Excise Act Lecture

CENTRAL EXCISE DUTYNATURE & MEANING CENTRAL EXCISE DUTY
EXCISE DUTY
Central excise duty is an indirect tax, levied in goods manufactured
in India. The tax is administered by the central government under the
authority of entry 84 of the union list (list 1) under 7 schedule, read with
article 256 of the constitution of India.
The word “excise” is derived from a Dutch term “acise” , which itself is
derived from the Latin word “accensay” , which means to tax “excise” is a
word of wide import any & according to dictionary meaning, denotes “an in
direct tax on commodity manufactured ,produced ,sold ,used or transported
by the country”. Excise duty is a duty levied on the goods that are
indigenously manufactured.
Excise duties having been defined in this manner in sec. 3 of the that act, it
immediately follows from the very defined that for anything to be liable to
excise duties, it must fulfill all the following conditions.
(A) It must be “goods”.
(B) It must be “excisable goods”.
(C) It must be either produced or manufactured in India.
While the duty no doubt is on goods as such, still goods
themselves cannot pay duty. This takes us to the next concept of
“taxable event”. For every tax, whether direct or indirect, there is a
“taxable event”. That is the event or situation which gives rise to
the liability which he has created, which would mean that he
should be the person to pay the duty. Since the taxable event is
production/manufacturer.
Excise duty is today the most important source of revenue in India.
It constitutes about 1/5 of the total yearly receipts of the central
government.
The finance act, 2000 has renamed the ‘duty of excise’. The
‘central value added tax’ (CENVAT), which term is the term
‘duty’, ‘duties’, ‘excise duty’ or ‘duties of excise’.
The Webster’s New International Dictionary defines “excise duty”
as :-
(A) Any duty, toll or tax ;
(B) An inland duty or imposed, levied upon the manufacture,
sale or consumption of commodities within the country.
(C) A tax upon the pursuit or fall of certain sports, trades or
occupation, usually taking in this case, the form of
exactions for licenses.
The supreme court of India has defined “Excise duty” as “a tax
on the production or manufacture of excisable goods produced
or manufactured within the country”
Nature of Excise Duty
A few special features describing the nature of excise duty are as
follows:-
1. The duty of excise is not levied on directly on the goods but is
levied on the manufacture or production of a new commodity.
Hence it is called an ‘indirect tax’.
2. Excise duty is payable by the manufacturer or the producer, not
by the consumer. However the incidence of duty is always
indirectly on the consumer.
3. Excise duty is levied on goods &the taxable events is
manufacture or production if a new commercial commodity. The
levy collection of excise duty is practically made at a stage next to
the manufacture of goods, i.e. removal of goods.
4. The taxable event is not independent of liability to pay duty
from levy of duty. Therefore there cannot be different taxable
events for different purposes.
5. The method of collection does not effect the essence of excise
duty, but only relates to the machinery of collection for
administration convenience.
Excise differentiated from other duties:Excise v/s custom duty :-Excise duty is levied on manufacture or production of goods within
the country. Thus it is related to industrial activity. Custom duty,
on the other hand, is attracted on the movement of goods across the
custom frontier.
Excise duties are the duties, payable on goods produced at home,
where as custom duties on goods imported into country from
abroad.
Excise v/s sales tax :-Excise duties are the duties levied upon a manufacture or producer
of specified goods, in respect of their manufacture & production in
a factory within the country. It is not related to sale of goods or
proceeds of such sale. Sale tax , on the contrary is levied on the
vendor of goods, in respect of his sale.
The taxable event in case of excise duty is the coming into
existence of a commodity. However in case of sale tax , the taxable
event is the sale of a commodity. The event of a sale of a
commodity is immaterial for levy of excise duty.
In 1939, the duty of excise included the tax on sales as well.
However, when the government of India Act 1985, delegated
powers to levy tax on sale to another authority, it was distinguished
from excise duty.
Excise v/s service tax :-Service tax is a tax on the services provided by the specified
category of person to their clients & customers. On the contrary,
excise duty is a tax on removal of goods from the place of
manufacture or production, irrespective Of whether the same are
used by customer or not.
Excise v/s octroi :-Octroi is charged on the entry of goods & a specified area. This is
generally levied & collected by the local governments.
While excise duty is levied on the goods manufactured &produced
&the country. Octri is a kind of entry tax. The levy of excise duty
is therefore not conflict with the levy & imposition of octroi.
Types of excise duty:-Central excise duties can be classified into the following
categories:-
(A) Basic excise duty (BED):- BED is levied under the central
excise act 1994, on specified goods manufactured or
produced in India at the rates specified in the Central
Excise Tariff Act 1985. The basic excise duty may be:-(1) Ad Valorem Duty i.e. duty levied at the specified rate on
the volume of goods.
(2) Specific Duty i.e. duty levied at the specified rate on the
unit, weight, volume, length or area of goods.
There is a fixed rate of duty @ 16% is charged.
The basic excise duty is shared between the Union & the States.
(B) Special duties also known as auxillary duties, are the
regulatory duties, which are levied as surcharge on certain
specified goods. The purpose of special duties to raise
additional resources for some specified objects. Special
excise duty is the percentage of effective basic duty is
calculated & relief exemptions & rebates is granted. Thus,
if the basic excise duty is nil the special excise duty would
also be nil.
The special duties were first introduced in India in 1963 at the
time of Chinese aggression. Special excise duties are generally
announced through the Finance Bill.
(C) Additional duties:- Additional duty is collected on certain
specified goods & products under the provisions of
separate status. The additional duty is levied with the
object to, either curb the demand or consumption of the
particular commodity or to generate revenue sources from
the commodity, which can, for the time being, bear the
extra load of taxation. These additional duties are in
addition to the basic excise duty & special excise duty.
(D) National calamity contingent duty [finance act 2001]:- A
national contingent duty is imposed by a finance act 2001.
This duty shall be in addition to any another duties of
excise chargeable on such goods under the Central Excise
Act 1944 or any other law for the time being in force. This
duty is imposed on Pan masala, Cigarettes, Bidies & other
tobacco products.
(E) Special Additional Excise Duty [finance act 2002]:- In the
case of goods specified in the 8th schedule, beings goods
manufactured, there shall be levied and collected for
purpose of the union by surcharge, a duty of excise to
called the special additional excise duty at the rates
specified in the said schedule,
This duty shall be in additional to any other duty on such
goods under central excise duty 1944 or any other law for
the time being in force.
The 8th schedule:-
1. Motor Spirit (Petrol),
2. High Speed Diesel Oil
(F) State excise duty:- It is imposed on manufacturing or
production of
items listed in state constitution.
According to list 2nd of 7th schedule entry 51 the state
governments are authorized to levy excise duty on the
production & manufacture of the followings goods:-
1. Any alcoholic liquor meant for human consumption.
2. Opium, bhang, narcotics drugs and other narcotics.
The duty by the Central government on the production &
manufacture of goods in India is called excise duty while the duty
levied by the state government on the production & manufacture of
narcotics in order to get for the sake of convenience called state
excise.
(G) Cesses:- Cess is a tax imposed for specified purpose with
reference to some goods. The cess is collected separately
& the collecting autority is under obligation to utilize the
same for the specified purpose only.
BASIS OF EXICE DUTY:The basic conditions of excise liability are:-
1:- The duty is on goods.
2:- The goods must be excisable
3:- The goods must be produced
4:- Such manufacture must be in India
Excise is levied on the following basis;1:- Specific duty
2:- Ad-valorem duty
3:- Compounded duty
1:- SPECIFIC DUTY:-
It is the duty payable on the basis of certain units like weight, length,
volume, thickness etc. for example duty on cigrattes is payable on the basis
of its length. Duty on sugar is based on per kg. etc. In such cases calculation
of duty is payable in comparatively easy.
In view of simplicity many goods were earlier covered under
specific duty. However this disadvantage is that even if the selling price of
product increases and the revenue earned by the government doesn’t
increase accordingly.
Frequent revision of the rates have to be done which is slow
and time consuming process hence now most of the goods are covered under
Ad-valorem duty. Presently specific rates amended for:-
1:- Cigrattes on the basis length, match box on the basis of per
hundred boxes/ packs.
2:- Marbles slabs and tiles on the basis of square mt.basis
3:- Colour t.v. based on screen size in centimeter.
4:- Sugar per quintal basis.
5:- Cement on ton basis.
2:- AD-VELORAM DUTY:-
Fixing specific duty or tariff value is possible only for few selected items
like sugar pan masala consumer goods etc. Generally it is not practically
possible to charge specific duty.
Similarly paying duty on the basis of mrp is possible only in
respect of few selected commodities. In other case central excise is payable
on the basis of value and this is called ad-veloram duty.
On a few commodity excise duty is levid on fix price or rate per
unit. For eg. Cement is levid @ 350 per ton and on sugar is levid on @ 340
per ton. However on the majority of goods the duty is levid on the adveloram
basis. In such case duty is payable should be worked out on
percentage basis of the assessable value of the goods clearly. This
percentage of duty is specified in the CEPA from 1994-1995. the gatepass
system has been replaced by invoice system. The manufacturer under self
removal procedure( under chapter vii a rule 173 A to 173 Q) can clear goods
by payment of duties, on the value shown in there invoice.there is no need of
filing price list ( except whenever the clearance are taking place from as well
as depot / consignment agents of factory)
The value shown in the invoice should be arrived at after
considering the provision of section 4 and section 4a of central excise act
1944 as well as central valuation rule 1975.
3:-COMPOUNDED DUTY:-
Compounded is the combination of specific and ad-veloram duty.
LEVY OF SLABS
1:- CENTRAL RATE – 16 %
2:- MERIT RATE – 8 %
3:- DEMERIT RATE – 24 %
( With effect from 20th feb 1999 as per the budget of 1999 )
Earlier these were 11 various ad- veloram rates, some commodities were
earlier fixed rates at 30 % 32 % 40 % but now maximum excise duty has
been lower to maximum of 24% .
LEVIABILITY
The duties of excise which shall be levied and collected on any excisable
goods which are produced or manufactured:-
1:- In a free trade zone and brought to any other place in India
2:- By a hundred per-cent export oriented undertaking and allowed to be
sold in India.
Shall be an amount equal to the aggregate of the duties of
customs which would be leviable ( under the customs act,1962 c52 of
18962) or any other law for the time being in force on like goods produced
or manufactured outside India if imported into India and where the said
duties of customs are chargeable by reference to their value the value of such
excisable goods shall notwithstanding anything contceined in any other
provision of this act be determined in accorndance with the provisions of the
customs act,1962 (52 of 1962)and the customs tarrif act 1975 (51 of1975).
WHO IS LIABLE TO CHARGE THE DUTY LEVIABILITY:-
CONSTITUTION IS SUPREME LAW:-
Legislative powers emanate from the provisions enshrined in the
constitution adopted by the respective country.
INDIA IS UNION OF STATES:-
India being a union of various states has a quasi federal constitution in
which the powers of legislation are shared between the union and states.
Article 246 and the seventh schedule mentioned therein which lay down the
division line, are specifically relevant for this purpose. It shall be seen
therefrom that both the union and the state government have powers to
legislative in regard to the levy and collection of excise duty.
CONSTITUTION AUTHORITY FOR LEVY OF EXCISE DUTY
BY CENTRAL GOVERNMENT:-
As regard duties of excise, the union government regulates that part of levy
which is provided in entry 84 or entry 97residual power of lidt 1 under
seveth schedule read with article 246 of the constitution of India and the
state government regulates those given in entry 51 list 3. The major part of
excise duties are leviable by the union government more popularly known as
central excise while the state legislature have a minor share to regulate as
described in entry 51.
It is understood that industrial alcohol will be subject to union excise
