C.A. FINAL – Group II - (Old Syllabus) November 2002

Q 1 and Q 6 are compulsory.
Candidates are required to attempt 3 questions out of Q Nos. 2 to 5 and
2 questions out of Q Nos. 7 to 9.

Q. 1. Decide the following problems with the help of case laws, if any: (a) A notification issued by Govt. of India exempts Iron or Steel products from payment of duty subject to the condition that the product is made from, fresh, unused, re-rollable scrap on which “appropriate amount of duty of excise has already been paid.” M/s D.L.F. manufacture Iron and Steel products from fresh, unused, ro-rollable scrap which was charged to nil rate of duty. They claim the exemption on Iron and Steel products claiming that nil rate of duty is also the payment of appropriate duty. The Department contends that the nil rate of payment is not payment of Central Excise duty. (b) M/s S.K. Enterprises manufactures Aluminium  doors and windows which were considered by them to be exempted from payment of Central Excise duty. After two years of their commencing production and clearance of goods Central Excise Officers made a case against them holding that the products manufactured by them are chargeable to Central Excise duty. The manufacturer then claims the benefit of MODVAT/CENVAT Credit of the duty paid on the inputs which have gone into the manufacture of doors and windows. The Department denies the same on the ground that neither any MODVAT/CENVAT declaration was filed nor the provisions of MODVAT/CENVAT Rules were followed. (c) M/s A.U.L. avail of CENVAT Credit of the duty paid on inputs namely, steel sheets. The scrap generated during the manufacture of their final product was cleared by them without payment of duty. Subsequently the Department raised a demand of Excise duty on the waste and scrap. M/s A.U.L. accepted the duty liability, but contended that the price at which waste and scrap had been sold should be considered to be cum-duty price and assessable value should be determined after deducting element of Excise duty. The contention of the Department is that as no Central Excise duty was paid by them while clearing the scrap, no deduction on account of Excise duty is available to M/s. A.U.L. [5x3 = 15 marks]

Q 2. Your advice as consultant is sought by the manufacturer of excisable goods in the following cases. You are required to indicate your decision/advice in the context of Central Excise laws. (Each case is a separate one) : (i) One partnership firm manufactured goods in a factory for a part of the year and another unrelated partnership firm manufactured goods in the same factory for remaining part of the year. The Central Excise Authorities want to club the turnover to decide the eligibility of SSI (Small Scale Industries) exemption. (ii) An SSI unit is availing SSI exemption under Notification No. 8/2001 ( without availing CENVAT Credit on inputs), but the SSI unit wants to avail Cenvat credit on capital goods. The Central Excise Officer has not allowed it. (iii) An SSI unit is availing SSI exemption under Notification No. 9/2001 and availing CENVAT Credit on inputs, but now the SSI unit is interested to switch over from ‘With CENVAT Scheme’ to ‘Without CENVAT Scheme’ after making clearances having an aggregate value of rupees forty lakhs. The Central Excise Officer is not permitting for the change. [15 marks]

Q 3. (a) (i) What are the duties in respect of which CENVAT Credit can be availed of under the CENVAT Credit Rules, 2001? (ii) What are the documents on the strength of which CENVAT Credit can be availed of ? (b) Based on the following information, determine the CENVAT Credit available for use in the current year under the CENVAT Credit Rules, 2001 [Amount after each item indicates  Central  Excise duty paid at the time of Purchase of goods (Rs.) – (a) Pollution control equipments – Rs 25,000 (b) Spares for pollution control equipments – Rs 5,000 (c) Equipments used in office – Rs 12,000 (d) Storage Tank – Rs 10,000 (e) Paints used for painting machinery used – Rs 6,000 (f) Packing material – Rs 4,000 (g) Lubricating oils – Rs  8,000 (h) High Speed diesel oil – Rs 7,000 [(4x2) 8+7 = 15 marks]

Q 4. (a) ‘Once the demand of duty, penalty or any other dues are confirmed finally by the Central Excise authorities, the assessee liable to pay the dues has to pay the amount within the time prescribed’. - - If the assessee fails to pay the above dues, what are the powers given to the Central Excise Officers under Central Excise Act and Customs Act to recover the dues ? (b) With reference to the relevant provisions of the Central Excise Act, 1944 and decided cases (if any), briefly discuss as to whether the provisions relating to ‘unjust enrichment’ shall be applicable to the following matters (pertaining to refund of duty) : (i) Captive consumption of raw materials. (ii) Duty paid on provisional basis. (iii) Duty paid as pre-deposit for filing an appeal. (iv) Bank guarantee encashed by department, but the case is finally decided in favour of the assessee. [7 + (2x4) 8 = 15 marks]

Q. 5. (a) State in relation to appeals to Commissioner (Appeals) under the Central Excise Act, 1944 and Central Excise (Appeals) Rules, 2001 regarding: (i) Time limit for filing appeal and extended period by Commissioner (Appeals). (ii) Suggested time to decide the appeal and stay application. (iii) Order that can be passed. (b) Write short notes on any two of the following with reference to the Central Excise laws: (i) Additional duties on goods of special importance. (ii) Remission of duty on goods lost/destroyed. (iii) Mandatory penalty. [(2+2+3) 7 + (4 x 2) 8 = 15 marks].

Q. 6. (a) Discuss briefly with reference to decided case laws as to how the ‘value’ shall be determined under Section 14 of the Customs Act, 1962 read with Customs Valuation Rules, 1988 in the following cases: (i) Goods are offered at specially reduced price to buyer and the buyer is asked not to disclose the specially reduced price to any other party in India. (ii) There has been a price rise between date of contract and date of importation. The contract was over 6 months before date of shipment. (iii) The sale involves special discounts limited to exclusive agents. (iv) The goods are purchased on high seas. (b) (i) The Custom Officers seized non-notified goods, namely Cameras, Photofilms of foreign origin valued at Rs.2 lakhs from the possession of Mr. K.P.S. when he was travelling from Chandigarh to  Shimla, under the belief that the goods were smuggled goods. Mr. K.P.S. did not have any vouchers in his possession relating to goods. The defence of K.P.S. is that he had purchased the goods from hawkers at Chandigarh for being sold at Shimla from his shop and goods are not smuggled goods. Please discuss whether these goods are liable to confiscation under the Customs Act. (ii) M/s S.A.S. imported 10,000 Citizen calculators model No.CT500 of Chinese origin from Singapore and declared value to be US$ 0.90 per piece in the Bill of Entry. The Customs Authorities enhanced the value to be US$ 1.80 per piece on the basis of Price-list of Citizen calculator and contemporaneous import at the same value. Is the action of the Customs justified? [ (2 x 4) 8 + (4 x 2) 8 = 16 marks]

Q 7.(a) Write short notes on any two of the following with reference to the Customs Act 1962: (i) Refund of export duty. (ii) Amendment to documents submitted to Customs Authorities (iii) Power to inspect and stop conveyance (b) Explain in brief the provisions made under the Customs Law for in-bond manufacture. [(3 x 2) 6 + 6 = 12 marks]

Q 8. (a) Define any three terms with reference to Customs Act, 1962: (i) Foreign going vessel (ii) Goods (iii) Person In-charge (iv) Stores. (b) Specify the authority under the Customs Act for appointing/approving the following: (i) Customs Ports and Customs Airports (ii) Inland Container Depots (iii) Landing places in any Customs Area (iv) Warehousing Stations (c) What is the relevant date for determination of rate of duty for Export goods? [(2x3) 6+ (1x4) 4 + 2 = 12 marks]

Q. 9. (a) (i) What are the owner’s rights to deal with warehoused goods under the Customs Act? (ii) What is the period prescribed under the Customs Act for keeping the goods in warehouse? (b) (i) The Customs Officers seized foreign origin gold from the possession of a passenger coming from Dubai on 10.01.2002. The Customs Commissioner issued a show cause notice for confiscation of gold and imposition of penalty on 10.08.2002. Is the passenger eligible for the return of gold. Please answer with the help of case law, if any. (ii) Under what circumstances Draw-Back shall not be allowed to an Exporter under the provisions of Customs Act? [(3x2) 6 + (3x2) 6 = 12 marks]

