sending the raw material to the job worker Rs. 3,000/- * Transportation charges for returning the finished packets to Asha Ltd. Rs. 3,000/- (12+3 = 15 marks) Q 3. (a) Answer in brief the following questions relating to export without payment of duty other than to Nepal and Bhutan under Rule 19 of the Central Excise Rules, 2002: (i) What is the type of bond to be executed? Who is exempted from furnishing such bond? (ii) What is the export document for the export clearance? How many copies are required to be prepared for it? (iii) Is it necessary to prepare an invoice also? If yes, how should it be prepared? (iv) What will be the duty payable, if goods are not exported within six months after clearance? (b) Does the bar of unjust enrichment apply to all types of refunds? Does the refund of penalty attract such bar? (c) State the various circumstances when goods are liable for confiscation under the Central Excise Law. Can the assessee get back the confiscated goods and if so how? (8+2+5 = 15 marks) Q 4 (a) Discuss whether remission of duty shall be granted or not, in the following cases, under the Central Excise Rules, 2002 : (i) Excisable goods manufactured in the factory are claimed by the manufacturer as unfit for consumption or for marketing (ii) Duty paid goods were damaged due to breakage in handling (iii) Finished goods entered in Daily Stock Account (DSA) were stolen from the factory (b) With reference to Rule 12(2) of the Central Excise Rules, 2002, explain in brief the main provisions of the Return in form E.R.-4, to be filed with the Central Excise Department by an assessee. What is the maximum penalty leviable for non-submission or late submission of E.R.-4 return? (c) Write a brief note on power of rectification of mistakes given to Appellate Tribunal under Section 35C(2) of Central Excise Act. Whether power of rectification includes the power to review the order also? (6+4+5 = 15 marks) Q 5 (a) Write short notes on the following : (i) Place of Removal (ii) Interest u/s 11AB (b) What is Personal Ledger Account or PLA? How is it maintained? (c) Briefly explain the procedure for removal of goods by a unit which is an 100% EOU for Domestic Tariff Area (6+5+4 = 15 marks) Part B Q 6. (a) Explain briefly with reference to the provisions of the Customs Act, 1962 any two of the following : (i) Adjudicating Authority (ii) Customs area (iiii) Smuggling (b) State briefly the provisions of refund on anti-dumping duty in certain cases. (c) Assessable value of an item imported is Rs. 1,00,000/-. Basic Customs duty is 20% and additional duty of customs is 16%, education cess is 2% on duty. Compute the amount of total customs duty payable. Also state the amount of credit available to importer and how can it be utilized by him (d) Your client loaded a Machine on the vessel for export. He has paid import duty and central excise duty on the components used in the manufacture. The vessel set sail from Mumbai, but runs into trouble and sinks in the Indian territorial waters. The customs department refuses to grant duty drawback for the reason that the goods have not reached their destination. Advise your client citing case law, if any. (e) India Car Co. is manufacturing passenger cars and has entered into a joint venture agreement and collaboration with Videshi Car Co. - - India Car Co. imported from Videshi Car Co. a shipment of 24 CKD packs (completely knocked down condition) of passenger car components. They filed Bill of Entry for clearing the goods, which were claimed to be components of motor cars. They also claimed benefit of a Notification exempting components, including components of motor cars in semi-knocked down packs and completely knocked down packs. The Adjudicating Authority held that the imported components being complete cars in CKD packs, had the essential character of the finished product and as such the consignment were to be treated as Motor Cars and not components. It was also held that India Car Co. was not entitled to the benefit of the notification as the notification was only for components. The questions for consideration are : (i) Whether the CKD packs imported into the country could be considered to be Motor Cars for the purpose of classification and clearance? (ii) Whether India Car Co. were entitled to the benefit of exemption notification? (4+2+4+4+6 = 20 marks) Q 7 (a) Explain the