as it is not fir for human consumption hence it is the central government not
the state government which is competent to levy duty thereon.
The union duties of excise are levied on varieties of goods
which are classified in the schedule to the central excise tariff act 1985. The
central excise tariff contains a detailed classification of excisable goods the
rate of duty leviable on each tariff head.
DEFINATION OF EXCISE DUTY:-
However there is no definition of term excise duty either in constitution or in
CEA.
CONSTITUTIONAL AUTHORITY FOR LEVY OF EXCISE
DUTY BY STATE GOVERNMENT:-
As in evident from entry 84 in the union list, in the seventh
schedule of the constitution of India, the union government has no power to
levy any duty of excise on alcoholic liquor for human consumption, opium,
Indian hemp, and other narcotic drugs but including medicinal tolilet
preparation containing alcohol or any narcotic substance.
Central government has power to levied duty on medicinal
toilet preparations containing alcohol narcotic substance etc. eg. Are cough
syrup and pain killer tablets or syrups etc. though the duty is levieable by
central government would be collected as state excise duty the center cannot
collect excise duty on them.
AN OVERVIEW OF CENTRAL EXCISE RULE 1944:-
As per usual scheme of any act sec 37 of the CEA grants power to govt. to
frame rules for prescribing procedures form etc. accordingly central excise
rules have been notified by central excise rules have been notified by central
govt. ammended from time to time. These rules provided for various
procedures t be followed for clearance storage of goods accounting of goods
licensing procedures refund procedures, appeal procedures etc. rules are
generally important as the prescribed procedure have to be followed by the
assessee. In case of central excise, the rules are more important because
excise is a very procedure oriented. Many time such substantive benefits are
lost or penalties are imposed merely because proper procedure were not
followed. Moreover rules often provide for granting concession reliefs hence
they must be studied thoroughly.
These rules contains the procedure for collection of duty. These rules
interalia detail the procedure for appointment and power of officers time
manner of payment of duty execution of bonds etc. detailed procedure
regarding on levy of duty on un manufactured products manufactured
tobacco, tyre, cotton fibers tea vegetables products medicine etc. has been
given. They also contain the procedure for availing the benefit of
MODVAT.
AN OVERVIEW OF CENTRAL EXCISE & SALT ACT 1944:-
To improve the body of excise duty, the British Govt. framed the central
excise and salt act 1944. there were separate excise act, number 16 all these
were consolidated and consolidating act was passed in 1944. In the year
1996 the word ‘salt’ was omitted from the name of the act, now this act is
known as central excise act 1944. This act is applicable till date but with
various amendments made in it from time to time.
Time is a basic act for excise duty collection, there are 40
sections in this enactment. This act provides for charging of duty, valuation
powers of officer provision of arrest and penalty etc Sec 37 of the act
empowers the central government to frame rules for this purpose.
AN OVERVIEW OF CENTRAL EXCISE TARIFF ACT 1985:-
This act provides for tariff for central duty of excise. The central excise rules
1984 and central excise tariff act 1985 form the body of law of central
excise. Recommendation made by the study group constitute to review the
central excise tariff a new central excise tariff act has come into force with
effect from 28 feb 1986. the tariff act replaces 1st schedule of the central
excise and tariff 1944, this is very important development in excise taxation.
When the central excise act was passed in 1944 the act itself
included various items ( called tariff items ) into which goods were
classified. However, as more and more goods were covered under central
excise. The tariff began complicated and unsystematic. Hence, CETA 1985
was passed which comes into effect from 1st april 1986. the CETA 1985
classified all goods under 96 chapters and specific court is allotted to each
item. There are over 1000 tariff headings and 2000 sub-headings in this act.
This classification forms the basis for classifying the goods under particular
chapter and sub-head to prescribed duty to be charged on particular product.
The excise act and tariff act are thus being separated.
Main features of tariff are as follows;-
1:-LINKING OF CETA:-CEA and CETA are link together as follows:-
I:-Section 2 of CETA states that rate at which duties of excise shall be levied
under CEA are specified in schedule to CETA.
II:-Section 3 (1) of CEA specifies that the duty shall be levied collected on
all excisable goods which are produced as manufactured in India, as and at
the rates, prescribed in schedule to the CETA thus both acts are link to each
other.
2:-CETA IS BASED ON HSN:-CETA is based on harmonize system of
nomenclature called harmonized community description coding system. This
is an international nomenclature and standard adopted by the most of the
countries to insure uniformity in classification. International trade through
CETA generally follows HSN. Often there are wide variations in HSN and
CETA.
3:-CETA CONTAINS 2 SCHEDULE:-CETA consist of 2 schedule the
first schedule gives basic excise duties leviable on various products while 2nd
schedule gives list of items on which special excise duty is payable.
2nd schedule contains only few items. It has been cleared that
tariff heading given in 2nd schedule will be interpreted in the same way as
those in 1st schedule. Items included in 2nd schedule are already covered in 1st
schedule.
4:-SECTION AND CHAPTERS OF CEA:-Tariff is divided into 20
sections each of 20 sections is related to broader class of goods. Section
notes are given at the beginning of each section which govern entries in that
section. These notes are applicable to all chapters in that section.
Each of the section is divided into various chapters and each
chapters contains goods of one class. Chapter notes are given at the
beginning of each chapter.
5:-GROUPS AND SUB GROUPS WITHIN THE CHAPTER:-
Each chapter is further divided into various headings depending on different
types of goods belonging to same class of products. The headings are
sometimes divided into further sub-headings.
All excisable goods are classified using 2 digit system 2 more digits are
added for further sub classification.
6:-A SAMPLE CHAPTER FORM CETA:-Extract from CETA of
chapter is given on previous page to given an idea of the tariff.
7:-COLUMNS IN CETA:-Central excise tariff has four columns:-
I:-HEADING
II:-SUB-HEADING
III:-DESCRIPTION OF GOODS
IV:-RATE OF DUTY
IMPORTANT TERMS AND DEFINATION
1:- ASSESSEE:-Asseesse means any person
I:- who is liable for payment of excise duty assessed under these act or any
other act
II:- included any procedure or manufactures of excisable goods
III:- a registered person of a private warehouse in which excisable goods are
stored.
2:- ASSESSABLE VALUE:- Assessable value is value in which duty is
payable as a percentage generally by value we understand the price as
mentioned in bill or invoice. However for excise purpose it is not possible to
fully relay on such price as:-
I;- duty is payable even if goods are not sold
II:- it is desirable to have uniform policy in fixing AV
III:- chances of manipulation in such price should be minimum.
BASIS OF ASSESSABLE VALUE (AV) U/S 4
AV is fixed be sec 4 of the act on the basis of normal wholesale price to
independent buyer at factory gate, inclusive of packing cost but exclusive of
I:- All taxes and duty payable
II:- Trade discount
III:- Cost of durable and returnable containers.
The basic provisions of sec 4 states the value for this purpose
has to be calculated as follows:-
I:- Normal price of the goods at which such goods are originally sold by the
assessee to a buyer in wholesale trade has to be considered.
II:- The price should be at the time and the place of removal ( i.e. at factory
rate or at the godown)
III:- Buyer should be an independent person and not a related person of the
seller.
IV:- Price should be the sole consideration on the sale.
V:- If goods are sold at different prices to different classes of buyers each
such price will be treated as normal price for such class of buyer( e.g. such
industries treat govt. department, industrial consumer and other customer as
separate class of buyer and prices can be different for them.). The cost of
packing has to be included in the value. However if the packing is of durable
nature is returnable than cost of such packing will not be included.
VI:- The value should be exclusive of excise duty, sales tax and other taxes
payable on such goods.
VII:- Trade discount allowed in a accordance with normal practice of
wholesale trade is allowed as deduction for the purpose of assessable value.
COMPUTATION OF ASSESSABLE VALUE
Custom duty selling price ---------------
Less:- Deductions
I:- All taxes and duty payable -------------
( except excise duty )
II:- Trade discount (+) -------------
III:- Cost of durable
Returnable containers (+) -------------
IV:- Excise duty (+) ------------
_________
-------------- (-) -------------
___________
ASSESSABLE VALUE -------------
___________
3:-CURING:- U/S 2(C):- Curing includes dying, fermenting, witting and
any process rendering an unmanufactured product fit for marketing for
manufacture.
4:- EXCISABLE GOODS:-U/S 2(D):- Once it is established that
something falls within the mischief of the term “goods” the issue to be
decided is whether it is also “excisable goods”. Fortunately, the latter term
has been defined specifically in section 2(d) of the central excise act 1944. It
says that the term “excisable goods”means “goods specified in the I
schedule and II schedule to the central excise tariff act 1985 as being subject
to a duty of excise and includes salt.”
Now, this would mean that it is not as if anything which is sold
or is saleable hence goods is taxable by excise. It should also be specified in
the central excise tariff the I schedule II schedule to central excise tariff act
1985.) Here an important aspect of this definition is to be noted.
The definition in sec.2 (d) is specific to the effect that it is only
goods spelt out in the tariff as being subject to duty that can be consider to
be exicable goods. This would mean that it is only till the stage when the
duty liability is not discharged by actual payments that the goods can be
called excisable goods. Once the duty is paid or the goods have been
subjected to duty, they are not excisable goods. In sum, excisability attaches
itself to the goods only till the point of payment of duty. Duty paid goods are
not excisable goods. Similarly, goods manufacture in India, once they are
cleared from the factory on payment of duty may continue to be
manufactured goods but they are not excisable goods. ( for the purpose of
excise law).
An important question that arises is whether the goods specified
in the central excise tariff as per dutiable or they should also satisfy the test
of marketability. The Supreme court in Bhor industry case held that simply
because an article falls within the tariff, it would not be dutiable under the
central excise law if the said article is not goods known to the market.
Another distinction worthy of note in this context is the one
between excisable goods dutiable goods. In the excise tariff, the rates are
specified by the legislature. However in several cases the dutiability is
brought down to nil though the goods being exempted entirely from duty u/s
5A now rule and sender notification. There has been some confusion on the
part of a few as to what is the status of goods which are totally exempted. It
is contended that in as much as the goods do not have to pay any excise
duty, they are not excisable goods. However this inspiration is incorrect.
Exemption u/s 5A rule 8 dose not remove excisability. It only keeps the duty
otherwise liable in suspended animation lasts. Even when the goods do not
have to pay duty they are exicisable though they may not be dutiable.
5:- MANUFACTURE:- U/S 2(F):- Section 2(f) of central excise act
merely states that manufacture includes any process:-
I:- Incidental or ancillary to the completion of manufactured product.
II:- Which is specified in relation to any goods in the section in chapter notes
to the schedule of the central excise tariff act 1985 and amounting to
manufacture called deemed manufacture. This definition of manufacture is
inclusive not exhaustive. However there is a case law in this issue.
MANUFACTURE MEANS:-
I:- Manufacture as specified in various court decisions i.e. new identificable
product must emerge
II:- Deemed manufacture( process amounting to manufacture )
Following would instances when manufacture has been place:-
I:- Manufacture of table from wood items
II:- Conversion of pulp into base paper.
III:- Conversion of sugarcane into sugar.
IV:- Crude diamond into jewellery.
In addition, central excise tariff act specifies some process as
deemed manufacturing. If this process are carried out goodwill be said to be
manufacture even if as per court decision the process may not amount to
manufacture.
Manufacture as defined by court takes place only when a process result in a
commercially different article or commodity.
IMPORTANT COURT DECISION ARE AS UNDER:-
1:- New substance having different name character or use must