C.A. FINAL – MAY 2002

Q 1. (a) M/s. T.E.L. are in the business of supplying “Turbo –alternators” to various customers. They manufacture steam turbines in the factory which are removed to the customer’s site on payment of Central Excise duty. They purchase duty paid alternators from the market which are delivered at the customer’s site. M/s. T.E.L. assemble both the items and fix them permanently on a platform at the site. Department demands Central Excise Duty payable on “Turbo-alternator, when it comes into existence after being assembled on the platform embedded to the earth. Is the view taken by the department correct? Please discuss with the help of case laws, if any. (b) M/s. U.T.A. manufacture welding electrodes which are put first in Polythene bags and then packed together in Cardboard cartons. They sell electrodes at the factory gate packed in cardboard cartons whereas such electrodes are also packed in wooden boxes when sold to their customers located at outstations. Is the department justified to include the cost of wooden boxes in the assessable value of the welding electrodes? Discuss with the help of case laws, if any. (c) M/s R.M.T. Industries manufacture cigarettes, which are sold in wholesale, ex-factory, at cum-duty price to wholesale dealers. The price charged to all the dealers for the cigarettes is the same. However, the dealers who purchase cigarettes on credit are required to deposit interest free security with M/s R.M.T. The department has demanded duty from M/s R.M.T. contending that they had earned notional interest on the security deposit received from the dealers which should be included in the assessable value of the cigarettes being the additional consideration. Duty on cigarettes is being charged on advalorem basis. Discuss the stand taken by the department with decided case laws, if any. [5+5+5 = 15 marks]

Q 2. (a) Write a note on Central Excise (No.2) Rules, 2001. (b) (i) ‘Erstwhile Rule 51A read with old Rules 173H and 173L containing stringent provisions have been replaced by the Rule 16 of the Central Excise (No.2) Rules, 2001 to ease the problems faced by the Assesses’. Discuss the above statement. (ii) Discuss Rule 8 of the Central Excise Rules, 2001 regarding the manner of Payment of Central Excise Duty. [7+4+4 = 15 marks]

Q 3. (a) (i) Define ‘Capital goods’ under Cenvat Credit Rules, 2001. ii) Explain the meaning of ‘Inputs’ with reference to Cenvat Credit Rules, 2001 (b) (i) Explain under what circumstances can a manufacturer claim refund of Cenvat Credit in cash under the Cenvat Credit Rules, 2001. (ii) Is a manufacturer allowed to remove the inputs on which Cenvat Credit has been taken as such? Explain the provisions on the above aspect under the Cenvat Credit Rules, 2001. [4+4+4+3 = 15 marks]

Q 4. (a) (i) What are the clearances whose values are excluded for the purpose of calculating the Small Scale Exemption Limit (SSI) while calculating the turnover of Rs. 100/300 lakhs? (ii) what are types of ‘acts’ that would constitute an offence under Section 9of the Central Excise Act, 1944? (b) (i) What are cases in which appeal cannot be heard by the Customs Excise and Gold (Central) Appellate Tribunal under the Central Excise Act, 1944? (ii) Explain the powers of adjudication of Central Excise Officers for demand of Central Excise Duty. [4+4+3+4 = 15 marks]

Q 5. (a) Write short notes on any two of the following with reference to Central Excise Laws: (i) Powers of Search and Seizure (ii) Duty paid under Protest. (iii) Self –assessment. (b) (i) What are the services rendered by a practicing Chartered Accountant, leviable to Service Tax in terms of Notification no.59/98- Service Tax dt. 16^th October , 1998. (ii) Define any two terms with reference to Service Tax. - (a) Stock-broker (b) Advertisement (c) Courier Agency. [3 x 2 = 6 +5+4 = 15 marks]

Q 6. (a) (i) M/s N.E.I. imported rubber seals and filed a Bill of Entry for clearance. The customs department assessed the duty classifying the rubber seals under Heading No. 40.16 of Customs Tariff. The goods were assessed accordingly and the importer paid the duty on 2-5-2001. Subsequently, on 29-10-2001, Ms/ N.E.I. filed a claim for refund of duty contending that rubber seals are classifiable under heading No. 84.82 which attracts a lesser rate of customs duty. Is the refund of customs duty admissible to M/s N.E.I. ? Discuss with the help of case laws, if any. (ii) M/s A.B.L. imported asbestos fiber from abroad. Asbestos fibre is extracted from rocks. When the department asked the importer to pay the Additional Customs duty (Countervailing duty) under Section 3(1) of the Customs Tariff Act, 1975, the importer argued that duty is not leviable as asbestos fibre has not been obtained as a result of manufacture. Is the contention of M/s A.B.L. correct? Discuss. (b) Write short notes on: (i) Adhoc Exemptions under the Customs Act, 1962 (ii) Indian Customs Waters under the Customs Act, 1962. [6+6+4 = 16 marks]

Q 7. (a) Explain Rule 3 of Rules for interpretation of the Customs Import Tariff Schedule. (b) Explain the meaning of single dash (-) and double dash (--) used in the Customs Tariff Schedule for imported goods. (c) How to determine duty when goods consists of articles liable to different rates of duty? [6+3+3 = 12 marks]

Q 8. (a) (i) Explain the differences between ‘Identical goods’ and ‘Similar goods’ with reference to Customs Valuation Rules, 1988. (ii) Enumerate the various costs and services that are to be added to the “Transaction Value” under Rule 9 of the Customs Valuation Rules, 1988. (b) M/s H.R.C imported a consignment of computer software and manuals valued at U.S.$42 lakhs and contended that the actual value was only U.S.$ 10 lakhs while the balance amount represented licence fee for using the software at multiple locations and as such customs duty is payable only on the actual value of U.S. $ 10 lakhs. Is the contention raised by M/s H.R.C. correct? Discuss. [4+4+4 = 12 marks]

Q 9. (a) Write short notes on any two of the following: (i) Goods improperly removed from the Warehouse as per Section 72 of the Customs Act, 1962. (ii) Distinction between Clearance for Home Consumption and Clearance for Warehousing. (iii) Levy of Customs duty on goods derelict, Wreck, Jetsam etc. (b) Write a note on: ‘Abatement of duty on damaged or deteriorated goods’ imported. [4+4+4 = 12 marks]

Indirect taxes - CA Final - November 2001 - Questions Nos. 1 and 6 are compulsory. The candidates are required to attempt three questions out of Q. Nos 2, 3, 4, & 5 and two questions out of Q. Nos 7, 8 & 9.

Q. 1 (a) Briefly discuss, how ‘value’ is to be determined for purposes of Section 4 of the Central Excise Act, 1944 and the Central Excise Valuation Rules, 2000 in each of the following situations :(i) The assessee manufactures certain excisable goods, which are not sold, but are used for captive consumption in the manufacture and sale of other final excisable products. (ii) Excisable goods manufactured and cleared as free samples. (iii) Assessee effects F.O.R. sales of excisable goods, where freight and insurance are charged on actual basis through debit notes. Assessee and buyer are not related and price is the sole consideration for the sale. (iv) Sales of excisable goods are made ex-factory, where freight and insurance are charged on actual basis through invoice. Assessee and the buyer are not related and price is the sole consideration for the sale

(b) “Manufacture” and “Marketability” are the essential ingredients for the levy of Central Excise Duty. Write a brief note in relation to the above statement with the help of decided cases. [8+7 = 15 marks]

Q. 2 (a) Write a brief note on the provisions of Section 11A of the Central Excise Act, 1944 with regard to recovery of duty not levied/ not paid/ short levied /short paid or duty erroneously refunded making specific reference to the changes introduced by the Finance Act, 2000.

(b) Discuss briefly the Rules for interpretation of the schedules to the Central Excise Tariff Act, 1985. [8+7 = 15 marks]

Q. 3 (a) Write a brief note on the concessions available to Small Scale Industrial Undertakings in terms of Notification no. 8/2000-C.E. dated 1.3.2000 and No. 9/2000-C.E. dated 1.3.2000.

(b) Write a brief note on the provisions of Rule 173L of the Central Excise Rules, 1944, which allows for refund of duty paid on goods returned into the factory and show the essential difference between this Rule and Rule 173H relating to Retention in, or bringing into, a factory or warehouse of duty paid goods. [8+7 = 15 marks]

Q. 4 (a) Write short notes on any two of the following : (i) Special Audit under Section 14A of the Central Excise Act, 1944 (ii) “Deemed Exports” with reference to Central Excise Law (iii) Emergency power of the Central Government to increase the duty of Excise.

(b) (i) Explain briefly the provisions of Rule 173Q of the Central Excise Rules, 1944 with respect to imposition of penalty. (ii) State briefly the circumstances under which the CEGAT could dispense with pre-deposit of duty and / or penalty under Section 35F of the Central Excise Act, 1944 (iii) Write a short note on the right of a party against whom and appeal has been filed to lodge “Cross-objections” under Section 35B of the Central Excise Act, 1944. [6+9 = 15 marks]

Q. 5 (a) Explain briefly the various types of duties on which CENVAT credit can be taken in terms of Rules 57AB of the Central Excise Rules, 1944 and the manner of utilisation of the said credit in terms of this Rule.