Doctrine of unjust enrichment with respect to refund of duty. Are there any exceptions to it and if so enumerate them? (b) When is the Redemption fine imposed? Whether this fine under Section 125 of the Customs Act, once paid, be claimed as refund, in case the importer decides to abandon the goods? (c) Explain briefly the provisions regarding drawback allowable on re-export of duty paid goods as such (5+5+5 = 15 marks) Q 8 (a) What is the crucial/relevant date for determination of rate of duty under Customs Act in following cases? (i) Clearance of Baggage (ii) Goods cleared for home consumption from a warehouse under Section 68 of the Customs Act (iii) Goods entered for export under Section 50 (b) Write short notes on the following with reference to the Customs act, 1962 : (i) Interest on drawback (ii) Power to arrest (c) Briefly discuss the provisions of the Customs act, 1962 regarding rejection of an application for advance ruling (6+6+3 = 15 marks) PART – CQ 9(a) (i) Certain abatement /exemption of the gross amount charged, has been notified, for computing the value of some taxable services. What are the conditions to be fulfilled to avail such partial exemption? (ii) What is the percentage of abatement granted in the following cases? (i) Services provided by a tour operator (ii) Services provided by an outdoor caterer supplying food also (iii) A Commercial concern providing construction service where the gross amount charged includes the value of goods and material (iv) Goods transport agency providing taxable service and paying service tax itself (b) Enumerate the specified services, other than accounting and auditing, provided by a practicing Chartered Accountant, liable to service tax (c) Hotel Marudhar Palace charges 10% of the bill amount as service charges and Department has asked them to pay Service tax on it. The assessee has submitted that the amount @ 10% collected from customers is subsequently disbursed among the staff, therefore it is not part of their income and cannot be included in the gross amount charged by them. Examine the case and advise suitably (6+6+3 = 15 marks) C.A. FINAL – Group II - (New Syllabus) May 2005 Question Nos 1, 6 and 9 are compulsory. Part A Q 1 (a) Briefly explain any two of the following with reference to the provisions of Cenvat Credit Rules, 2002: (i) Exempted goods (ii) Final products (iii) First stage dealer (b) What are the situations where transaction value under Section 4 of the Central Excise Act does not apply (c) A trader supplies fabrics to independent processor. Cost of fabrics is Rs. 1,150. The processor charges Rs. 450 which includes Rs. 350 as processing charges and Rs. 100 as his profit. After processing goods are sent back to the trader, who sells them at Rs. 1,800. Transport charges for receiving goods at the premises of the processor is Rs. 50 and the transport charges for sending goods after processing is Rs. 60. Please determine the assessable value of the goods under Section 4 of the Central Excise Act. (d) Before 1.3.2003, light diesel oil was one of the inputs as per the definition of input given in Cenvat Credit Rules. M/s Rim purchased duty paid light diesel oil in January, 2003 and availed of Cenvat Credit. On 4.1.2003, when input definition was amended to exclude LDO, department asked the Company Rim to reverse the amount of Cenvat Credit in respect of the stock of LDO with them as on 1.3.2003. Advise M/s Rim as whether they have to reverse the credit? (The date 4-1-2003 seems to be wrong. Correct date should be 1-3-2003)(4+4+6+6 = 20 marks) Q 2 (a) Explain briefly with reference to the provisions of the Central Excise Act the term “Deemed Manufacture”. (b) Discuss the provisions of the Central Excise Act relating to collection of amount by a person from his buyer in Excess of the Duty assessed or determined and paid on any excisable goods. (c) When a person shall be deemed to be related person for the purpose of valuation under the Central Excise Act. (d) Describe Power to Summon persons under the Central Excise Act (3+4+4+4 = 15 marks). Q 3 (a) Is there any exception to the Rule that Central Excise Duty is payable by a producer or manufacturer of goods on removal thereof from the factory and duty is payable by someone else? (b) What are the dates for determination of rate of Central Excise Duty under Central Excise Rules, 2002. (c) Please