emerge:-In union of India v/s Delhi cloth mill. Air 1963 sec 791 for eg.
Cutting of wood in small pieces or making small pieces of long steel bar
would not amount to manufacture as no new product emerge.
2:- Trade parlance ( transperancy )is important:-The test to be applied
is a commodity subject to processing retains its original character identity or
whether the proceed commodity is regarded in the trade by those who deal in
it, as different identity from original commodity. Nature and extent of
commodity processing may vary with each process the original commodity
experiences change but it is only when the change of series of change take
commodity to a point where commercially it is recognized as a new different
commodity then it can be say that new commodity then it can be say that
new and different commodity has come into being. The test is whether in the
eyes of those dealing in the commodity or commercial parlance the proceed
commodity is regarded as different in character and identity form the
original commodity case law:- Aditya mills ltd. v/s UOI 1989.
3:- Identity of original article should be lost:- Case law PIO food
packers 1980. Commonly, manufacture is end result of one or more process
when the change occurs to a point where commercially it can be identified as
a new separate article manufacture is said to have taken place.
4:- Assembly can be manufacture:- Assembly of various part
components may amount to manufacture if new product emerges which is
movable and marketable.
Case Law:- Assembly of computers from duty paid bought out parts
amounts to manufacture. Sheth computers v/s CCE (2000)
I:- Assembly of CKD ( completely knocked down ) package is not
manufacture often goods are dispatched in SKD ( semi knock down )or
CKD conditional for conveyance for dispatch. For e.g. cycle manufacture
bend cycle in unassembled condition from their factory. In such cases
assembly of SKD or CKD packs at site would not amount to manufacture.
Case Law:-
A :- Cycles of India v/s VOI ( 1983 )
B :- Walchand Nagar v/s CCF ( 1995 )
II:- Assembly of plant at site is not manufacture. Assembly of plant at site
will not be liable to pay duty if immovable property emerges. After such
assembly because excise duty can be only on goods i.e. movable property.
5:- Manufacture even if final product falls under same tariff:- There
can be manufacture even if both input and final product fall under same
tariff heading if a different idenficable commercially known product comes
into existence.
Case Law:- Laminated packing pvt. Ltd. V/s CCE 1990 (i.e. ELT 326)(sc)
MANUFACTURER:-
The liability to pay duty is on open manufacturer or producer duty cannot be
recovered form his purchaser though the manufacturer may recover the same
from buyer.
WHO IS THE MANUFACTURER:-
Sec. 2(f ) which defines the word manufacturers after defining the word
manufacturer states that the word manufacturer shall be understood
accordingly and shall include not only a person who employs hired labour in
the production or manufactures at excisable goods but also any person who
involves in their production and manufacture on his own account. Here
again the definition is not exhaustive the definition contains two categories
of manufacturer namely.
I:- Persons who manufacture goods themselves on their own account.
II:-Persons who gets the goods manufactured through hired labor.
Since the definition is not exhaustive the word ‘manufacturer’
has to be understood in its natural meaning. Manufacturer is a person who
actually manufacture of produce excisable goods.
1:- MANUFACTURED THROUGH HIRED LABOUR:- A
person will be treated as manufacturer if he engaged hired labor who may be
employee or contractor for manufacture of excisable goods. A hired labor is
one who hires himself to work for an under control of another for wages.
2:- MANUFACTURE ON HIS OWN ACCOUNT:- The word on his
own account in the definition of manufacture indicate that a person will be
treated as manufacture even if the manufactures goods for his own
consumption or use.
I:-Who is not manufacturer:- It is necessary to understand who is not treated
as manufacture.
A:-Raw material supplier is not manufacture:- It is common in industries to
supply raw material to a job worked or processor and get the goods
manufactured from him in his factory like bajaj, maruti, mahindra or premier
automobile vary often get many parts manufactured form outside on
jobwork basis. In such cases they will not be treated as manufacturer even if
the raw material supplied by them right of rejection is retained by them.
B:- Brand owner is not the manufacturer:-
Some large units get their goods manufactured from others under their brand
name instead of manufacturing it themselves. They usually control quality
may even supply the design for e.g. bajaj electricals many electrical goods
manufactured footwear and use brand name some large companies also get
the goods manufactured from small scale units under their brand names. In
such cases bajaj bata or the formestical companies will not be treated as
manufacturer even if they exercise quality control or allow use of their brand
name or provide financial help to the small manufacturers or even supply the
raw material if their relation with the manufactures is principal to principal
basis.
C:- Loan license :- Loan license is not manufacture in drug license supplies
raw material to other having manufacturing facility. Person supplying the
raw material is termed as ‘loan license’. He has to obtain loan license as per
rule 138 A of drugs and cosmetics rule. Goods are manufactured by factory
owner under brand name loan license. In such case the loan license is not the
manufacturer. The owner of factory which carries on the actual
manufacturing activity is the manufacture.
D:- Contractor :- Contractor supplying labour in the premises of
manufacture is not manufacturer. If contractor supplies labour and goods
which are manufactured in the premises of manufacture with his machinery
the contractor cannot be treated as manufacturer.
DUMMY MANUFACTURER:- The above position regarding supplies of
raw material or brand name owner is valid only if the actual manufacture is
not dummy or fague or is not working under direct control or supervision of
raw material supplier. However, mere quality check or control over price
will not make the manufacturer dummy.
REGISTRATION UNDER CENTRAL EXCISE:
In terms of section 6 of the CEA,1944 a manufacturer of any excisable
goods is required to register himself with the central excise office within
whose range the factory of the manufacturer is located.
Rule 9 of the CCR, 1944 further amplifies various procedure aspect of
registration as a manufacture. Under rule 9(1) the following categories of
persons have been specified by the government to be under an obligation to
apply to registration.
1:- Person require registration:-
A:- Manufacture of excisable goods( issuing invoice under rule 11 )
B:- Producer of excisable goods ( issuing invoice under rule 11 )
C:- Warehouse where excisable goods are stored without payment of duty.
D:- Users who bring the goods without payment of duty under central
excise( removal of goods at concessional rate of duty for manufacture of
excisable goods )rules, 2001 procedure.
E:- Persons who obtain excisable goods for availing end use based
exemption notification.
F:- Exporters manufacturing or processing export goods by using duty paid
inputs and intending to claim rebate of such duty or by using inputs receives
without payment of duty and exporting the finished export goods.
G:- Importer( who will issue invoice under CENVAT rules, 2001 )
H:- Dealer of imported goods( whether first second stage who will issue
invoice under CENVAT rules 2001 )
I:- First stage dealer of excisable goods( who will issue invoice under
CENVAT rule 2001 )
J :- Second stage dealer of excisable goods( who will issue invoice under
CENVAT rules 2001)
Manufacture/ producer/ warehouse/ owner must apply for
registration before commencement of manufacture, production or
warehousing of goods.
FIRST STAGE DEALER:- FSD means a dealer who purchases either from
the manufacturers factory or depot or from the consignment agent of the
manufacturers or from any other premises from where the goods are sold by
or on behalf of the said manufacturer or from an importer of the goods.
SECOND STAGE DEALER means the dealer who purchases the goods
form the first stage dealer.
PROCEDURE FOR REGISTRATION IS A S UNDER:-
1:- Application for registration:- Application for registration is to be made in
form A-1 in quadruplicate to jurisidictional RSCE. The application should
be signed by the authorized signatory only, in case of partnership firm the
application should contain the name of all the partners and should be signed
by all the partners.
The following doucuments should be enclosed with the application:-
A:- Certified copy of the sales tax registration certificate.
B:- Certified copy of income tax permanent account number.
C:- Ground plan/ map/ layout/ of the factory/ office/ godown if it is separate
with full postal address marking on ground plan of major plant and
machinery where they are installed.
Where factory premises are used to manufacture both excisable
as well as non excisable goods than the person intending to register has to
give only a portion of the ground plan wherein manufacturing activity
pertaining to excisable goods is undertaken.
D:- Certified copy of the factory license/ shopestablishment certificate if
any.
E:- Certified copy of certificate of incorporation/ certificate for
commencement of business in case of company.
F:- Certified copy of partnership deed in case of firm.
G:-Certified copy of memorandum and articles of association in case of
private/ public ltd. Company.
H:- Copy of bye laws of the society if the manufacture is the co-operative
society.
I:- Power of attorney for signing excise documents in case of person other
than partner
J:- Board resolution copy for authorizing to sign and submit excise
documents application also procure or collect central excise registration
certificate in favour of any one director.
K:- If the premises godown is owned than property tax receipts society’s
maintainance receipt, if the premises/ godowns is rented then rent receipt or
if there is subtenancy or sublease then such agreement’s certified copy.
L:- No physical verification of premises or godown will be done before issue
of registration certificate the bonafide of the applicant will be verified form
the certified copies of the above documents.
M:- There is no fee for registration and a factory/ depot etc. is to be
registered once only i.e. there is no requirement for renewing the
registration.
N:-Registration certificate in form re duly typed in triplicate indicate therein
all goods manufactured/ traded with proper nomenclature tariff headings/
sub headings.
O:- Manufacture applicant are required to submit in addition to above the
following additional details/ documents with form A-1.
P:- List of complete plant and machinery installed within the factory
premises.
Q:- List of final products list of intermediate products list of waste scrap to
be manufactured or produced with full description relevant tariff headings/
sub headings numbers.
R:- Details of input with tariff headings and sub headings.
S:- Details of manufacturing process if possible sequence of operations/
process involved in the manufacture of the.
RECORDS OF PRODUCTION
1:- DAILY STOCK ACCOUNT REGISTER (RG 1):-
Under rule 10 of the central excise rules the manufacture is
required to maintain a daily stock account of the excisable goods
manufactured by him in daily stock account register. Daily stock account
register is to be maintained on daily basis. In case there is non-production or
dispatch on a particular day nil entries are to be made in the daily stock
account register. The commissioner has the power to grant exemption form
making mil entries in the register. In case of default, goods are liable to be
confiscated.
The register is not required to be pre authenticated by the
authorities before being brought into use. However, first page and last page
of the daily stock account register is to be pre authenticated by producer or
the manufacture or his authorized agent.
RECORDS IN DAILY STOCK REGISTER:-
A:- Quantity deposited in the store room or other place of storage.
B:- Quantity removed after payment of duty from such store room or other
place of storage or from the place or premises specified under rule 9.
C:- for recording the date of storage of loose goods in the finishing room.
D:- The date of subsequent transfer of pacted goods from finishing room to
the finished goods store room
E:- Process waste and scrap which are excisable under the tariff.
F:- Quantity delivered form the factory without payment of duty for export
or other purpose and the rate of duty the amount of such duty.
DAY AND TIME OF RECORDING:-
Usually manufacturer’s accumulate the day’s production and make a
consolidated entry. In such cases, assessee should inform to the
jurisdictional range superitendent and assistant commissioner the day and
time by which the daily production will be entered in daily stock account
register.
Goods in gully manufactured condition should be accounted
within one hour of the close of the day.
The entries in the daily stock account register are made on 24
hours cycle i.e. production of excisable goods for the previous 24 hours is
entered in the daily stock account register every morning at the
commencement of the working day.
Entries in the register cab also be made shift wise. Assessee
working under three shifts,