(b) (i) A manufacturer utilises an input “X” in the manufacture of two final products “A” and “B” and avails CENVAT credit on the input “X”. Product “A” is exempt from duty. Briefly explain the procedure to be followed by the manufacturer in terms of Rule 57AD of the Central Excise Rules, 1944 in this regard. (ii) Write short notes on any two of the following - (a) Wholesale dealer (b) Excisable goods (c) Assessee [6+5+4 = 15 marks]

Q. 6 (a) (i) DD India Private Ltd., imported components and spares of diesel engines, such as impellers, gaskets, elements etc. from DD Asia Private Ltd., Singapore. The Special Valuation Branch (SVB) Custom House, Chennai initiated investigation into the question of admissibility of invoice value for the purpose of valuation of goods imparted and assessment of customs duty. - - The SVB found that DD India was reselling the imported goods at a margin of 65% (which includes expenses and profits) in the domestic market. The SVB felt that the said margin should not be more than 45%. - - The SVB came to the following two conclusion : (1) DD India is related to DD Asia as per Rule 2(2) of the Customs Valuation Rules, 1988 as DD India are the sole distributors in India of DD Asia. (2) The “transaction value” shall be determined as per Rule 8 of the Customs Valuation Rules, 1988. - - Consequently the invoice value of all imports by DD India was ordered to be loaded by 20% for purpose of assessment to customs duty. - - DD India had taken over the distribution from M/s Elandtee, who were the erstwhile distributors in India for DD Asia, During the enquiry proceedings, DD India had placed evidence before the SVB that the margin enjoyed by M/s Elandtee was also 65%. This was however ignored by the SVB as being not relevant. – - The SVB also rejected the price that list of foreign suppliers produced by DD India without assigning any reasons. Write a brief note on the two conclusions arrived at by the SVB and state, how as the Excise and Customs consultant of DD India you would assail the same in the aforesaid facts and circumstances of the case. [5 marks]

Q. 6 (a) (ii) K Power Corporation (KP) are the promoters of Naphtha based short gestation 355 M. W. combined cycle power plant. For setting up the power plant KP entered into a power purchase agreement with the State Electricity Board. With a view to implement the project on schedule and to avail the concessional customs duty provided under the Project Import Regulations, 1986 the contract between KP and the foreign suppliers of power equipment based in Korea was registered with the Customs House. The project equipment was off loaded after filing necessary documents relating to clearance of goods vide Bill of Entry No. 109 dated 20.05.2000. The Customs Authorities in terms of the contract registered under the Project Import Regulations assessed the customs duty on the project equipment amounting to Rs. 2.15 crores provisionally. The duty was paid as per the provisionally assessed Bill of Entry. The cargo was discharged between 21.5.2000 and 24.5.2000. - - As the project equipment imported at the port was more than 200 M. T. in weight and the equipments were in assembled condition it was felt that the equipment could not be transferred by road from the port to the project site. Therefore it was decided to transport the equipment by Sea in a costal barge to another nearby place (M) and then to move them by road to the project site. The said equipment, which was oversized cargo was therefore transferred to the barge to be towed by a tug to place (M). All the packages containing the said equipment were discharged to Trailers/barges. The barge set out on Costal Voyage on 1.6.2000 after taking necessary permission from various authorities. Unfortunately the large capsized during the Voyage on 2.6.2000 and finally overturned resulting in total loss of all packages containing the said equipment. - -The importers have sought for remission of duty and refund of duty already paid on provisional basis in terms of Section 23 of the Customs Act, 1962. Write a brief note on the validity of the claim made by the importers. [5 marks]

Q. 6 (b) Explain briefly, how the following would be treated for purposes of valuation under Section 14 of the Customs Act, 1962 and the Customs Valuation Rules, 1988: (i) “Dismantling charges” paid by the importer of a machine to the foreign supplier for removal of the machine before shipment at the foreign supplier’s place. (ii) “Demurrage charges” actually incurred by the importer of goods. [6 marks]

Q. 7 (a) Explain briefly the procedure for assessment and clearance of imported goods through a Customs Sea Port under the Customs Act, 1962.

(b) (i) Who is a “tourist” under the Baggage Rules, 1988? (ii) Briefly enumerate the articles that are allowed free of duty under the Baggage Rules, 1988 to a tourist of Indian origin coming from countries other than Nepal, Bhutan, China and Myanmar. [6+2+4 = 12 marks]

Q. 8 (a) (i) The Customs Authority released the seized goods to the owner on the execution of a Bond. The Adjudicating Authority in his adjudication order imposed a Redemption fine. The owner has contented that no Redemption Fine could be imposed as the goods are no longer in the custody of the Customs Department. Briefly examine whether the contention of the owner is correct in law. (ii) Briefly list out the circumstances mentioned in Section 72 of the Customs Act, 1962, when the doctrine of “unjust enrichment” will have no application.

(b) Briefly explain the provisions relating to “Advance Ruling” contained in Section 28E to Section 28M of the Customs Act, 1962. [3+3+6 = 12 marks]

Q. 9 (a) i) Explain briefly the provisions under the Customs Act, 1962 with respect to duty on “Pilfered goods”. (ii) Write a short note on “special Additional Duty of Customs”.

(b) Write short notes on any two of the following: (i) Warehousing period (ii) Drawback under Section 74 of the Customs Act, 1962 (iii) Procedure for sale of goods and application of sale proceeds in terms of section 150 of the Customs Act, 1962. [3+3+3+3 = 12 marks]

Indirect taxes - CA Final – May, 2001 - Questions Nos. 1 and 6 are compulsory. The candidates are required to attempt three questions out of Q. Nos 2, 3, 4, & 5 and two questions out of Q. Nos 7, 8 & 9.

Q 1 (a) Discuss briefly with reference to Sec. 4 of the Central Excise Act, 1944 and the Central Excise Valuation Rules, 2000 how ‘Value’ for the purpose of the said section is to be determined in each of the following situations? (i) X Ltd. does not effect any sales of its goods ex-factory. Goods are sold only from Depots / branches situated away from the factory and costs are incurred for transport of goods from the factory to depots. X Ltd., the assessee and its customers are not ‘Related persons’ and price is sole consideration for the sale. What is the basis for determining the ‘value’ of clearances ex-Depot / branches. (ii) An Assessee splits up the pricing system and charges a price for the goods and separately charges for packing. How would the cost of packing be treated in this case for determining ‘value’? (iii) An assessee charges warranty charges separately for all those customers who on an optional basis desire to take the ‘after sales services’ provided by the assessee. Are ‘warranty charges’ includible for purpose of ‘value’ in such cases. (iv) The assessee allows the buyers 30 days to make payment for the goods supplied. Interest is charged by the assessee from the buyer only if payments are made beyond this period. How is interest to be treated for purposes of determining ‘value’?

Q 1 (b) Discuss the CENVAT Credit Scheme for Capital Goods with specific reference to Rule 57AA and Rule 57AC of the Central Excise Rules, 1944. [8+7 = 15 marks]

Q 2 (a) With reference to Sec. 4 of the Central Excise Act, 1944 briefly explain the meaning of the following expressions (i) Related Persons ii) Transaction value

(b) ‘A’ Company manufactures and sells metal containers. Some of the metal containers sold to Company ‘B’ were found to be defective and were returned to ‘A’ Company for remaking. Company ‘A’ manufactures new metal containers out of such returned defective containers and takes CENVAT Credit equal to the duty paid earlier, when the metal containers were originally supplied treated these as ‘inputs’. The defective containers are deseamed and the metal sheet obtained are sent for printing. After printing the sheets are cut to size and rolled into the size of finished metal containers. Then they are sent to the welding line for making new containers. Company ‘A’ claims that since manufacture of a new product has taken place the defective containers should be treated as ‘inputs ’ and CENVAT Credit allowed on the same. The Excise Department’s view is that no new product has come into existence since the defective containers were not melted and remade. The defective containers being ‘final products’ cannot be considered as inputs. Briefly discuss with reference to Central Excise Act and Rules whether the stand taken by the Department is correct. [8+7 = 15 marks]

Q 3 (a) Briefly explain the provisions of Rule 12 of the Central Excise Rules, 1944 relating to “Rebate of duty on goods exported”.