discuss the manner of payment of duty under Central Excise Rules, 2002 (Rule 8 only). (d) M/s SYL purchase film from the manufacturer thereof on payment of appropriate Central Excise Duty. They undertake the processes of Lamination/metallisation of the said film. The department directs them to pay Central Excise Duty as the processes undertaken by them amount to manufacturer (The word should be ‘manufacture’). Please offer your comments with the help of decided case law (2+3+4+6 = 15 marks). Q 4 (a) Does the Maxim “Latter the Better” apply in classifying the excisable goods? (b) Mention briefly the provisions regarding export under bond to Nepal where payment of duty is in freely convertible currency. (c) Deputy Commissioner Central Excise passes an adjudication order classifying the goods manufactured by MTZ under heading 85.42 and charges duty @ 16% Ad Valorem. MTZ pays the duty without challenging the adjudication order. After 4 months they realise that partial exemption under a notification was available to goods manufactured by them. They file a claim for refund of duty paid in excess on the ground that benefit of exemption can be claimed at any time. Are MTZ entitled to the refund of duty claimed in time (Note – Presume that principle of unjust enrichment does not apply) (3+6+6 = 15 marks) Q 5 (a) In what circumstances additional evidence can be produced by an appellant before the Commissioner Appeals (Central Excise)? (b) M/s RKR Manufacture Footwear bearing the brand name “Lotus” which is owned by M/s. Lotus Industries Ltd. for manufacture of detergent powder. When the department disallowed the benefit of Small Scale exemption under Notification No. 9/2003-C.E. on the ground that their goods are bearing brand name of another person, M/s R.K.R. contended that M/s Lotus Industries Ltd. owns brand name ‘Lotus’ only for detergent power and not for footwear. Decide the case with reasons and mention case law, if any. (c) “Mere selling of a commodity does not mean it is marketable”? Elucidate (5+5+5 = 15 marks) Part – B Q 6 (a) Briefly explain with reference to the provisions of the Customs Act any two of the following : (i) Entry (ii) Prohibited goods (iii) Warehouses. (b) A material was imported by air at CIF price of 5,000 US$. Freight paid was 1,500 US$ and insurance cost was 500 US$. The banker realized the payment from importer at the exchange rate of Rs. 45 per dollar. Central Board of Excise and Customs notified the exchange rate as Rs. 44.50 per US$. Find the value of the material for the purpose of Levying duty. (c) Discuss the provisions regarding ‘Transit of Goods’ and ‘Transshipment of goods’ without payment of duty under the Customs Act. (d) State the circumstances under which a revision petition can be filed before the Central Government under the Customs Act. (e) Write a note on project import and mention eligible projects (4+4+4+4 = 16 marks) Q 7 (a) Explain with reference to the Customs Act (i) Conditions for filing application to settlement commission. (ii) Service of order etc. under Section 153 of the Customs Act. (b) Mention the orders against which appeal lies to the Supreme Court under Section 130E of the Customs Act. (c) Briefly explain the time limit for issuing show cause notice for demanding customs duty short paid (3+2+5+5 = 15 marks). Q 8 (a) When the ship on its arrival from Dubai was searched by the Customs Officer, they found 2,000 biscuits of Gold kept concealed in the ceiling of one of the unoccupied Cabin. The Chief cook of the ship admitted the concealing of the Gold. The Captain of the ship deposed in his statement that he alongwith Chief Engineer and Chief Officer had inspected the vessel for contraband and inspection did not reveal anything. No Evidence was also found that captain was involved in the smuggling of Gold. Discuss whether the ship is liable to confiscation under the Customs Act. (b) M/s. XYZ, a 100% export oriented undertaking (100% EOU in short) imported DG sets and furnace oil duty free for setting up captive power plant for its power requirements for export production. They used the power so generated for export production but sold surplus power in domestic tariff area. Is customs department justified in demanding duty on DG sets and furnace oil as surplus power has been sold in Domestic Tariff Area. (c) Mention the circumstances under which