ICWA Intermediate Old Syllabus IDT 50 Marks

Old Syllabus



ICWA - INTERMEDIATE EXAMINATION

Business Taxation – Inter ICWA

The paper covers section I (Direct Taxes) 50 marks and
section II (Indirect Taxes) 50 marks. Only section II is given below.

Business Taxation
Section – II

December 2009

Q5. (a) State with reasons whether True or False (answer without reasoning will not deserve any credit): (i) No excise duty is payable on electric cars (ii) Petrol is declared goods under the Central Sales Tax Act, 1956 (iii) If goods are pilfered in port before clearance, customs duty is still payable by the importer (iv) Exemption from excise duty does not mean automatic exemption from excise registration. (2 x 4 = 8 marks)

Q5(b) Fill up the blanks - (i) Under the Central Sales Tax Act, 1956, when goods are exchanged for another set of goods, it will be treated as _________ (barter/sale/deemed sale) (ii) A sale or purchase of goods is deemed to be in the course of import, inter alia, if such sale or purchase _________ the import of such goods. (iii) In order to attract excise duty, goods must be _______ (movable or immovable/immovable/movable). (iv) The most important decision rendered by the Supreme Court in the early stages relating to the definition of “manufacture” is in the case of ________ (Tata Iron & Steel Co. Ltd./Delhi Cloth Mills Ltd./Associated Cement Co. Ltd./Indian Aluminum Co. Ltd.) (v) Sales tax/VAT on declared goods _______ (can/cannot) be levied by the State Government only once (vi) An EOU is required to execute a _________ (B-7/B-8/B-17) bond (1 x 6 = 6 marks)

Q6. Write short notes on any three of the following: (a) Value for excise duty purposes determined when sales are generally through a related person (b) Mandatory penalty equal to the amount of duty under the Central Excise Act, 1944 and circumstances such penalty shall be reduced (c) Use of C, F and H form under Central Sales Tax Act, 1956 (d) Valuation for exports, if value cannot be determined on basis of transaction value (18 marks).

Q7 (a) A manufacturer manufactures 1000 Nos. of product “P”, the assessable value of which is Rs. 2,000 per piece. Duty payable is 20%. Duty paid on raw materials is Rs. 2,00,000. The manufacturer sells 700 pieces in India and 300 pieces are exported. What is CENVAT credit available and what is the duty payable through PLA? (b) Explain the term “specific duty” and enumerate few items for which specific rates have been prescribed (c) Examine whether the following are “Inter-state Sales”. (i) B comes to Tamilnadu and purchases goods from A. Then, B books the goods from Tamilnadu to Maharashtra in his own name. (ii) A in Gujarat enters into an agreement to sell his goods to B in Bihar. A sends the goods from Gujarat to Bihar by booking the goods in the name of B. (d) Explain the term “Identical Goods” under Customs Valuation rules, 2007 (3+4+6+5 = 18 marks)

Q8 (a) Can mere re-packing or relabelling be treated as “deemed manufacture” for excise Duty purposes? Explain. (b) After availing CENVAT credit on machinery towards payment of duty on final product, Vasudha Wires Ltd., a manufacturer, sold the machinery as scrap. The machinery had been purchased four years back. What is the excise duty liability? Will your answer be different, if the machinery is removed as second hand goods? (c) Briefly explain the provisions of Customs Act, 1982 relating to amendment and substitution of bill of entry (3+9+6 = 18 marks)



June 2009

Answer Q No. 5 which is compulsory and any two from the rest in this section.

Q5 (a) State whether True or False (answer without reasoning will not deserve any credit): (i) For the purpose of classification of goods under the Central Excise Act, resort should be had to the scientific and technical meaning of the terms and expression used therein. (ii) Specific duty leviable under Central Excise Act is based on the value of the article/goods being assessed (iii) Taxable event of imports is compete when the goods enter the territorial water of India (iv) Insurance company which takes possession of goods for which it has paid insurance sells the damaged goods. The insurance company is a dealer under Central Sales-tax Act (8 marks)

Q5(b) Fill up the blanks: (i) Inter-State sale takes place if two conditions are fulfilled: (1) ___________ of goods, and (2) _________ goods from one State to another. (ii) Under the Customs Act, customs duty is recoverable from _________ (person liable to pay duty/any person) (iii) Declared goods are those declared under section 14 of the Central Sales-tax Act, to be goods of _________ in inter-state trade or commerce. (iv) Customs duty on project imports is _________%. (v) The peak rate of customs duty is ___________. (vi) Mere repacking or relabelling ________( will/will not) be ‘deemed manufacture’ for excise purposes (6 marks).

Q 6. (a) An importer has imported a machine from UK at FOB cost of 10,000 UK pounds. Other details are as follows: (i) Freight from port in UK to Indian port was 700 pounds (ii) Insurance was paid to insurer in India: Rs. 6000/- (iii) Design and development charges of 2,000 UK pounds were paid to a consultancy firm in UK (iv) The importer also spent an amount of Rs. 50,000 in India for development work connected with the machinery (v) Rs. 10,000 were spent in transporting the machinery from Indian port to the factory of importer (vi) Rate of exchange as announced by RBI was: Rs. 68.82 = one UK pound. (vii) Rate of exchange as announced by CBE&C (Board) by notification under section 14(3)(a)(i); Rs. 68.70 = one UK pound. (viii) Rate at which bank recovered the amount from importer: Rs. 68.35 = one UK pound. (ix) Foreign exporters have an Agent in India. Commission is payable to the agent in Indian Rupees @ 5% of FOB price. If similar goods were produced in India, excise duty payable as per tariff is 24%. There is an excise exemption notification which exempt the duty as in excess of 16%. Find customs duty payable. How much Cenvat can be availed by importer, if he is (1) a manufacturer, and (2) trader? (b) Discuss briefly about incidental or ancillary process under the Central Excise Act, 1944 (13+5 = 18 marks)

Q7 (a) Discuss the dutiability of waste and scrap. (b) “Every manufacture is production; every production is not manufacture.” Explain this statement. (c) State with reason whether the following would amount to manufacture under the Central Excise Act, 1944 : (i) Reconditioning, repairs; (ii) Printing of colour logo on Glass bottle; (iii) Assembly and fitting of different parts into one articles. (d) How should “Value” be calculated for determining SSI limits for Central Excise purposes? (6+4+6+2 = 18 marks)

Q 8 (a) Vivitha & Co. is a dealer in an electronic product, chargeable to CST at 3%. For the year ended 31.3.2009, the dealer has shown total turnover (including CST) at Rs. 39,14,000. In the above, the dealer has treated the following amounts thus: (i) Dharmada collected from buyers, shown separately in invoices – Rs. 28,000/- (ii) Weighment charges incidental to sale – Rs. 14,000/- (iii) Central excise duty collected (including cess) – Rs. 2,06,000/- The dealer has recorded the following amounts in separate folios in the ledger (i) Packing charges (These have been collected separately from buyers through Debit Notes) – Rs. 45,000/- (ii) Cash discounts allowed to buyer – Rs. 18,000/- (iii) Indemnity/Guarantee charges collected from buyers to cover loss during transit – Rs. 12,000/- (iv) Marine insurance premium for transporting goods to the premises of buyers, collected from buyers. – Rs. 32,000/-. Determine the total and taxable turnover under the Central Sales Tax, 1956, for the financial year 2008-09. You are required to show the treatment of each and every item distinctly (b) Detail 6 instances of declared goods under section 14 of the Central Sales Tax Act, 1956 and state restrictions, if any, on State taxation on such goods (12+6 = 18 marks).





December 2008
Q 5. (a) Choose the correct answer: (i) Annual financial information statement is required to be submitted by the assessee paying duty of Rs. (1) 50 lakh or more in a year through PLA (2) 1 crore or more in a year through PLA (3) 1 crore through PLA and/or through Cenvat credit in a year (4) All the assesses irrespective of duty paid (ii) Cenvat credit availed should be utilized only within a period of (1) 1 year (2) 3 Year (3) End of financial year in which the input was purchased (4) No time limit for utilization (iii) For purpose of valuation of imported goods, foreign exchange rate to be considered is as applicable on date of (1) grant of entry inwards (2) presentation of bill of entry (3) grant of entry inward or presentation of bill of entry whichever is later (4) grant of entry inward or presentation of bill of entry whichever is earlier

Q 5(b) State with reasons whether true of false (answers without reasoning will not deserve any credit) - (i) For determining the customs value or assessable value as per section 14(1) of the Customs Act, special discount limited to exclusive agents is not admissible. (ii) For matters of omission other than those covered by section 10 of the CST Act, the State Law provisions will apply. (iii) Declared goods under the CST Act, are those goods which are declared to be goods of special importance by way of notification in the Official Gazette by the Central Government each year.