(b) (i) Write a short note on the specified documents under Rule 57AE of the Central Excise Rules, 1944 for taking CENVAT Credit. (ii) A SSI unit clears goods with labels carrying M.R.P. of Rs. 67 per unit in the ordinary course of its business. The same goods are supplied at Rs. 52 per unit pack marked as M.R.P. under contract to Canteen Stores Department (CSD), which in turn sells them at the same price of Rs. 52 per unit pack to Defence Service Personnel at various places. The labels used for sale to Canteen Stores carry the inscription ‘For C.S.D. only’. The Excise Department insists that the SSI unit should pay duty with reference to the M.R.P. of Rs. 67 per unit pack even in respect of the sales to CSD. With reference to Sec. 4A of the Central Excise Act, 1944, briefly discuss whether the stand taken by the Department is correct. [8+7 = 15 marks]

Q 4 (a) Discuss the provisions of Rule 173H Of the Central Excise Rules, 1944 regarding re-entry of duty paid goods into the factory.

(b) Briefly explain the procedural requirements under Chapter X of the Central Excise Rules, 1944 with respect to remission of duty on goods used for special industrial purposes. [7+8 = 15 marks]

Q 5 (a) Write short notes on any two of the following with reference to the provisions of the Central Excise Act and Rules made thereunder: (i) Power to Summon (ii) Registration (iii) Duty paid under Protest

(b) Write a short note on the “Appellate Remedies” (i.e., right of appeal to persons aggrieved by the order passed by an adjudicating authority) under the provisions of the Central Excise Act, 1944. [8+7 = 15 marks]

Q 6 (a) Explain briefly the difference between “Safeguard duty” and “Anti-dumping Duty” under the Customs Tariff Act, 1975.

(b) ‘V’ Steels imported various items for its captive power plant with technical know-how from ‘N’ Engineering, U. S. A. The relevant drawings of the turbine shaft and layout of the turbine with other items were also supplied. One of the items which was a turbine shaft was in a semi-finished condition. Before fitting, this turbine shaft had to be further ground and finished as per the dimensions of the shaft indicated in the layout drawing. ‘V’ Steels paid US $2000 for the layout drawing and did not pay any customs duty on this amount. The Customs Department has clamed that this amount of US $2000 forms part of the transaction value under Rule 9(1) of the Customs Valuation Rules, 1988. The counter of ‘V’ Steels to this claim made by the Department is that the drawing indicating the dimensions of the turbine shaft was merely a layout drawing of the turbine with other items of the turbine room. Explain with specific reference to the provisions of Rule 9 of the Customs Valuation Rules, 1988, whether the claim made by the Department is tenable?

(c) A consignment of 800 metric tons of skimmed milk powder of US origin was imported by a Non-profit making organisation for free distribution of milk to the children in a tribal area under a World Health Programme. This being a special transaction a nominal price of US $10 per metric ton was charged for the consignment to cover freight and insurance charges. The Customs Department found out at or about the time of importation of this gift consignment there were the following imports of skimmed milk powder of US origin : (1) Quantity Imported – 20 metric Tonnes. Unit price CIF 260 US $ (2) Quantity Imported – 100 metric Tonnes. Unit price CIF 220 US $ (3) Quantity Imported – 500 metric Tonnes. Unit price CIF 200 US $ (4) Quantity Imported – 900 metric Tonnes. Unit price CIF 175 US $ (5) Quantity Imported – 400 metric Tonnes. Unit price CIF 180 US $ (6) Quantity Imported – 780 metric Tonnes. Unit price CIF 160 US $ - - The rate of exchange on the relevant date was 1 US $ = Rs. 46. - - Briefly explain, how the assessable value for purpose of Customs Duty will be arrived at in this case under the Customs Act, 1962 and the Customs Valuation Rules, 1988. [4+6+6 = 16 marks]

Q 7 Write short notes on any three of the following with reference to the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975 : (a) Project Imports (b) Burden of Proof (c) Drawback under Sec. 75 of Customs Act, 1962 (d) Redemption Fine and Penalty. [12 marks]

Q 8 (a) Explain briefly the difference between “Public Bonded Warehouse” and “Private Bonded Warehouse” under the Customs Act, 1962.

(b) State briefly the circumstances under which goods deposited in a bonded warehouse could be removed under the Customs Act, 1962.

(c) Discuss briefly the owner’s right to deal with warehoused goods under the Customs Act, 1962.

(d) Explain briefly the penal provisions of Sec. 72 of the Customs Act, 1962 in respect of goods improperly removed from a warehouse. [3 x 4 = 12 marks]

Q 9 (a) Write short notes on any two of the following with reference to the provisions of the Customs Act, 1962 : (i) Prohibited goods (ii) Stores (iii) Entry.

(b) Explain briefly with reference to provisions of the Customs Act, 1962 any two of the following (i) Provisional assessment (ii) Determination of duty on sets of articles imported (iii) Assessment of accessories supplied with the main equipment that is imported. [6+6 = 12 marks]

Indirect taxes - CA Final - November 2000 - Questions Nos. 1 and 6 are compulsory. The candidates are required to attempt three questions out of Q. Nos 2, 3, 4, & 5 and two questions out of Q. Nos 7, 8 & 9.

Q 1. (a) M/s. KLM gets their gray cloth processed from M/s. ABC. M/S ABC carried out the processes of bleaching, dyeing, sizing, finishing etc. on the gray cloth and return the same to M/s. KLM. The cloth is supplied by M/s. KLM and the ownership of the goods vests with M/s. KLM all the time. M/s KLM sells the processed cloth at the rate of Rs.100 per meter. The cost of gray cloth in the hands of M/s. ABC is Rs.50 per meter and M/s. ABC charge Rs.20 per meter as job charges (which includes M/s. ABC’s profits) and the job charges are recovered from M/s. KLM. Upon the above facts, discuss briefly with reference to the relevant provisions of the Central Excise Act, 1944 and the Rules made there-under the following questions that arise :

(i) Does the process of bleaching, dyeing, sizing, finishing etc., in the above context amount to manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944? (3)

(ii) In the facts and circumstances of the above case, who will be regarded as the ‘manufacturer’ for the purpose of the Central Excise Act, 1944 M/s. KLM or M/s. ABC or both? (2)

(iii) How will the assessable value of the processed cloth for purposes of Section 4 of the Central Excise Act, 1944 and the Rules made there-under be arrived? (3)

(b) A manufacturer manufactures a product ‘C’, which is chargeable to excise duty. He avails MODVAT credit of the duty paid on the inputs, which are used in or in relation to the manufacture of product ‘C’. The product is an intermediate product and is consumed captively in the factory for manufacture of the final product. The final product is wholly exempt from the payment of duty under the Central Excise Act, 1944. While determining the assessable value under Rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975 the manufacturer does not include the element of duty paid on the inputs. The reasoning advanced by the manufacturer is that since credit has been taken of the duty paid on the said inputs, the cost of manufacture automatically stands reduced to the extent. Explain briefly with reference to decided case law if any, whether the stand taken by the manufacturer in not including the duty paid on the inputs for purposes of valuation is correct? (4)

(c) Radar systems of a given type, after assembly in the factory are loaded normally on containerised truck, five at time, for being dispatched to the wholesale buyer (industrial buyer). Each assembled system is fixed by nuts and bolts in the containerised truck. X Ltd., manufactures the aforesaid type of Radar systems. They have orders from a certain large public sector organisation, which requires delivery of the Radar systems directly at its sites which are in hilly or forest areas. The order therefore specified special wooden packing for each radar system to protect it en route and before installation at the respective site.

With reference to the relevant provisions of the Central Excise Act, 1944 and decided cases, if any, briefly discuss whether the cost of such wooden packing must be included in the value under Section 4 of the Act even if the said packing is not durable and returnable by the buyer to the assessee? (3)

Q 2. (a) (i) State briefly the questions on which an “Advance ruling” under Section 23C of the Central Excise Act, 1944 may be sought. (3)

(ii) An assessee is barred from making an application for settlement of cases under Section 32E of the Central Excise Act, 1944 in certain “circumstances”. Briefly enumerate these circumstances. (4)

(b) (i) M/s. NML, a unit registered as a small scale unit, manufactures coloured television sets under the brand name “SONY” in India, which brand name is owned by a Foreign Company. M/s. NML has the exclusive rights to use the Brand name “SONY” in India.