goods are considered to have been removed improperly from a warehouse under the Customs Act (5+5+5 = 15 marks) Part – C Q 9 (a) Whether Service Tax under the provisions of Finance Act, 1994 is chargeable on the following services : (i) Use of the precincts of a Religious place as a Mandap (ii) Payment of service is received in India in convertible Foreign exchange (iii) An interior decorator provides service of beautification of spaces in Srinagar (iv) Services provided by a sub-broker to an investor (b) (i) Mention the issues on which advance ruling can be sought in service Tax matter (ii) When does an advance ruling on Service Tax become void ab initio (8+7 = 15 marks). C.A. FINAL – Group II - (New Syllabus) November 2004 Question Nos 1, 6 and 9 are compulsory. Part A Q 1 (a) State briefly the provisions of the CENVAT Credit Rules, 2002 in respect of removal of inputs and capital goods on which CENVAT credit has been availed in any two of the following cases: (i) Capital goods removed in good condition after being put to use for a period of two years in respect of which period depreciation under the Income-tax Act, 1961 was claimed (ii) An input becomes a waste and is sold as scrap (iii) Sale of the factory along with the said inputs and capital goods (b) Briefly explain the provisions of the Central Excise Act, 1944 pertaining to “Related persons”. (c) Write a brief note on the following with reference to Notification Nos. 8/2003-CE and 9/2003-CE dated 01-03-2003 relating to small scale units: (i) determination of ‘value’ for the purposes of the said notifications; (ii) availability of CENVAT Credit on capital goods under the said notifications; (iii) treatment in respect of ‘Clearances of excisable goods without payment of duty’ as specified in the said notifications. (d) (i) Discuss briefly with reference to the provisions of the Central Excise Act, 1944 whether the following process would amount to ‘manufacture’. XYZ Corporation is engaged in the process of mixing aluminium paste, metal lacquer and thinner resulting in the production of aluminium paint having a shelf life of 8-10 hours. (ii) Explain briefly whether duty liability under the Central Excise Act, 1944 will be attracted in the following case : MN & Co. engaged in the manufacture of Vanaspati oil used activated clay for deodoring, bleaching and decolouring of oil. As a result of this processing, the activated clay was transformed into “spent earth” which was nothing but the residue of activated clay. The activated clay residue had lost its absorbent character during the course of refining and bleaching of oil. Excise Department sought to classify the “spent earth” under Central Excise tariff chapter Heading No. 1507, which reads as : “residues resulting from treatment of fatty substances or animal or vegetable waxes.” [4+4+6+6 = 20 marks] Q 2 (a) (i) PQR Ltd. who are in the manufacture of excisable goods had the practice of providing full reimbursement to all its dealers towards the value of damaged goods. The company used to charge a certain sum towards the cost of freight in the return of the damaged goods to it. No other consideration was received by the company. The Central Excise Department has issued a show cause notice that the return freight in respect of damaged goods has to be included in the assessable value for purposes of duty. Examine briefly the correctness in law of the show cause notice. (ii) State briefly whether “damage discount” is permissible as a deduction for purpose of arriving at the assessable value under Section 4 of the Central Excise Act, 1944 (b) Write a brief note on the following exemption notifications issued under the Central Excise Act, 1944: (i) Power not to recover duty of excise not levied or short-levied as a result of general practice, under Section 11C (ii) Power to grant exemption from duty of excise under Section 5A (c) Briefly enumerate the specified categories of persons/premises that have been exempted in terms of Rule 9(2) of the Central Excise Rules, 2002 from obtaining registration under Section 6 of the Central Excise Act, 1944 [4+5+6 = 15 marks]. Q 3 (a) Briefly explain the procedure with respect to “Provisional Assessment” under the Central Excise Rules, 2002. (b) Write a brief note on : “Export under bond to Nepal where payment is in freely convertible foreign currency” with reference