Q5 (c) Fill up the blanks: (i) Recording of sound on duty paid magnetic cassette _ _ _ _ (is/is not) manufactured for the purposes of excise duty. (ii) Present Cenvat Credit Rules have been issued in the _ _ _ _ (iii) Where Company X amalgamates with Company Y, goods can be removed from factory of X to Y, _ _ _ ( after/without) payment of excise duty under rule _ _ _ _ of Cenvat Credit Rules. (iv) Where an importer proves that the anti-dumping duty imposed is more than the _ _ _ _ of dumping, he will be entitled to refund under section _ _ _ _ of the Customs Tariff Act, 1975. (v) Education cess _ _ _ _ ( is/is not) payable on safeguard duty payable under section 8C of the Customs Tariff Act, 1975 [3+6+5 = 14 marks]

Q 6. (a) After visiting USA, Mrs. & Mr. Saxena brought to India a lap-top computer valued at Rs. 1,80,000, personal effects valued at Rs. 90,000 and a personal computer worth Rs. 53,000. What is the customs duty payable? (b) W dispatches goods from Karnataka and raises invoice on X in Madhya Pradesh, W charges 3% CST and pays the same in Karnataka. During the course of movement of goods, X sells goods to Y in West Bengal and Y ultimately sells goods to Z in Kolkata. Z takes delivery of goods and the movement of goods comes to end. Sales from X to Y and Y to Z are by transfer of lorry way bill receipts. Explain the forms to be issued so that the first and subsequent sales are exempt from central sales tax. (c) Briefly explain about Duty Entitlement Pass Book (DEPB) Scheme. (d) Is it correct to say that for chargeability to excise duty purposes, an occasional sale does not mean that the impugned product is marketable? [4+4+6+4 = 18 marks]

Q 7. (a) Briefly discuss about the general exemption and concessions given to SSI units for excise duty purposes. (b) Can an importer, exporter or ‘person in charge’ amend the documents submitted to customs authorities? If yes, from what date is the amendment effective? (c) Explain briefly the provisions of CST Act, relating to Inter-State sale by transfer of document of title to goods. (d) What is the “taxable event” in the case of export of goods under customs law? Is export duty payable in case of applicable goods where ship travels 40 nautical miles from Indian port, title passes to the buyer, but the ship returns to India because of engine trouble? What is the relevant date for export duty? [5+3+6+4 = 18 marks]

Q 8. Write short notes on any three of the following (a) “Place of business” under the CST Act (b) Appeals to appellate authority under the CST Act (c) Similar goods under Customs Law (d) Meaning of “Accessory” for excise duty purposes [6 x 3 = 18 marks]

ICWA INTERMEDIATE

JUNE 2008

Business Taxation



ICWA Inter- Revised Syllabus – June 2008 – Business Taxation - The paper consists of section I (Direct Taxes) 50 marks and section II (Indirect Taxes) 50 marks. Only Section II is given below.

Section – B

Q5. (a) Fill up the blanks:

(i) Ownership of raw materials is _________ (relevant/not relevant) for excise duty liability.

(ii) Goods were removed by the manufacturer without payment of excise duty on the premise that the goods are exempt. Later it transpires that such goods are excisable at 15% (all inclusive). The manufacturer has invoiced at Rs. 11,500/-. The assessable value is Rs. ______.

(iii) Customs duty is levied under section _______ of the Customs Act.

(iv) Foreign visitors are permitted to bring articles upto Rs. ______ for making gifts, without payment of duty.

(v) Stock transfer to branch is not treated as inter-State sale when Form _________ is submitted.

(vi) Application for registration under the Central Sales-Tax Act, 1956 should be filed within __________ days (1 x 6 = 6 marks)

Q 5(b) State with reasons, whether True or False:

(i) Waste and Scrap are always treated as excisable goods.

(ii) In exceptional circumstances, goods can be cleared from factory without payment of excise duty and stored in any other premises.

(iii) Since the Government wants to encourage exports, there is export (customs) duty on very few items.

(iv) There is no “fast track clearance” for any importer towards clearance of imported goods.

(v) Importers can store imported goods without payment of duty in public warehouse or private warehouse.

(vi) Security demanded from dealer under the Central Sales-tax Act, 1956 can be satisfied in the form of Surety Bond (2 x 6 = 12 marks)

Q 6. (a) Customs value (Assessable Value) of imported goods is Rs. 2,00,000. Basic customs duty payable is 10%. If the goods were produced in India, excise duty payable would have been 14%. Education Cess is 2% and Special Education Cess is 1%. Special CVD is payable at appropriate rates. Find the Customs duty payable. What are the duty refunds/Cenvat credits available if the importer is (i) manufacturer, (ii) service provider, (iii) trader? (b) How is the value determined for excise duty purposes when sales are made to or through a related person? (10+6 = 16 marks)

Q 7. (a) Briefly explain the provisions under the Customs Act relating to import through courier (b) Who can file refund claims under the Customs Act? (13+3 = 16 marks)

Q 8. (a) Is it correct to say that every dealer, who in the course of inter-State trade or commerce sells the goods, shall be liable to pay Central Sales Tax? Explain in detail who are all ‘dealers’. (b) What are the Central sales tax rates applicable for inter-State sale of declared goods? (11+5 = 16 marks)

ICWA Inter- Revised Syllabus – December 2007 – Business Taxation - The paper consists of section I (Direct Taxes) 50 marks and section II (Indirect Taxes) 50 marks. Only Section II is given below.

Answer Q No. 6 which is compulsory and any two from the rest.

Q 6 (a) Fill up blanks. (i) Import manifest is required to be filed by the person in charge of vessel ___________ arrival of vessel. (ii) The relevant date for foreign exchange rate for customs valuation is _________. (iii) Goods covered by Central Excise Act Tariff but fully exempt from duty are __________ (excisable/not excisable) goods. (iv) State Government _______ (can/cannot) waive the condition of submission of C Form by issue of notification. (v) SSI units whose turnover exceeds Rs. ______ per annum have to furnish declaration in prescribed form for central excise purposes. (vi) Under the Customs Act, where refund becomes due in the final assessment, interest will be payable if refund is not granted within _______. (1 x 6 = 6 marks)

Q 6(b) State with reasons, whether true or false. (i) The peak rate of basic customs duty on non-agricultural products is 15%. (ii) Cenvat credit on capital goods has to be availed in full in the year of purchase. (iii) As per section 20 of the Central Sales Tax Act, 1956, appeal may be filed within 90 days from the date on which the order is served on the aggrieved person (iv) There is no provision under the Customs Act for remission of customs duty on goods lost, damaged or pilfered (3 x 4 = 12 marks)

Q 7 (a) Vasudha Electronics Ltd. having its factory at Delhi, furnishes the following information. (i) 3000 Units sold at factory gate (ii) 6000 Units sold to dealers in Nagpur. Actual transport expenses Rs. 30,000 charged. (iii) 1000 Units sold to dealers in Lucknow, actual transport expenses Rs. 10,000, but charged to dealers at Rs. 12,000. (iv) Invoice price for the above is Rs. 10,000 per unit, excluding transport charges and all items below: (1) Sales tax shown separately Rs. 40,000 (2) Octroi shown separately Rs. 18,000. (3) Dharmada shown separately collected form dealers Rs. 12,000. The basic rate of excise duty is 16%. Determine the total excuse duty payable, assuming that the dealer is not entitled to any exemption (10 marks)

Q 7 (b) Discuss whether Cenvat credit can be availed in respect of goods used for manufacture of capital goods within the factory and in respect of inputs for effluent treatment plant (6 marks)

Q 8(a) What is the effective rate of customs duty on baggage? (b) Can gold be brought into India? What is the customs duty payable thereon? Can such gold be subsequently sold in India? (c) Briefly discuss about the Deductive value method for customs valuation (4+7+5 = 16marks)

Q 9(a) What is meant by ‘place of business’ under the Central Sales tax Act, 1956? What should a dealer do towards registration, if he has more than one place of business? (b) What are the acts of omission or commission which attract the penal provisions of section 10 of the Central Sales tax Act? (c) A dealer makes inter-state sale of goods which are generally exempt within the State, to registered as well as unregistered dealers? Should he obtain any Central Sales-tax Form from the buyers? (7+5+4 = 16 marks)

Q 10 Write short notes on the following: (a) Liability of a company in liquidation, under the Central Sales-tax Act. (b) Meaning and relevance of ‘Crossing Customs frontiers of India’ under the Central Sales-tax Act. (c) Relevant date for rate and valuation of customs duty for imports through post and imports as baggage. (d) Exemption from registration under Central Excise Act (4 x 4 = 16 marks).



ICWA Inter- Revised Syllabus – June 2007 – Business Taxation

The paper consists of section I (Direct Taxes) 50 marks and section II (Indirect Taxes) 50 marks. Only Section II is given below.

Q 5. (A) Choose the correct answer: (i) In order to attract excise duty under the Central Excise Act, 1944, goods must be (a) Movable (b) Movable or immovable (c) Immovable (d) None of the above (ii) The following is not liable to sales-tax under CST Act, 1956: (a) Newspapers (b) Lottery tickets (c) Sim cards (d) Trade Licenses (iii) R of Coimbatore, Tamil Nadu sold to a Malaysian Ship at Kochi port in Kerala, some goods for consumption on board the ship; such sale will be (a) Intra-State sale (b) Inter-State sale (c) Export sale as it is a foreign ship (d) Sale in he course of import (iv) Imported goods can be kept in custom bonded warehouse up to ____ days without payment of any interest. Beyond that period interest payable is ____ per cent (1 x 4 = 4 marks)

Q5 (B) State with reasons whether true or false: (a) There is provision for payment of Central Excise Duty “under protest”. (b) Goods mentioned in Central Excise tariff but fully exempt from excise duty are not “excisable goods”. (c) State Government cannot waive condition of submission of C Form by issue of a notification (d) Central Government is empowered to make Rules providing for the manner of determination of the sale price for a works contract, under the CST Act, 1956. (e) On 14.03.2007, Central Excise or customs authorities can make a provisional attachment of property of a person to whom a show cause notice has been issued (f) Customs Officer should pass an adjudication order in all situations where the assessment is done contrary to the claim of importer/exporter (2 x 6 = 12 marks)

Q 6(a) Define the term Large Taxpayer Unit (LTU) under the Central Excise Law (b) Is it compulsory for a taxpayer to join LTU Scheme? (c) Briefly discuss about the “other taxes” which are deductible in arriving at the “transaction value” under the Central Excise Act (d) SV Ltd. purchase a Boring-Drilling Machine at a cum-duty price of Rs. 32,14,476. The excise duty rate charged on the said machine was @ 16% plus education cess @ 2%. The machine was purchased on 01.04.2005 and disposed off on 01.10.2006 for a price of Rs. 12 lakhs. The company was claiming depreciation @ 25% following straight line method. In the light of the said information, answer the following questions: (i) What was the excise duty paid on the machine? (ii) What is Cenvat credit allowable? (iii) What is the amount of Cenvat credit reversible or duty payable at the time of clearance of the said machinery? (2+2+6+6 = 16 marks)

Q 7. (a) How is value determined for purposes of special CVD under the Customs Tariff Act? (b)Write brief note on Anti-dumping Duty (c) Briefly discuss about EDI system of assessment under the Customs Act (5+8+3 = 16 marks)

Q8 (a) Explain the term “Crossing the customs frontiers of India” as per the Central Sales-tax Act, 1956. (b) Mr. Ashoke Kumar, a first stage dealer in packing machinery in the city of Mumbai, furnishes the following data: (i) Total inter-State sales during financial year 2006-07 CST not shown separately – Rs. 92,50,000, (ii) Above Sales include: Excise duty – 9,00,000, Freight (of this Rs. 50,000 is not shown separately in invoices) – Rs 1,50,000, Insurance charges incurred prior to delivery of goods – Rs 32,000, Installation and commissioning charges shown separately – Rs 15,000. Determine the turnover and CST payable, assuming that all transactions were covered by valid “C” Forms (c) What is “interest-free period” in respect of warehoused goods under the Customs Act, 1962? Is interest payable when warehoused goods are exempt from duty on the date of clearance? (4+6+6 = 16 marks)



ICWA Inter- Revised Syllabus – December 2006 – Business Taxation

The paper consists of section I (Direct Taxes) 50 marks and section II (Indirect Taxes) 50 marks. Only Section II is given below.