Explain briefly with reference to Notifications governing Small Scale Industrial Undertakings under the Central Excise Act, 1944 and the Rules, whether the manufacturer in this case M/s MNL is entitled to the benefit of the exemptions as applicable to small scale industrial undertakings. (4)

(ii) M/s. RPL has three units situated in Bangalore, Delhi and Pune. The total clearances from all these Small Scale units of excisable goods was Rs.350 lakhs during the financial year, 1999-2000. However, the value of individual clearances of excisable goods from each of the said units was : Bangalore Unit Rs.150 lakhs; Delhi Unit Rs.100 lakhs; and Pune Unit Rs.100 lakhs. Discuss briefly with reference to the Notifications governing small scale industrial undertakings under the Central Excise Act, 1944 whether the benefit of exemption would be available to M/s. RPL for the financial year, 2000-2001. (4)

Q 3. (a) Write a note with reference to decided case law on the statement that “The goods enumerated in the Schedules to the Central Excise Tariff Act, 1985 will not attract duty unless they are marketable or capable of being marketed” (7)

(b) (i) Explain briefly the provisions relating to chargeability of excise duty on the basis of capacity under Section 3A of the Central Excise Act, 1944. (4)

(ii) Briefly explain with reference to Section 11AC of the Central Excise Act, 1944 the circumstances under which penalty equal to the duty of excise has to be imposed. (4)

Q 4. (a) Briefly discuss the provision of Section 11A(1) of the Central Excise Act, 1944 with respect to the period of limitation specified therein for recovery by the Excise department from the assessee of duty short paid. Also state the circumstances when the extended period of limitation becomes applicable under the provision to Section 11A(1) of the Central Excise Act, 1944. (5)

(b) With reference to the provisions of the Central Excise Act and Rules briefly discuss whether a partner of a firm could be prosecuted for evasion of Central Excise Duty. (5)

(c) What offences are punishable under the Central Excise Act, 1944? Briefly discuss. (5)

Q 5. (a) Enumerate the various duty paying documents specified in Rule 57G of the Central Excise Rules, 1944 on the strength of which an assessee is permitted to avail MODVAT credit. (6)

(b) Write short notes on any three of the following with reference to the provisions of the Central Excise Act, 1944 and the rules. (3 x 3 = 9)

(i) Wholesale Dealer. (ii) Assessee. (iii) Invoice. (iv) Wholesale Trade (v) Refund.

Q 6. (a) A ship carrying the goods for XYZ entered the territorial waters of India from a foreign country on February 25, 1999. The goods were exempted from payment of Customs Duty under the Customs Act, 1962 on that day under a notification issued in terms of the said Act by the Central Government. The goods were warehoused in a warehouse under Chapter IX of the Customs Act, 1962 on February 26, 1999. The goods were removed from the warehouse on March 15, 1999 by which time the earlier notification exempting the goods from payment of customs duty stood rescinded.

The importer has sought your advice whether he could resist the claim of duty on the goods made upon him by the Department on the ground that when the goods entered the territorial waters on February 25, 1999 no duty was payable and the taxable event had occurred in terms of Section 12 of the Customs Act, 1962.

Write a note explaining the position with reference to the Customs Act, 1962 and decided case law, if any, whether the contention advanced by the importer could be supported. (6)

(b) Discuss briefly with reference to decided case law whether landing charges imposed after the landing of the goods, but prior to their clearance for customs purposes are to be included for determining the value under Section 14 of the Customs Act, 1962 in arriving at the Customs Duty payable. (4)

(c) Triveni Alloys imported during June, 1999 by sea, a consignment of metal scrap weighing 3,000 metric tonnes from U.K. They filed a Bill of Entry for Home Consumption and the Assistant Commissioner passed an order for clearance of goods and the applicable duty was also paid. The importer thereafter found on taking delivery from the Port Trust authorities, that only 2,500 metric tonnes of scrap were available at the docks although they had paid duty for the entire 3,000 metric tonnes since there was no short landing of cargo. The short delivery of 500 metric tonnes was also substantiated by the Port Authorities, who gave a weighment certificate to the importer to that effect.

Upon a representation to the Customs Department the importer has been directed in writing to justify as to which provision of the Customs Act, 1962 governs the importers claim for restoration of duty paid on the quantity of 500 metric tonnes scrap not delivered by the Port Trust.

Examine the issues involved and briefly discuss the same with reference to the provisions of the Customs Act, 1962 giving reasons. (6)

Q 7. (a) Who is empowered to make an arrest under the provisions of the Customs Act, 1962 and on what grounds? Briefly discuss. (4)

(b) What is the liability of the owner of a conveyance under the Customs Act, 1962 in case goods loaded for importation are not accounted for properly or are short delivered. Discuss briefly. (4)

(c) Explain briefly any one of the following terms with reference to the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988.

(i) Related Persons (ii) Residual Method of Valuation (4)

Q 8. (a) State briefly, how the Assessable value and the rate of duty is determined under the Customs Act, 1962 and Rules made thereunder. (6)

(b) (i) State briefly the procedure for claiming drawback on goods exported by Post. (3)

(ii) ABC Ltd., who is an exporter finds that the amount of drawback refunded to it is less than what it is entitled to on the basis of the rates of drawback announced by the Central Government. Briefly discuss whether ABC Ltd., can claim the difference of drawback short refunded and the procedure to be followed in this regard. (3)

Q 9. (a) Write short notes on any three of the following with reference to the Customs Act, 1962.

(i) Goods (ii) Imported Goods (iii) Dutiable goods (iv) Person in charge (3 x 2 = 6)

(b) Explain briefly with reference to the provisions of the Customs Act, 1962 the power conferred on the customs authorities to screen or X-ray bodies suspected persons. (2)

(c) INFOTECH has imported five main frame computer systems from USA in December, 1998 paying customs duty of Rs.60 lakhs.

Due to some technical snags that developed in the system in March, 1999 the supplier sent his technicians to India to resolve the same. No solution was found. In July 1999 INFOTECH decided to reship/return the goods to the foreign supplier.

You are the Finance Manager of INFOTECH and have been approached for advice whether import duty already paid can be got back from the Central Government when the goods are reshipped / returned.

Briefly examine with reference to the provisions of Customs Act, 1962. (4)

Indirect taxes - CA Final - May, 2000 - Questions Nos. 1 and 6 are compulsory. The candidates are required to attempt three questions out of Q. Nos 2, 3, 4, & 5 and two questions out of Q. Nos 7, 8 & 9.

Q-1 (a) i) An assessee was using two inputs in the manufacture of beverage, availing proforma credit of the duty paid on the inputs in terms of Rule 56A of Central Excise Rules, 1944. On 29.07.86, these two inputs were exempted from payment of duty; on that date, there was a credit balance in the assessee's account. From 1.3.87, the final product (beverage) was covered under Modvat Credit Scheme and the assessee sought the permission from the central excise officer to transfer the credit balance lying in the Proforma Credit Account to the Modvat Credit Account; this was, however, denied by the Assistant Commissioner. While denying the permission, he held that the proforma credit was not in operation from 29.07.86 to the date of application and that Rule 57H permitted such transfer to be made only when proforma credit account was "operative immediately prior" to 28.2.1987. On an appeal, the Commissioner held that for transfer of proforma credit, the assessee should be availing of the procedure under Rule 57A 'immediately before' opting for the Modvat credit and he further observed that the assessee was not operating under the procedure of Rule 56A i.e. the period between 29.7.86 and 27.3.87 when the application was made under Rule 57H. Assessee has now appealed to the Tribunal for remedy. Critically examine the issue and offer your comments by reference to Rules 56A, 57A and 57H. (ii) A company engaged in the manufacture of Vacuum Cleaner, was clearing the goods from its factory to its depots in different places in the country from where, they were sold in wholesale. The goods were cleared from the factory by packing each vacuum cleaner in a plain brown carton, two such cartons being further packed together in a larger plain brown carton, to their depots (Godowns). At the depots, the vacuum cleaners were removed from the plain cartons and each `cleaner' was packed in a printed carton before sales were made. The plain cartons in which the goods were transported from the factory to the depots were discarded. The cost of the plain cartons as also that of the printed cartons was included in the price of the vacuum cleaner. The company filed a price list claiming deduction of the cost of the plain cartons since they were discarded, but the claim was disallowed by the Assistant Commissioner. An appeal against his order was also rejected. In further appeal before Tribunal, the company claimed that plain cartons were used only for protection of goods during transport from factory to godowns to avoid damage to the printed cartons which would be the case if they are used for the first stage despatch itself. You are required to examine the issue and indicate whether the company's claim to exclude the cost of the plain cartons from the assessable value is right. - . - (b) i) Section 4A of Central Excise Act, 1944 empowers the Central Government to specify goods on which duty will be payable on maximum retail price basis. Bring out the salient features of this concept. ii) A factory collects insurance charges from its customers as part of the selling price; the factory, however, does not actually incur any charges for obtaining an insurance cover. Kindly indicate whether the collection made by the factory will form part of the assessable value for excise duty purposes. [4+4+4+3 = 15 marks]