to the Central Excise Act, 1944 and the Rules. (c) With reference to Rules 12 and 17(3) of the Central Excise Rules, 2002 and Rule 7(5) of the CENVAT Credit Rules, 2002, explain in brief the main contents of the Returns to be filed with the Central Excise Department by an assessee in Form E.R. – 1, E. R. – 2 and E. R. – 3 (4+5+6 = 15 marks). Q 4 (a) State briefly against whom prosecution may be launched in the case of “offences by companies” under Section 9AA of the Central Excise Act, 1944 (b) Write short notes on the following with reference to the Central Excise Act, 1944 and the Rules made thereunder: (i) Duty payment “under protest” (ii) “Refund claim” under Section 11B (c) State in brief the provisions relating to “Invoice” under Rule 11 of the Central Excise Rules, 2002 (3+6+6 = 15 marks). Q 5 (a) State briefly as to who can make an application for “Advance Ruling” under Section 23A of the Central Excise Act, 1944 (b) Discuss briefly the power of the Appellate Tribunal to order “rectification of mistake” under Section 35C of the Central Excise Act, 1944 (c) Explain briefly the provisions relating to “special Audit” in certain cases under Section 14A of the Central Excise Act, 1944. (d) State the provisions of Rule 17 of the Central Excise Rules regarding removal of goods by a 100% Export Oriented Undertaking for Domestic Tariff Area (3+3+4+5 = 15 marks). Part B Q 6 (a) Explain briefly with reference to the provisions of the Customs Act, 1962 any two of the following: (i) Goods (ii) Person in charge (iii) Foreign going vessel (b) (i) C and Co. imported second hand machinery and declared the transaction value in the Bill of Entry filed for purposes of assessment to import duty. The Assistant Commissioner of Customs ignored the transaction value and based on Charted engineer’s certificate showing that the machinery was in working condition and had a residual life of 10 years he completed the assessment under Rule 8 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 after allowing maximum depreciation of 70%. Discuss briefly giving reasons whether the action of the Assistant Commissioner is valid in law (ii) Due to congestion in the ports or non-availability of deep draught, all ports are not navigable upto the jetty. Goods have to be discharged or transhipped at the outer anchorage with the help of barges. The charges associated with the delivery of cargo at outer anchorage are called “barging/lighterage charges”. State giving reasons whether such charges have to be included for purposes of determination of assessable value under the Customs Valuation (Determination of price of Imported Goods) Rules, 1988. (c) Explain briefly the provisions of Rule 3 of the General rules for the interpretation of the first schedule to the Customs Tariff Act, 1975. (d) State briefly the provisions of the Customs Act, 1962 relating to filing of “Import Bill of Entry” (4+6+4+6 = 20 marks). Q 7 (a) State whether the principle of “unjust enrichment” applies to refund of export duty under the Customs Act, 1962 (b) Write short notes on the following with reference to the Customs Act, 1962: (i) Duty on pilfered goods (ii) Reimportation of goods (c) XYZ Co. the assessee has claimed before the Customs Authority that since the exports of goods in its case attracted no duty, the value for purposes of Customs Act, 1962 to be declared shall be the value of the goods, which he expects to receive on sale of goods in the overseas market. Briefly discuss giving reasons whether the stand taken by XYZ Co. is correct. (d) State in brief the features of “Special Economic Zone” with reference to the Customs Act, 1962 (2+4+3+6 = 15 marks). Q 8 (a) Explain briefly the procedure for clearance of warehoused goods for home consumption under Section 68 of the Customs Act, 1962. (b) State in brief with reference to the provisions of Section 129A of the Customs Act, 1962 the matters relating to which no appeal shall lie before the Appellate Tribunal (c) Enumerate briefly the penalties under Section 114 of the Customs Act, 1962 for attempt to export goods improperly. (d) Explain the manner of filing drawback claim under the Duty Drawback Rules pursuant to Section 74 of the Customs Act, 1962 (3+3+4+5 = 15 marks) Part C Q 9 (a) Answer any four of the following with reference to the Finance Act, 1994 as amended relating to applicability of Service