Q 5. (a) Answer the following giving brief comments where applicable; (i) Fill in the blanks: Captive consumption means ___________. (ii) An SSI unit manufacturing goods with other’s brand name is not entitled to any exemption from duty. However, it can avail SSI exemption, if goods are manufactured in a specified area. Which is that area? (iii) A dealer in Patna sold to a ship, goods for consumption on board the ship at Mumbai port. The sale will be (a) Inter-State sale (b) Sale in Course of export (c) Inter-State sale within Maharashtra (d) None of above. (iv) VAT rate of gold, if sold within State of Gujarat, is 1%. If gold is sold to a unregistered buyer in Delhi, the CST rate will be (a) Nil (b) 1% (c) 4% (d) 10% (v) An assessee was availing SSI exemption from 1-4-2005. He crossed turnover of Rs. 100 lakhs on 15-11-2005 and started payment of excise duty. He had received machinery on 10-11-2005 on which excise duty paid was Rs. 3,20,000. He intends to avail Cenvat credit of this duty. Can he do so? (vi) State true of false: Trade discount is permissible as deduction from assessable value for Central Excise, only if it is given before removal from factory. Discount given later is not allowable as deduction. (vii) State True or False: Dharmada (Charity) charged in invoice is required to be included while calculating Assessable Value for purpose of Central Excise. (viii) Fill up the blanks; A SSI unit is eligible for exemption up to Rs. _____ lakhs. However, if its turnover in the previous financial year was more than Rs. ____lakhs, it is ineligible for exemption from duty in current year (1 x 8 = 8 marks)

Q 5 (b) Following transactions took place in a month: (i) The manufacturer received inputs with Invoice evidencing payment of duty of Rs. 42,800 on 2nd. The invoice was marked ‘Original for Buyer’. (ii) 400 pieces of Final products were dispatched under Invoice on 6th. Assessable value was Rs. 80 per piece and excise duty rate was 16%. (iii) 1,000 pieces of input ‘I’ were sent outside for job work on 10th. When the inputs were received, credit of duty of Rs. 15,000 was taken on those inputs. (iv) Some inputs were purchased from a manufacturer in Chennai in March, 2004. These were directly dispatched from factory of the supplier to factory of job worker. Duty paid on the inputs is Rs. 40,000. Out of those inputs, 45% of inputs were received after carrying out the job work, on 18th. (v) An imported consignment of raw materials was received on 19th. The materials were not imported directly, but was purchased from an importer. The invoice of importer showed that customs duty paid was Rs. 26,000, special duty of Rs. 3,000, Additional customs duty paid was Rs. 13,200 and anti dumping duty paid was Rs. 5,400. The importer is registered with Central Excise authorities. (vi) Goods worth Rs. 2,00,000 were dispatched on 24th. Rate of duty was 16%. - - There was no opening balance in PLA or Cenvat credit account at the beginning of the month. Calculate the amount of excise duty payable (1 x 6 = 6 marks)

Q 6 (a) Elaborate the concept of transaction values as assessable value under Central Excise Act, 1944. (b) Enumerate the circumstances when raw material supplier will be treated as manufacturer of goods (13+5 = 18 marks)

Q 7. (a) (i) 500 pieces of inputs were received. Duty paid on these goods was Rs. 2,500. These were issued to production. While on production line, a fire broke out and 200 pieces of inputs lying on the shop floor were destroyed. (ii) 1000 litres were received on which duty paid was Rs. 18,000. These were issued to production. Out of these, 940 litres of final products were manufactured. 60 litres of inputs were lost in process. Discuss eligibility of Cenvat credit in the above cases (2+2 = 4 marks)

Q 7(b) A manufacturing unit undertook the following job work: (i) Machining of raw materials supplied by the customer: The material was sent under Cenvat challan. Job work charges were Rs. 30,000. Cost of the raw material was Rs. 3,50,000. These were returned after job work. (ii) Repairs of a component: Original cost of component was Rs. 25,000, Repair Charges were Rs. 3,000. The component was sent by customer under cover of his letter. - - If excise duty is payable @ 15%, find out total duty payable and procedure to be followed by manufacturer for dispatch in each case after carrying out the work (4 x 2 = 8 marks)

Q 7(c) An Indian company imported certain consumer goods from abroad with MRP printed in packing cartons. In respect of similar goods manufactured in India, excise duty is payable on basis of MRP. The importer will be using the goods for further processing. Customs authorities contend that CVD will be calculated based on the MRP printed in the goods. Is this proper? Will your answer be different, if the goods are imported for retail sales? (6 marks).

Q 8. (a) Explain how Cenvat provisions are used for providing duty relief to exported goods. (b) Write a note on first appraisement and second appraisement systems under the Customs Act, 1962. (c) The gross turnover of a dealer for the financial year 2005-06 is Rs. 54 lakhs (including CST). The CST on goods transacted by the company are subject to local State Sale-tax @ 7%. The dealer made inter-State Sales of Rs. 24 lakhs to registered dealers, which includes erection charges of Rs. 3 lakhs, excise duty of Rs. 1.50 lakhs and packing charges of Rs. 60,000. Fright and delivery charges shown separately in the invoice is Rs. 60,000. The dealer also made inter-State sales aggregating to Rs. 30 lakhs to unregistered dealers, which included excise duty of Rs. 2.50 lakhs and transport charges of Rs. 1 lakh charged separately in the invoice. There was a sales return of goods worth Rs. 50,000 (invoice value) within 6 months in respect of sales to unregistered dealers. Calculate the CST payable and turnover of the company (5+5+8 = 18 marks)



June 2006

Answer Question No. 5 which is compulsory.
and any two from the rest from this Section

Q 5 (a) Answer any eight from the following: (i) If customs duty is evaded by suppression of facts or fraud or wilful misstatement, there is mandatory penalty equal to ________ . (Value of goods, duty and interest payable, twice the duty and interest payable, customs duty payable) (ii) Imported goods can be kept in customs bonded warehouse without payment of interest for a period of ______days. (30,60,90,180) (iii) Value of software loaded on computer at the time of clearance from factory, is required to be ________ (excluded/included) for purpose of valuation of computer, under section 4 of Central Excise Act. (iv) A company has factory in Surat and HO in Mumbai. It pays audit fees from Mumbai, for auditing its annual accounts. The Auditor charged service tax in his Invoice. Can the company avail Cenvat credit of that service tax? (v) State correct or wrong: Countervailing duty (CVD) is payable on assessable value plus basic customs duty plus anti-dumping duty. (vi) A manufacturer purchased certain inputs from ‘X’. The assessable value is Rs. 10,000 and excise duty Rs. 1,632 (including education cess) [Total Invoice Rs. 11,632]. The manufacturer paid only Rs. 10,200 to ‘X’ in full settlement of his Bill. How much Cenvat credit can be availed by the manufacturer? (vii) A assessee cleared some goods on payment of excise duty, considering value as Rs. 20,000. Later, he found that actual value was Rs. 24,000. Which document he should prepare to pay the differential duty so that buyer can avail Cenvat credit? (viii) Excise Departmental appeal against order passed by Commissioner (Appeals) can be filed when it is authorised by ________. [Committee of two Commissioners/Committee of two Chief Commissioners/Chief Commissioner/ Board i.e. CBE & C] (8 marks)

Q5 (b) An assessee cleared his manufactured final products during January 2006. The duty payable for the month on his final products was as follows: Basic duty – Rs. 48,000, NCCD – Rs. 2,000, Education cess – As applicable. During the month, he received various inputs on which total duty paid by suppliers of inputs was as follows - Basic duty – Rs. 40,000 plus applicable education cess; Special Excise Duty – Rs. 4,000 plus applicable education cess. Service tax paid on input services was as follows: Service tax – Rs. 8,000. Education cess – Rs. 160. How much duty the assessee will be required to pay through account current for the month of January 2006? [6 marks]

Q 6. (a) Turnover of an SSI unit during financial year 2005-06 was as follows: (i) Clearances under his own brand name – Rs. 110 lakhs (ii) Clearances of goods bearing other’s brand name, on full payment of duty – Rs. 180 lakhs (iii) Waste and Scrap – Rs. 10 lakhs (iv) Goods which were exempt from duty – Rs. 225 lakhs (v) Job work done under notification No. 214/86-Central Excise-Job Charges-Rs. 30 lakhs, Cost of material on which job work done – Rs. 120 lakhs (vi) Exports – Rs. 80 lakhs. Can he avail SSI exemption during 2006-07? (b) Explain meaning of ‘benches’ of Customs, Excise and Service Tax Appellate Tribunal (CESTAT). Distinguish between Principal and Zonal Bench and Single Member bench and Full Bench. (c) Mr. and Mrs. Bapat visited Germany as tourist and bought a personal computer for Rs. 52,000 and a laptop computer of Rs. 78,000 while returning to India, besides their personal effects valued at Rs. 1,33,000. What is the customs duty payable, if duty on baggage is 35% plus education cess of 2% [7+5+6 = 18 marks].

Q 7 (a) Customs Valuation Rules provide that if valuation is not possible on the basis of transaction value of identical goods, valuation can be done on basis of transaction value of ‘similar goods’. What are the distinctions and similarities between ‘identical goods’ and ‘similar goods’? (b) State giving brief reasons, whether sales tax can be levied on following transactions: (i) Sale of newspapers (ii) Giving utensils on rental basis (iii) Supply, erection, testing and commissioning of water supply line. (c) A manufacturer sold the goods @ Rs. 300 per piece without charging excise duty, as he was under impression that his product was exempt from duty. Later, it was found that the product was dutiable @ 16%. Excise Department claimed that since goods were removed without duty, assessable value should be Rs. 300 and duty @ 16% plus education cess of 2% is payable on assessable value of Rs. 300. Assessee contended that price of Rs. 300 should be taken as cum-duty price and actual duty payable should be calculated by back calculations. Who is correct? Explain and determine the correct duty payable per piece [6+6+6 = 18 marks].