Q-2 (a) A company manufactures excisable goods. Its factory is situated in the interior areas of the country. A substantial part of the manufacture is exported. Do you recommend to the management of the company any procedure for adoption of a programme which will avoid, within the provisions of Central Excise Legislation, payment of duty ? Discuss the procedure you will like to adopt. (b) i) State the procedure in regard to `Diversion of Export Goods for Home Consumption'. ii) Explain the validity of "Deemed Manufacture" with examples. [8+4+3 = 15 marks]

Q-3 (a) i) discuss the reversibility or otherwise of Modvat credit in the following cases, referring to decided case laws, wherever applicable : (1) If input originally entitled to Modvat, subsequently became ineligible for Modvat; (2) If supplier gives reduction in price after clearance; (3) If final product is subsequent exempted; (4) If goods are sent under chapter X. (b) (i) "Monthly Return is Self Assessment." Explain the procedure for submission of Monthly Return. (ii) Explain 'return' and 'retention' under rule 173L. [4 x 2 = 8+4+3 = 15 marks]

Q-4. Discuss the following issues : (a) Time Limit for filling Refund application under Section 11B of Central Excise Act. (b) Excluded turnover for SSI Exemption Limit. (c) Emergency Power of the Government to increase Excise Duty. [5+5+5 = 15 marks]

Q-5 Your advice as consultant is sought by taxpayers in the following cases. Kindly indicate, with reasons, your decision. [ facts do not relate to the same taxpayer] : (a) One of the plants of the taxpayer produces ferrous sulphate, chromium sulphate and sulphur-di-oxide during the preparation of a Khaki dye. These are intermediate goods / semi-finished goods and are not marketable. Central Excise Authorities demand excise duty on the ground that the taxpayer was manufacturing these goods and was clearing them for internal consumption. (b) One of the manufacturing units of the taxpayer manufactured products on which no special excise duty was payable till February, 1999. The products manufactured upto the end of February, 1999 were cleared on 5th March, 1999. On 28th February, the Government through its budget proposals introduced a special excise duty on these products. Central Excise Authorities demand that the special excise duty introduced effective 1st March, 1999 would be payable on the goods cleared on 5th March, though their manufacture was completed before 1st March, 1999. (c) An Assistant Commissioner of Central Excise by his order of 11th February, 1980 held that goods were classifiable under tariff item 68 and liable to excise duty. The Superintendent of Central Excise by his notice of 24th May, 1980 demanded duty on these goods. Is the Department's stand justified ? [5+5+% = 15 marks]

Q-6 (a) i) ABC Ltd., manufacturer of fertilisers, imported large quantity of rock phosphate and sulphur. Goods were purchased by ABC Ltd. on the high seas and the responsibility of unloading in India was theirs and they maintained their own wharf at port unloading equipment and staff for the same. Customs Authorities assessed the landing charges at 1.4% on C.I.F. value thereof (then assessed rate) and the importer had paid the same as demanded. Later on, Customs Authority claimed that the said 1.4% did not include Stevedoring charges or unloading charges and therefore they added them separately calculating them upon the basis of inter-alia unloading labour charges, customs staff overtime, post-hire charges for dining hall, fuel, electricity, depreciation, maintenance cost, administrative overheads and notional interest on capital. State what your advice to the company would be, bearing in mind the provisions of Customs Act and decided cases. (ii) An importer imported some goods for subsequent sale in India at $ 12,000 on CIF basis. Relevant exchange rate as notified by the Central Government and RBI was Rs. 45 and Rs.45.50 respectively. Finance Act, 1999 restructured the basic customs duty rates and imposed a surcharge @ 10% on the effective basic duty. The item imported attracts basic duty at 40%. If similar goods were manufactured in India, Excise Duty payable as per Tariff is 20%. Arrive at the Assessable value and the total duty payable thereon. (b) ITDC as a canalising agent imported certain goods and stored them in a bounded warehouse. A private party obtained an import licence and approached ITDC for clearance of these goods. ITDC filed ex-bond Bill of Entry on 29th January, 1996. This was returned by customs authorities to ITDC, after due processing, for payment of duty. The private party, in the meantime, changed his mind and decided not to clear the goods and informed ITDC accordingly who in turn, by their letter requested the Customs Department to cancel the Bill of Entry. This was done. Subsequently, the Customs Department demanded interest since the duty had not been paid within seven days of assessment of the Bill of Entry as stipulated by Section 47 of the Customs Act. Do you think that the demand for interest is sustainable ? Discuss. [6+6+4 = 16 marks]

Q-7 (a) i) What do you understand by First Assessment and Second Assessment System under the Customs Law ? (ii) Explain the rules regarding "Remission on relinquished goods". (b) Write a short note on : i) Warehousing period under Section 61 of Customs Act. ii) `Project Import' and "Eligible Projects". [3+3+3+3 = 12 marks]

Q-8 (a) A manufacturer of excisable goods imported epoxy resin under Bill of Entry dated 28th March, 1992 and put them in a bonded warehouse. He later on cleared it on payment of duty. Subsequently, he realised that there was an excess payment of duty and put in a refund claim. He used the imported goods in the manufacture of other goods and the burden of duty had not been passed on. The imported goods were not sold to any other buyer. The Customs Department refused the claim to refund on the ground of unjust enrichment. Was the decision justified ? Discuss. (b) Write a brief note on adjudication in customs cases. (c) State and discuss the feature of temporary detention of baggage imported, under Section 80 of Customs Act. [4+4+4 = 12 marks]

Q-9 (a) write a note under Customs Law on : (i) tourist (ii) Identical Goods (iii) Customs Station and Customs Port. (b) discuss the provision regarding `Transit of Goods' and `transhipment of Goods without Payment of Duty' under Customs Act. [2+2+2+6 = 12 marks

Indirect taxes - CA Final - November, 1999 - Questions Nos. 1 and 6 are compulsory. The candidates are required to attempt three questions out of Q. Nos 2, 3, 4, & 5 and two questions out of Q. Nos 7, 8 & 9.

Q. 1 (a) (i) Computers are covered under Heading No. 84.71 of the First schedule to the Central Excise Tariff Act, 1985 which describes computers as automatic data processing machines. XYZ Ltd. has undertaken upgradation of its computers both in terms of storage capacity and processing speed by increasing the hard disc capacity, RAM, changing of processor chip from 386 to 486 and in certain cases from Pentium I to II. The Department’s contention is that new goods with a different name, character and use have come into existence and the upgraded products are chargeable to excise duty. Discuss in the light of provisions of Sec. 2 (f) of the Central Excise Act, 1944 relating to "manufacture" whether this stand of the Department is justified. (ii) XYZ Ltd. exported carbon steel flanges during the period 1-1-99 to 31-3-99 and 1-4-99 to 30-6-99 under Bond and claimed refund of MODVAT Credit in respect of duty on inputs used in the manufacture of the said product under the provisions of Rule 57F (2) of the Central Excise Rules. They claimed refund and the entire quantity of inputs put to use in the manufacture of ‘Flanges’ except the quantity of waste and scrap generated during the manufacturing process. They however claimed "burning loss" which occurs at the forging stage and at the machining stage to the extent of 9.4% and 8.8% respectively to be the quantity of inputs used in manufacture. The Assistant Commissioner allowed the refund claims on the quantity of steel flanges actually exported, but disallowed the claim for credit on "burning loss" etc. Discuss, with reasons, whether the action of the Assistant Commissioner is sustainable in law ? - . - (b) Discuss fully the revisionary powers of the Central Excise Authorities under Sec. 35E, Sec. 35EA and Sec. 35EE of the Central Excise Act, 1944. [8+7=15 marks]

Q. 2. (a) Briefly explain the procedure under Chapter X of the Central Excise Rules governing remission of excise duty on goods used for special industrial purposes. (b) State briefly the provisions relating to MODVAT credit on capital goods. [8+7=15 marks]

Q. 3. (a) Explain briefly : (i) Whether expenses for maintenance and running of depots could be claimed as deduction from the price for purposes of determining value under Sec. 4 of the Central Excise Act ? (ii) Can different rates of discounts offered to dealers in different regions be claimed as admissible deduction for valuation under Sec. 4 of the Central Excise Act ? (iii) Are Dharmada charges (charity payments) recovered by the assessee from its customers includible in the assessable value of the final products under Sec. 4 of the Central Excise Act ? (iv) Whether profits made by a dealer on transportation by charging more than the amount spent on actual transport is includible in the assessable value for purposes of Sec. 4 of the Central Excise Act ? - . - (b) Explain the concept of "Related Person" under Sec. 4 of the Central Excise Act with the help of decided cases. [8+7=15 marks]

Q. 4. (a) (i) Discuss broad criteria for deciding excisability of Plant and Machinery assembled at site. (ii) Briefly state the provisions relating to exemption available for Small Scale Units under the Central Excise Act. - . - (b) Explain the circumstances in which a refund claim could be admitted and what are the consequences of rejection of a refund claim under the Central Excise Act ? [8+7=15 marks]