Tax: (i) One professionally qualified engineer with one non-professionally qualified engineer rendering engineering consultancy services under the name and style of ABC Consultancy Pvt. Ltd. (ii) Business Auxiliary services provided by a Commission Agent (iii) An institute providing pre-school coaching and training (iv) Ship repair services including dry docking within port premises (v) Blood test and analysis services provided by a Commercial pathology laboratory (b) Answer any two of the following with reference to the provisions of the Finance Act, 1994 as amended relating to service tax - (i) Services rendered after 1.7.2003 under a maintenance contract of machinery entered into prior to the effective date i.e., 1.7.2003 and in respect of which the bill has been raised and the value in full received from the customer prior to 1.7.2003 (ii) What is the date of payment of service tax where the amount of service tax is paid by cheque and is presented to the designated bank on April 25, 2004 and realised by the bank on April 27, 2004. Whether any interest and penalty is attracted in this case (iii) Whether service tax credit availed on input services during the period April 1, 2004 to April 24, 2004 can be utilized for the payment of service tax on the output services provided for the month/quarter ended March 2004, which is due for payment of April 25, 2004 (c) Briefly discuss the provisions of the Finance Act, 1994 as amended relating to service tax with respect to any one of the following taxable services: (i) Event Management (ii) Video Tape Production Services (8+4+3 = 15 marks). C.A. FINAL – Group II - (New Syllabus) May 2004 Question Nos 1, 6 and 9 are compulsory. Q 1. (a) Briefly explain the following with reference to the provisions of the Central Excise Act, 1944/Central Excise Tariff Act, 1985 (i) Dutiability of site related activities and immovable property (ii) Emergency power of the Central Government to increase duty of Excise (b) Determine the cost of production on manufacture of the under-mentioned product for purpose of captive consumption in terms of Rule 8 of the Central Excise Valuation (DPE) Rules, 2000 - Direct material – Rs 11,600, Direct Wages & Salaries – Rs 8,400, Works Overheads – Rs 6,200, Quality Control Costs – Rs 3,500, Research and Development Costs – Rs 2,400, Administrative Overheads – Rs 4,100, Selling and Distribution Costs – Rs 1,600, Realisable Value of Scrap – Rs 1,200. Administrative overheads are in relation to production activities. Material cost includes Excise duty Rs. 1,600. (c) A Small Scale Unit (SSI) has effected clearances of goods of the value of Rs. 360 lakhs during the financial year 2003-04. The said clearances include the following: (i) Clearance of excisable goods without payment of Excise duty to a 100% EOU unit : Rs. 40 lakhs. (ii) Export to Nepal and Bhutan : Rs. 50 lakhs. (iii) Job-work in terms of Notification No. 214/86 C.E., which is exempt from duty : Rs. 60 lakhs. (iv) Goods manufactured in rural area with the brand name of others: Rs. 70 lakhs. Write a brief note with reference to the Notifications governing SSI under the Central Excise Act whether the benefit of exemption would be available to the unit for the financial year 2004-05 (d) State briefly with reasons whether credit under the CENVAT RULES, 2002 would be available in any two of the following cases: (i) Inputs are pilfered from the store-room (ii) Inputs used in intermediate product, which is exempt from duty, but the final product is dutiable (iii) Final product is cleared in durable and returnable packing material (6+5+5+4 = 20 marks) Q 2. (a) Explain briefly the expression “Place of Removal” with reference to the Central Excise Act, 1944. (b) Write a short note on the ‘Rules for the Interpretation’ of the schedule to the Central Excise Tariff Act, 1985 (c) Explain the penal provisions under the Central Excise Act, 1944 and the Central Excise Rules, 2002 in the following cases: (i) Rule 25 of the Central Excise Rules, 2002 (ii) Sec. 11AC of Central Excise Act, 1944 (3+5+7 = 15 marks). Q 3 (a) “Issue of Show Cause Notice (SCN) within the prescribed time limit is a mandatory requirement to sustain any demand of Central Excise Duty.” Write a brief note on this statement and explain whether there are any circumstances under the Central Excise Act, 1944, when the issue of SCN is |