Q 8 (a) Discuss provisions relating to ‘deemed manufacture’ in respect of goods covered under MRP provisions of valuation (b) Discuss the circumstances when an Advance Ruling will be void under Central Excise Act, 1944. (c) Write a short note on Provisional Assessment under Customs Act, 1962 [6+6+6 = 18 marks]

December 2005

The paper covers section I (Direct Taxes) 50 marks and
section II (Indirect Taxes) 50 marks. Only section II is given below.

Answer Question No. 5 which is compulsory.
and any two from the rest from this Section

Section II

Q 5 (a) Answer the following (i) Fill in the blanks – An EOU Unit is required to execute a _________ bond. (ii) An EOU unit can obtain indigenous material without payment of duty on submission of _________ certificate. (iii) State true or false – Petrol is ‘declared goods’ under CST Act. (iv) State true or false – State Government can waive condition of submission of C Form by issue of a notification under CST Act. (v) A registered dealer has procured some goods from depot of a manufacturer. Is the registered dealer ‘first stage dealer’ or ‘second stage dealer’? (vi) Fill in the blank – A service provider is providing both taxable and exempt services and he is unable to bifurcate the common input services used for providing exempt output services. In such case, his Cenvat credit of input services is restricted to _________ (10%, 20%, 33%, 40%) of service tax payable on his output taxable services. (b) Selling price of a product is Rs. 10,000. It is inclusive of outward freight of Rs. 250, packing charges of Rs.200, CST @ 4%, excise duty @ 16% and education cess @ 2%. Find the Assessable Value. (c) (i) State the basic two requirements that should be satisfied for treating something as “goods” for the purpose of levy of Excise Duty (ii) XYZ situated in Kolkata placed order for a certain product with the manufacturer ABC in Mumbai. The product manufactured to the buyer’s specification by ABC is transferred by ABC to its branch in Kolkata. The Excise authorities refused to treat the transfer from Mumbai to Kolkata branch as “Branch Transfer” and treated it as “Sale”. Are they justified in doing so? (6+8+6 = 20 marks)

Q 6 (a) Explain provisions in Cenvat Credit Rules in respect of ‘Input service distributor’ (b) From Central sales tax point of view, distinguish between goods returned by buyer and goods rejected by buyer. (c) State purpose and use of ‘Yellow Bill of Entry” (5 x 3 = 15 marks).

Q 7. A large manufacturing unit undertook following job work: (a) Machining of raw materials supplied by the buyer. The material was sent under Cenvat challan. Job work charges were Rs. 30,000. Cost of raw material was Rs. 3,50,000. These were returned after job work. (b) Processing of inputs sent by a buyer under his own (buyer’s) challan. Processing charges were Rs. 10,000 and cost on inputs was Rs. 2,00,000. (c) Repairs of a component. Original cost of component was Rs. 25,000 and repairs charges were Rs. 3,000. The component was sent by customer under cover of his letter. In all these cases, raw material was sent by customer. Excise duty payable is 16% plus education cess of 2%. You are required to (a) Find total duty payable, (b) Procedure to be followed by manufacturer for dispatch in each case after carrying out job work (15 marks).

Q 8 Write notes on: (a) Aggregate sale price under CST Act, 1956 (b) Unaccompanied Baggage under Customs Act, 1962 (c) House mark and Brand name under the Central Excise Act, 1944 (5 x 3 = 15 marks)

June 2005

The paper covers section I (Direct Taxes) 50 marks and
section II (Indirect Taxes) 50 marks. Only section II is given below.

Answer Question No. 5 which is compulsory.
and any two from the rest from this Section

Section II

Q 5 Fill up the blanks (with the appropriate expression out of those put in brackets where applicable.) (i) SSI units paying duty under notification No. 9/2003-Central Excise have to pay excise duty on ------- (Monthly/quarterly/half yearly) basis. They have to file return within the prescribed time on ------(monthly/quarterly/half yearly/yearly) basis. (ii) A registered dealer has procured some goods from depot of a manufacturer. The registered dealer is ------ (‘first stage dealer’/’second stage dealer’). Invoice of second stage dealer is ----- (required/not required) to be authenticated by Inspector of Central Excise. (iii) Advance licence is ------ (transferable/not transferable). Advance licence ------(can be/cannot be) issued for deemed exports. (iv) Duty drawback on re-export is allowable if goods are re-exported within ------years from date of import. -------of customs duty which was paid while importing the goods is allowed as duty drawback u/s. 74 of Customs Act. (v) EOU units can sell part of their production in domestic market up to -----% of their FOB value of exports in previous year, with permission from -----.(vi) W.e.f. 1-11-2004, assessees paying duty of rupees ------ or more per annum through PLA, should file Annual Financial Information Statement for the proceeding financial year by ------ of succeeding year in Form ER-4. (vii) Where an assessee has opted for provisional assessment of central excise duty, if differential duty is found to be payable on finalization of assessment, the rate of interest chargeable under section 11AA or 11AB is -----%. The time limit for finalization of provisional assessment is -----. The said time limit for finalization or provisional assessment can be extended for a further period of ---- (viii) In case of transfer of business, the successor in business is ----- (liable/not liable) for the excise dues of the predecessor (ix) CESTAT can grant a maximum of ----- adjournments. (x) Education cess is ----- (payable/not payable) on safeguard duty levied under section 8B of the Customs Act. (xi) W.e.f. 10-09-2004, a manufacturer producing both exempt as well as non-exempt services, not maintaining separate accounts would pay excise duty at ------ & Education cess is -----(payable/not payable) on the same. (20 marks)

Q 6 (a) An SSI unit, which is a partnership firm, has achieved turnover of Rs. 90 lakhs in 2003-04. It is receiving good orders and its turnover may cross Rs. 100 lakhs in current year. It is planning to start another unit so that SSI exemption can be availed for both the units. The firm approaches you for advice. Advise them the legal position with reference to clubbing provisions of the Central Excise Act. (b) Briefly explain the term “dealer” as per the Central Sales-tax Act, 1956 (10+5 = 15 marks).

Q 7 (a) Briefly explain the provision in respect of ‘burden of proof’ in respect of goods covered under section 123 of Customs Act, 1962. List at least four articles which are covered under these provisions. (b) FOB Cost of an article imported on 10-12-2004 is 3000 UK pounds. Insurance and transport costs are not available. On the date of filing of Bill of entry, RBI rate of USD was Rs. 43.37 and inter-Bank closing rate was Rs. 43.38 per USD and Rs. 69.38 per UK pound. Exchange rate as per Customs notification was Rs. 69.78 per UK pound. Assuming customs duty of 20% and excise duty payable on similar product in India as 16%, find the total duty payable. (c) Briefly discuss about inter-changeability of duties for Cenvat credit (6+5+4 = 15 marks).

Q 8 (a) Gross inter-state sales of ZX Co. Ltd., Patna, Bihar, were Rs. 18,00,000 during 2004-05 (April 2004-March 2005). CST was not shown separately in invoices. Other information are as follows: (i) If product P is sold within State of Bihar, sales tax rate is 8%. (ii) Sales of Rs. 8 lakhs are inclusive of erection expenses of Rs. 1,00,000, excise duty of Rs. 76,000 and packing charges of Rs. 25,000. The sale price is also inclusive of trade discount of Rs. 24,000, which has been later given by issuing a Credit Note. Buyers of these goods have issued form ‘C’ for these purchases. (iii) Balance sales of Rs. 10 lakhs are inclusive of excise duty of Rs. 95,000 and outward freight of Rs. 30,000. The freight was charged separately in Invoice. Buyers of these goods have not issued any declaration under Central Sales Tax Act. Out of these sales, goods of Rs. 2 lakhs were returned by customers. The goods were dispatched in February 04 and returned in June 04, i.e. after end of the accounting year. Find the turnover and CST payable. (b) What is meant by “Indian customs water” under the Customs Act, 1962? (10+5 = 15 marks)

December 2004

The paper covers section I (Direct Taxes) 50 marks and
section II (Indirect Taxes) 50 marks. Only section II is given below.

Section II

Q No. 5 carrying 18 marks which is compulsory.
2 other questions each carrying 16 marks are to be answered out of the
remaining three questions in section II.

Q 5 An importer has imported a machine from UK at FOB cost of 10,000 UK Pounds. Other details are as follows: (i) Freight from UK to Indian port was 700 pounds. (ii) Insurance was paid to insurer in India: Rs. 6,000. (iii) Design and development charges of 2,000 UK pounds were paid to a consultancy firm in UK. (iv) The importer also spent an amount of Rs. 50,000 in India for development work connected with the machinery (v) Rs. 10,000 were spent in transporting the machinery from Indian port to the factory of importer (vi) Rate of Exchange as announced by RBI was Rs. 68.82 = one UK pound. (vii) Rate of exchange as announced by CBE&C (Board) by notification under section 14(3)(a)(i): Rs. 68.70 = one UK pound. (viii) Rate at which bank recovered the amount from importer Rs. 68.35 = one UK pound. (ix) Foreign exporters have an agent in India. Commission is payable to the agent in Indian Rupees @ 5% of FOB price. Customs duty payable was 25%. If similar goods were produced in India, excise duty payable as per tariff is 24%. There is an excise exemption notification which exempts the duty as is in excess of 16%. Find customs duty payable if (a) Importer is manufacturer using the goods himself, (b) Importer is a trader who has imported goods for subsequent sale in India (18 marks).

Q 6. (a) A small scale manufacturer having a SSI Unit has achieved turnover of Rs. 1.52 crores during the year ended 31.03.2004. Normal duty payable on the product is 16%. Find the total excise duty payable by the manufacturer during the year: (i) if the unit has availed CENVAT Credit (ii) if the unit has not availed CENVAT Credit (The turnover mentioned above is without taxes and duties) (b) Describe the Constitutional provisions under which central excise duty is imposed (c) Explain the penal provisions relating to vexatius search, seizures, etc. by Central Excise officers (8+4+4 = 16 marks).

Q 7 (a) M/s. Snow White Ltd., Mumbai sells iron rods to M/s Hyderabad Ltd. in Vijaywada, (both of them are registered dealers), for a value of Rs. 10,00,000 inclusive of CST @ 4%. The local sales tax on iron rods in Mumbai is 3%. Ascertain the CST payable. If Hyderabad Ltd. were unable to submit Form ‘C’ being an unregistered dealer, what will be the CST liability, if the local sales tax rate is 12%? Note – Iron rods are not declared goods. (b) Inter-State sales of Deepak brothers, Bhopal, MP of product X was Rs. 6 lakhs during the year ended 31st March, 2004. The same is inclusive of sales tax charged in invoices at appropriate rates. The goods were liable to tax @ 4% if sold within State of MP. Out of the goods sold, goods of Rs. 50,000 were returned. These were sold by Deepak Brothers in February, 2004 and returned by buyer in May 2004 as they were in excess of his requirements. Some goods of Rs. 30,000 dispatched in December, 2003 were rejected by a buyer and sent back in November 2004. Find the taxable turnover and CST if C form was received from all buyers. (c) What is the compounded levy scheme under Central Excise Act, 1944? Explain giving instances where it is applicable (6+5+5 = 16 marks).