Q. 5. Write short notes on any three of the following. : (a) Dutiability of Waste and Scrap (b) Self-assessment (c) Eligible "inputs" under MODVAT Scheme (d) Authorized Representative. [8+7=15 marks]

Q. 6. (a) (i) The shipping bill in respect of an export consignment was presented to the Customs Authority on March 8, 1999. The Customs Authority granted "entry outwards" to the ship on March 11, 1999, the loading of the goods in the ship had commenced only after March 17, 1999. A notification was issued under the Customs Act exempting the export item from customs duty on March 17, 1999. The assessee contends that since the loading of the goods in the ship had commenced after March 17, 1999, the export consignment is eligible for the benefit of the exemption notification. Discuss with reasons whether the assessee’s contention is tenable in law. (ii) Nircom ice-cream Company imported, under one single order, a consignment of plant and machinery, namely "continuous ice-cream freezer with accessories such as electric dozer, can filler, fruit feeder and ripple machine with spare parts." According to Nircom, the main function of the machine is to make ice-cream. The ice freezer is stated to be refrigerating equipment classifiable under heading 84.18 of the Customs Tariff Act, 1975. None of the aforesaid accessories can function independently as each of them has been specially made to be connected to work along with the ice-cream freezer. It is the Department’s view that the can filler, fruit feeder and ripple machine are independent machines and not accessories. State with reasons as to how you would decide the issue with reference to the ‘General Rules of interpretation’ under First Schedule - Import Tariff to the Customs Tariff Act, 1975. (b) Discuss in detail, various types of duties levied on imports under the Customs Act, 1962. [8+8=16 marks]

Q. 7. (a) State briefly the provisions of Sec. 14 of the Customs Act, 1962 regarding valuation of goods for purposes of assessment. - . - (b) (i) When are the Customs Authorities precluded from enhancing the value on the basis of contemporaneous import at higher price invoking Rule 4 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 read with Sec. 14 of the Customs Act, 1962 ? (ii) Rule 4 of the Customs Valuation Rules, 1988 states that the transaction value of imported goods shall be the price actually paid or payable for the goods, when sold for export to India adjusted in accordance with the provisions of Rule 9 with regard to costs and services. What is the benefit available to the importer with respect to the cost of transport for importation by air, when the free on board value is ascertainable ? [6+6 = 12 marks]

Q. 8. (a) Explain ‘Foreign going vessel or aircraft’ under Sec. 2 (21) of the Customs Act, 1962. State whether a vessel engaged in fishing outside the territorial waters would be considered as foreign going vessel and give reasons therefor ? (b) Additional duty under Sec. 3 of the Customs Tariff Act, 1975 cannot be levied on the import of a manufactured or produced article, if no excise duty on a like article could be levied, if manufactured or produced in India. Explain the import of this statement with reference to Sec. 12 of the Customs Act and Sec. 2 and 3 of the Customs Tariff Act, 1975. [6+6 = 12 marks]

Q. 9. (a) (i) Sun Industries sent certain goods by a ship from Calcutta to Colombo in Sri Lanka under claim for drawback on the said goods under Sec. 75 of the Customs Act, 1962 against Shipping Bill. The ship had passed beyond the territorial waters of India and the engine developed trouble while the ship was in high seas falling within the ambit of the expression ‘taking out to a place outside India.’ The ship returned back and ran aground in Indian territorial waters at the Port of Paradeep. The fittings, stores and cargo was salvaged. Discuss the admissibility of claim for drawback by the Company. (ii) An importer having received 100 casks of whisky from Scotland by a vessel, warehouses them in a bonded place. Each cask is reported to contain 1,000 litres. At the time of removal of goods, it is found that 50 of the cases contained only 980 litres each. The importer claims that there has been a loss in storage and hence no duty can be levied on the shortage. Explain the relevant provisions of the Customs Act, 1962 regarding shortage of volatile goods and state, with reasons, how you would decide the case. - . - (b) Write short notes on : (i) "Goods" as defined in the Customs Act, 1962 (ii) Release of Goods on execution of a Bond. [6+6=12 marks]

Indirect taxes - CA Final - May, 1999 - Questions Nos. 1 and 6 are compulsory. The candidates are required to attempt three questions out of Q. Nos 2, 3, 4, & 5 and two questions out of Q. Nos 7, 8 & 9.

Q. 1. (a) XYZ Co. Ltd. avails MODVAT credit on inputs used in the manufacture of their final product viz. insulated wires and cables. On 30th January, 1999, 10,000 metres duly packed and lying in Bonded Store Room inside the factory were destroyed by fire. Excise duty involved on the above is Rs. 22,000. Discuss the following propositions giving reasons. i) The company can avoid payment of excise duty liability of Rs. 22,000 on the quantity of wires and cables lost in fire. ii) The company would be required to reverse MODVAT credit availed on the inputs contained in the above final product. (b) Discuss the circumstances under which and by whom ‘Special Audit’ under Section 14AA of the Central Excise Act, 1944 may be ordered. How is this different from the Special Audit under Section 14A of the Act ? [8+7 = 15 marks]

Q. 2. (a) Discuss the statement : "Excisable goods should be good which are ‘movables’ and ‘marketable’ to attract levy of Central Excise Duty under the Central Excise Duty under the Central Excise Act, 1944." (b) i) Explain the concept under the proviso to Section 11A of the Central Excise Act, 1944 that : "Intention to evade payment of duty is not mere failure to pay duty. It must be something more i.e. the assessee must be aware that the duty was leviable and he must have deliberately avoided payment of duty." ii) Write short notes on : * Registration of Manufacturers * Payment of duty under Protest. [8+3+2+2 = 15 marks]

Q. 3. (a) Explain the concept ambit and scope of ‘manufacture’ under the Central Excise Act, 1994. (b) i) What is the legal status or otherwise of the Explanatory Notes to HSN for the purposes of classification of goods under the Central Tariff Act, 1985 ? ii) Company X manufactures copper bolts and nuts specially made for fitment in a die casting machine and claims classification of such bolts and nuts as parts of ‘die casting machine’ under Chapter 84 of the Central Excise Tariff covering ‘Machinery’. However, it is the contention of the Excise Department that such bolts and nuts are classifiable under Chapter 74 as ‘Copper Bolts and Nuts’ as ‘Parts of General Use’. How would you decide upon the correct classification ? [7+3+5 = 15 marks]

Q. 4. (a) A Ltd., a manufacturer of tyres was extending a warranty discount on any tyres that were defective. The scheme of warranty discount operated thus : the customers lodged their claim with regard to any defects in the tyres. Such claims were then scrutinized by a Technical Committee of A Ltd., which would decide the amount of refund due to the customer on the basis of the reduction in the normal life of tyre attributable to the defect. This refund was to be given by the Technical Committee. This practice was being followed by A Ltd. for the last 15 years. A Ltd. claimed the warranty discount as a Trade discount which is deductible in computing the assessable value of the tyres. Is this correct ? Discuss in the light of the provisions under Section 4 of the Central Excise Act, 1944 with respect to Trade discount. (b) Discuss the includibility or otherwise of the following amount for purposes of valuation under Section 4 of the Central Excise Act, 1944 : i) Cost of packing materials supplied by customers. ii) Interest on delayed payments. iii) Cost of transportation from the factory to the depots. [8+7 = 15 marks]

Q. 5. (a) Discuss in detail the difference between Rule 12 and 13 of the Central Excise Rules, 1944 pertaining to export of excisable goods. (b) Explain the provisions of Rules 173H and 173L of the Central Excise Rules, 1944 regarding re-entry or retention of duty paid goods into the factory of manufacture and refund of duty on goods returned to the factory. [8+7 = 15 marks]

Q. 6. (a) Discuss the includibility or otherwise to the assessable value the Customs Act, 1962 of the following payments made by an importer to the overseas supplier of a second hand plant in India : i) Dismantling charges for removing the second hand plant at the supplier’s place and shipping to the Indian importer. ii) Fees for supervision of erection and commissioning of plant in India. For this purpose the foreign supplier deputed their technicians in India. iii) Payments for tools, dies and moulds (imported alongwith the plant) for use in connection with the manufacture of excisable goods on successful commissioning of the plant. iv) Lump sum payment and annual royalty for transfer of technical know-how for manufacturing goods. (b) Briefly describe the assessment and clearance procedure under the Customs Act, 1962. [8+8 = 16 marks]

Q. 7. (a) Write a short note on ‘draw back’ under Section 74 and Section 75 of the Customs Act, 1962 and the essential difference between the two provisions. (b) State the provisions relating to licensing of private bonded warehouses under the Customs Act, 1962. [6+6 = 12 marks]

Q. 8. (a) i) Discuss the significance of ‘Burden of Proof’ under Section 123 of the Customs Act, 1962. ii) Explain with reference to the relevant provisions under the Customs Act, 1962 as to how to calculate the duty where imported goods consist of articles liable to different rates of duty. (b) What are the provisions under Section 54 of the Customs Act, 1962 regarding transshipment of imported goods ? Explain briefly with reference to the regulations framed under that Section. [6+6 = 12 marks]

Q. 9. (a) Write short notes on : i) Warehousing without warehousing under the Customs Act, 1962. ii) Redemption fine and Penalty. iii) Indian customs waters. (b) Explain the following : i) Power to take samples under Section 144 of the Customs Act, 1962 ii) Person in charge under the Customs Act, 1962. [6+6 = 12 marks]

CA Final - November 1998 - Questions Nos. 1 and 6 are compulsory. The candidates are required to attempt three questions out of Q. Nos 2, 3, 4, & 5 and two questions out of Q. Nos 7, 8 & 9.

Q. 1. (a) Kagaz Karkhana Ltd. manufactures paper. In the year 1995, it embarked on a major expansion programme, and for the purpose, fabricated at site, 75% of the portion of a paper making machine and procured (paying excise duty) the remaining parts of the paper making machine from other suppliers. Having done so, it assembled all the parts together into a paper making machine at site. The erection and installation was completed during November, 1995 and the machine was firmly fastened to the earth, with the help of bolts, nuts and grouting material on a concrete bed, to prevent rattling and ensure wobble-free operation and presently the machine is functional and operating. During July, 1998, the Central Excise authorities served the company a show cause notice, demanding excise duty of Rs. 5 crores, on the paper making machine, alleging that the activity resulted in manufacture of excisable goods, falling under chapter 84 of CET. The company engages you as ‘counsel’ to represent them and desires to contest the case on the grounds (i) that the activity of erection and installation was not manufacture, (ii) that the activity resulted in "immovable property" emanating at site and (iii) that the demand is time-barred. You are required to discuss the tenability or otherwise of the contentions of the noticee-client and advise them, drawing support from judicial decisions. [8 marks] (b) Outline the provisions enshrined in the Central Excise Act, 1944 and rules framed thereunder, which govern the levy of excise based on capacity of production. Your answer shall be with reference to the provisions introduced by the Finance (No. 2) Act of 1997. (7 marks)

Q. 2. (a) You are required to test the veracity or otherwise of the following assertions, in the context of Central Excise law, supporting your arguments with case law (if any) and statutory provisions applicable : (i) Branding / labelling of packed spices is manufacture, but branding / labelling of stainless steel screws is not manufacture. (ii) Captive consumption of excisable goods within the factory should always be valued on the basis of sale price of similar goods manufactured by others. (iii) Registration procedure is never required to be followed by a non-manufacturer in excise law. (iv) A 100% EOU engaged in the manufacture of excisable goods should pay excise duty in a special manner and general provisions do not apply to them. (2 x 4 = 8 marks) (b) (i) Outline all the documents on the basis of which MODVAT credit is admissible (for inputs and capital goods) under the C.E. Rules, 1944. (ii) When the duty paying document accompanying a consignment is lost, what should be done to avail credit ? (5+2 = 7 marks)

Q. 3. (a) How would you deal with the following items in the course of arriving at the assessable value of excisable goods ? (i) Trade Discount (ii) Protective packing (for safe transportation of goods) (iii) Interest on receivables (iv) Outward handling charges. (2 x 4 = 8 marks) (b) Shakti Ltd. manufactures D. G. sets. During November, 1997 it cleared a D. G. set, paying excise duty to its customer Bhakti Ltd. In August, 1998, the D. G. set developed a major problem and the customer intends to send it back to Shakti Ltd. for repair/re-conditioning (without paying excise duty again when the repaired D. G. set is sent back to them). There is a two-year warranty period given by Shakti Ltd. You are required to examine the possibility of the repair / reconditioning being undertaken by the manufacturer and clearance to Bhakti Ltd. without paying excise duty. Examine the relevant provisions of the C.E. Rules. (7 marks)

Q. 4. (a) You are the Manager (Excise) of M/s. Alpha Ltd. situated in Calcutta. You are required to prepare a note to your Managing Director, summarising the procedure for Export of excisable goods under Bond without payment of excise duty, for a consignment of the company is due to leave Calcutta Port for Singapore (by sea). You shall refer to Rule 13 of the CE Rules, 1944 and other applicable provisions of law. (8 marks) (b) Pre-deposit of adjudication levies is a "condition-precedent" for filing an appeal under the Central Excise Act, 1944. Under what circumstances can the appellate authority waive such a condition and admit/entertain the appeal ? Examine the issue with the help of decided cases. (7 marks)

Q. 5. (a) Examine the following aspects with reference to Sections 9AA and 9C of the Central Excise Act, 1944 : (i) Whether criminal prosecution would lie against a company, before a Court of Law ? (ii) To what extent are directors of a company responsible, for offences committed by the company ? (4 x 2 = 8 marks) (b) Enumerate the instances / circumstances contemplated in Section 11B of the Central Excise Act, 1944, under which excise duty shall be refunded to an applicant, instead of being credited to the Consumer Welfare Fund. Also state under each such instance or circumstance, the documents required to be produced or filed alongwith the refund claim. (4 + 3 = 7 marks)

Q. 6. (a) Rishi Alloys Ltd., imported during June, 1998, by sea, a consignment of metal scrap weighing 3,000 M. T. (metric tonnes) from U. K. They filed a bill of entry for home consumption and the Assistant Commissioner passed an order for clearance of goods, and applicable duty was also paid. The importer thereafter found on taking delivery from the port trust authorities, that only 2,500 M.T. of scrap were available at the docks although they had paid duty for the entire 3,000 M. T., since there was no short-landing of cargo. The short-delivery of 500 M.T. was also substantiated by the Port-Trust Authorities, who gave a "weighment certificate" to the importer ? - . - . - On filing a representation to the Custom Department, the importer has been directed in writing, to justify as to which provision of the Customs Act, 1962 governs their claim for restoration of duty on the 500 M.T. scrap not delivered by the Port-Trust. You are approached by the importer as "counsel" for an opinion / advice. Examine the issues and tender your opinion as per law, giving reasons. (8 marks) (b) Sulabh Ltd., imported five main-frame computer systems from USA in December, 1997, paying customs duty of Rs. 60 lakhs. Due to some technical snags which developed in the systems during March, 1998, the supplier sent his technicians from USA, to repair / solve the snag. No solution was found, as a result of which in July, 1998, the management of Sulabh Ltd. has decided to re-ship / return the goods to the foreign supplier. You are finance manager of the company (Sulabh Ltd.) and have been approached by the Board of Directors, to examine and advise whether import-duty paid can be got back from the Central Government when goods are sent back. Examine and advise, in the light of the provisions of Customs Act, 1962. (8 marks)

Q. 7. (a) In the context of the Customs Act, 1962, briefly discuss the following : (i) Interest on delayed payment of duty. (ii) Date for purposes of determination of rate of duty / tariff valuation in respect of goods imported or exported by post. (3 + 3 = 6 marks) (b) (i) Briefly state the law relating to demand for payment of duty and interest under Section 28 of the Customs Act, 1962. (ii) State the provisions in the Customs Act, 1962 which govern the appearance by an authorised representative and the qualifications for such a person. (3 + 3 = 6 marks)

Q. 8. (a) Discuss the includibility or otherwise of the following payments made by an importer to the overseas supplier of an imported machine / equipment, to the assessable value of goods imported : (i) Process licence fee and technology transfer fees (ii) Dismantling charges for removing the machine (before shipment to India) at the foreign supplier’s site (iii) Training charges paid to supplier, for imparting training to the Indian company’s personnel, on how to use the equipment. Your answer shall be with reference to Section 14 of the Customs Act, 1962. You may draw support from decided cases. (2 x 3 = 6 marks) (b) State and summarise the procedure and documentation for clearance of ‘export cargo," under the Customs Act, 1962. (6 marks)

Q. 9. (a) Briefly examine the nature and significance of the levy of "Anti Dumping Duty," under the Customs Tariff Act, 1975. (6 marks) (b) Define or briefly elucidate the meaning of the following words / expressions in the context of the Customs Act, 1962 : (i) Smuggling (ii) Importer (iii) Foreign Going Vessel or Aircraft. (2 x 3 = 6 marks)