Q 8 Write short notes on: (a) Surrender of registration certificate/deregistration under the Central Excise Act, 1944 (b) Provisional Assessment under Customs Act 1962 (c) Deemed Sales under CST Act, 1956 (5+6+5 = 16 marks).

REVISED SYLLABUS
Business Taxation – Inter ICWA

June 2004

The paper covers section I (Direct Taxes) 50 marks and
section II (Indirect Taxes) 50 marks. Only section II is given below.

Section II

Q No. 5 carrying 18 marks which is compulsory.
2 other questions each carrying 16 marks are to be answered out of the
remaining three questions in section II.

Q. 5 – Answer the following, giving brief reasons/comments not exceeding 3 to 4 sentences [18 marks] (a) Expand the following abbreviations – EPCGS, NCCD, CCCE, DFRC (b) A book often contains a CD. If a software is purchased, a manual is given along with CD. The CD contains the software. Thus, in both cases, there is a book and CD. What test will be applied while classifying these products ? (c) State true or false – (i) Trade discount is permissible as deduction from assessable value only if it is given before removal from factory. Discount given later is not allowable as deduction (ii) In case of CIF contract, the assessee will be entitled to deduction of outward insurance and freight while calculating assessable value (iii) Charges for training the buyer in use of the machinery supplied are includible in assessable value (d) (i) An assessee has discontinued his manufacturing activities. He has applied for cancellation of excise registration. Explain circumstances in which the Excise Superintendent can refuse cancellation of registration (ii) If assessee is required to pay differential duty subsequent to removal from his factory, which document he should prepare ? (e) – Fill in the blanks – If duty is not paid fully on due date, assessee is liable to pay the outstanding amount along with interest on unpaid amount @ . .% per month on outstanding amount, or Rs . . per day, whichever is . . (higher/lower), till payment of duty (f) State purpose of B-2 and B-4 bond (g) State whether following are eligible as inputs for Cenvat – (i) Safety appliances used by workmen (ii) Light Diesel Oil (LDO) used in manufacture (iii) Dies (iv) Parts used to manufacture capital goods within the factory (h) An assessee had procured some inputs in May 2002 for Rs 20 lakhs. Duty paid on the inputs was Rs 3,20,000 ( @ 16%). He was unable to use the inputs in view of change in market conditions. He sold the inputs in March 2004 for Rs 16,00,000. How much ‘duty’ or ‘amount’ is payable while clearing the inputs?

Q 6 (a) – An assessee has factory in Kolkata. As a sales policy, he has fixed uniform price of Rs 2,000 per piece (excluding taxes) for sale anywhere in India. Freight is not shown separately in his invoice. During F.Y. 2003-04, he made following sales – (i) Sale at factory gate in Kolkata – 1,200 pieces – no transport charges (ii) Sale to buyers in Gujarat – 600 pieces – actual transport charges incurred – Rs 28,000 (iii) Sale to buyers in Bihar – 400 pieces – actual transport charges incurred – Rs 18,000 (iv) Sale to buyers in Kerala – 1,000 pieces. – Actual transport charges – Rs 54,800. Find assessable value. (b) What is the purpose of ‘safeguard duty’? What are restrictions of WTO in respect of safeguard duty ? Can it be imposed on provisional basis ? [8+8 = 16 marks]

Q 7 (a) Mr. A, a person holding Indian passport, brings 1 Kg Gold, out of which Rs. 3,60,000 are in form of biscuits and balance of Rs. 40,000 in form of gold jewellery which he was using abroad (valued at international rates). What is the duty payable if (i) the person is returning after 3 months stay (ii) the person is returning after 9 month’s stay abroad and the Gold belongs to him (iii) the person is returning after 8 months stay abroad and the Gold belongs to his friend, who has given it only for carrying to India. (iv) He is returning after 18 months’ stay abroad (ignore difference due to minor impurities in jewellery) (b) Define ‘Indian Customs Waters’. What is the significance in terms of Customs Act, 1962 ? [8+8 = 16 marks]

Q 8 Write short notes on – (a) Document of title of goods (b) Customs value as per section 14(1) of the Customs Act, 1962 (c) Manufacturer under the Central Excise Act, 1944 [5+6+5 = 16 marks]

December 2003

The paper covers section I (Direct Taxes) 50 marks and
section II (Indirect Taxes) 50 marks. Only section II is given below.

Section II

Q No. 5 carrying 18 marks which is compulsory.
2 other questions each carrying 16 marks are to be answered out of the
remaining three questions in section II.

Q 5. (a) What is a stock transfer/branch transfer? Is it considered as a sale under Central Sales Tax Act, 1956? (b) What are goods under Customs Act, 1962? (c) What are the inputs eligible and inputs not eligible for Cenvat in Central Excise? [6 x 3 = 18 marks]

Q 6. In the context of valuation of goods for determining the price paid or payable in the course of arriving at the assessable value under the Customs Act, discuss about the inclusion of the following items: (a) Cost of durable and reusable containers used for transportation: (b) Technical know-how drawing supplied by importer; (c) Air freight charges incurred for importing items urgently required, which are normally imported by sea (d) Cost of insurance not readily ascertainable. [3+7+3+3 = 16 marks]

Q 7. (a) Discuss about the eligibility of Cenvat Credit in each of the following situations - (i) 1000 kgs of raw materials were purchased on which duty paid was Rs. 16,000. Whilst in the production yard, they were destroyed by accidental fire (ii) 1000 kgs of raw materials on which duty paid was Rs. 10,000 was used in manufacture of a final product for which the duty payable is Rs. 8000 (iii) The original invoice for 1,000 units of inputs purchased were missing; however ‘Duplicate for transport’ copy of invoice is available, which shows that duty of Rs. 10,000 had been paid on inputs (b) (i) Discuss the importance of noting of bill of entry vis-à-vis rate of customs duty applicable for import of goods, under the Customs Act; (ii) An Indian resident visiting Germany brought following goods while returning to India (a) his personal effects like cloth etc. valued at Rs. 25,000; (b) one litre of liquor of Rs. 1,600; (c) new camera of Rs. 24,800. What is the customs duty payable? [ (a) 3 x 3 = 9 marks (b) 4+3 = 7 marks]

Q 8. Write short notes on: (a) Drawback rates; (b) Valuation in case of job work under Central Excise Act, 1944; (c) Exclusions from sale price under Central Sales Tax Act, 1956 [5+5+6 = 16 marks]

June 2003

The paper covers section I (Direct Taxes) 50 marks and
section II (Indirect Taxes) 50 marks. Only section II is given below.

Section II

Q No. 5 carrying 18 marks which is compulsory.
2 other questions each carrying 16 marks are to be answered out of the
remaining three questions in section II.

Q 5. (a) Define transaction value under the Central Excise Act, 1944. What are its main requirements? (b) State whether the following items are includible in T.V. citing reasons, if any: (i) Regional discount (ii) Commission (iii) Surprise incentive scheme (iv) Trader’s margin (c) How would you arrive at the T.V. for the purpose of levying excise duty from the following data?

Cum-duty selling price (exclusive of Sales Tax) Rs 10,000
Rate of Excise Duty 16%
Trade discount allowed Rs 1,200
Freight Rs 750

(d) How is Turnover determined under the Central Sales Tax Act, 1956? [7+4+3+4= 18 marks].

Q 6. (a) An importer in India imported raw materials @ US $ 25,000 FOB. The goods were packed for which US $ 600 were charged extra. The goods were stuffed in Container, the price of which was US $ 2,000. Insurance charges and ocean freight of US $ 250 and 800 respectively were paid. A commission of US $ 500 had to be paid to a broker for arranging the deal; 1 US $ = Rs. 42.38, Customs Duty is 35%, Special Additional Duty (SAD) is 4%, Excise duty on similar goods in India is 16%. Determine the duty payable. (b) Mr. And Mrs. K visited the USA and bought there a personal computer for US dollars equivalent to Rs. 31,000 while returning to India. They carried personal effects also, valued at Rs. 46,000/-. What is the customs duty payable? (c) An Indian resident goes to Nepal on tour. He purchases a Colour TV for Rs. 18,000 and a hair-dryer for Rs. 2,000 (Indian Rs. ) from a duty-free shop in Nepal and brings these into India. What is the duty payable, if he returns on (i) the 3rd day of arrival in Nepal? (ii) the 11th day of arrival in Nepal? [12+2+2 = 16 marks]

Q 7 (a) Examine whether the following amounts to manufacture under the Central Excise Act, 1944: (i) Cutting or sizing; (ii) Repairing, reconditioning; (iii) Re-melting; (iv) Mixing of metals (b) Distinguish between CENVAT on capital goods and on inputs for production (c) What are the documents and accounts required to be maintained for availing oneself of CENVAT credit? [4+6+6 = 16 marks]

Q 8. Write short notes on: (a) Penultimate sale for export under the Central Sales Tax Act, 1956 (b) Stores under the Customs Act, 1962. (c) Tariff value under Central Excise Act, 1944 [6+5+5 = 16 marks]

December 2002

The paper covers section I (Direct Taxes) 50 marks and
section II (Indirect Taxes) 50 marks. Only section II is given below.

Section II

Q No. 5 carrying 18 marks is compulsory.
2 other questions each carrying 16 marks are to be answered out of the
remaining three questions in section II.

Q 5. (a) What is deemed manufacture under the Central Excise Act, 1944? Give four examples of deemed manufacture. (b) Briefly state the salient features of the CENVAT Scheme. (c) Explain the term ‘Related Persons’ under section 4 of the Central Excise Act. (d) What are the essential elements of a valid sale under the Central Sales Tax Act, 1956? [6+4+4+4 = 18 marks]

Q 6. Explain the reference to the Customs Act, 1962, the difference between (a) Identical goods and Similar goods. (b) Territorial Water and Indian Customs Water. (c) Public Bonded Warehouse and Private Bonded Warehouse. [5+5+6 = 16 marks]

Q 7. (a) Explain how the value is to be determined for the purposes of section 4 of the Central Excise Act and Rules in the following cases: (i) Dutiable goods manufactured and used for Captive Consumption in the manufacture and sale of other final excisable products. (ii) Excisable goods manufactured and cleared as free samples (iii) A manufacturer charges separately for the goods produced and sold and for the packing. How will the cost of packing be treated for determining the value? (iv) The goods manufactured are sold ex-factory and the freight and insurance are charged on actual basis through invoices. (b) Briefly describe the offences that the penal provisions of section 10 of the Central Sales Tax Act, 1956. [(3 x 4) 12 + 4 = 16 marks]

Q 8. Write short notes on: (i) Dealer under the Central Sales Tax Act, 1956. (ii) Doctrine of unjust enrichment under the Central Excise Act, 1944. (iii) Searches under the Customs Act, 1962. [5+6+5 = 16 marks]

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