CA Final :: Indirect Taxes : May 2006

Roll No…………………
Total No. of Questions— 9]	[Total No. of Printed Pages—4
Time Allowed : 3 Hours	Maximum Marks : 100
RK
Answers to questions are to be given only in English except in the cases of candidates who have opted for Hindi medium. If a candidate who has not opted for Hindi medium, answers in Hindi, his answers in Hindi will not be valued.
Question Nos. 1,6 and 9 are compulsory. In addition thereto, answer any two questions from Part "A" and any one question from Part "B".
Marks

PART—A

(a)

Briefly explain any two of the following with reference to the provisions of Central Excise Act, 1944:

(i)	Wholesale dealer
(ii)	Factory
(iii)	Dutiability of waste and scrap

2x2=4

(b)

With reference to CENVAT Credit Rules, 2004, discuss giving reason whether the following statements are true or false:

(i)

Credit of duties of excise on inputs will not be available if inputs are used in intermediate product, which is exempt from duty, even though the final product is dutiable.

(ii)

A manufacturer can sell the inputs on which CENVAT credit has already been availed of, as they are, provided he pays the amount equal to the credit availed.

(iii)

A manufacturer is eligible for CENVAT credit in the cases stated below:

(1) Inputs used in trial runs;

(2) Materials used for maintaining factory building.

3x2=6

(c)

With reference to the Central Excise Act, 1944 and the rules thereunder, explain briefly whether the following persons require registration or not?

(i)	Persons, who manufacture excisable goods chargeable to ‘nil’ rate of duty;
(ii)	Central Government undertakings manufacturing excisable goods;
(ii)	100% EOU.

3x2=6

(d)

ABC Company imported medicines in pallets with one big box containing assorted medicines in smaller units which were, then, repacked in thermocole boxes of different sizes which again were put into cardboard boxes. The cardboard boxes were in turn labelled containing, interalia, the name of the medicine, the name of the manufacturer, the quantity, batch no., manufacturing date, expiry date and name of the marketing agency. The department relying upon note 5 to chapter 30, claimed that the activities as aforesaid amount to manufacture i.e., bulk pack to retail pack.

Decide whether the above activities tantamount to manufacture.

(a)

The assessee was a manufacturer of I.C. engine parts like piston and gudgeon pins. He used to procure from the market piston rings and circlips and supply them along with the items that he had manufactured, to the buyers. He was also selling these procured items separately. The department contended that those bought-out items, supplied along with the manufactured items, were part of piston assembly and therefore, their value should be included in the value of the piston assemblies cleared by the manufacturer. But the assessee contended that the piston rings and circlips were all different parts of I.C. engine and therefore they were not to be considered as parts of another item.

Decide whether the contention of the department is correct or not.

(b)

Explain whether an application from an NRI for advance ruling under section 23C, regarding determination of whether a certain process would amount to manufacture, is maintainable?

(c)

State the procedure for valuing excisable goods that are to be sold from depot/branch or premises of a consignment agent under the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.

P.T.O.

( 2 )

Marks

(a)

Explain the provisions regarding maintenance of daily stock account of stored goods under rule 10(1) of Central Excise Rules, 2002.

(b)

Write a short note on the procedure in respect of exported goods subsequently reimported and returned to factory.

(c)

Comment on the following:

(i)	Excise department cannot challenge the reasonability of MRP printed on the package.
(ii)	If any excisable goods are exempted from duty of excise absolutely, the manufacturer of such goods will be bound to avail of the exemption.
(iii)	SSI units whose turnover exceeds Rupees 90 lakhs per annum have to give a declaration in the prescribed form.
(iv)	Annual Financial Information Statement (ER-4) is required to be submitted by the assesses paying duty of Rs. 4 crores or above per annum through PLA.

4x1=4

(d)

What is CT-1 certificate?

(a)

A SSI unit has effected clearances of goods of the value of Rs. 475 lacs during the financial year 2005-06. The said clearances include the following:

(i)	Clearance of excisable goods without payment of excise duty to a 100% EOU	Rs.120 lacs
(ii)	Job work in terms of Notification No. 214/86 CE, which is exempt from duty	Rs.75 lacs
(iii)	Export to Nepal and Bhutan	Rs.50 lacs
(iv)	Goods manufactured in rural area with the brand name of the others	Rs.90 lacs

Examine with reference to the notification governing SSI under the Central Excise Act whether the benefit of exemption would be available to the unit for the financial year 2006–07.

(b)

(i)	Whether provisional assessment can be initiated by the department of excise?
(ii)	What is the remedy available with the department in case assessing officer does not find the self assessment filed by the assessee in order?

2+3

(c)

State the provisions relating to confiscation and penalty under CENVAT Credit Rules, 2004.

(a)

Write a note on duty payment 'Under protest' with reference to the Central Excise Act, 1944 and the rules made thereunder.

(b)

What are the orders that are appealable to Supreme Court under the Central Excise Act 1944?

(c)

Explain briefly the provisions relating to 'Special Audit' in certain cases under section 14A of the Central Excise Act, 1944.

(d)

What is Consumer Welfare Fund? How is this fund utilized?

RK	Contind...

( 3 )

Marks

PART—B

(a)

Briefly explain with reference to the provisions of the Customs Act, any two of the following:

(i)	Indian customs waters
(ii)	Person-in-charge
(iii)	Foreign going vessel or aircraft

2x2=4

(b)

M/s. AJ imported some inputs and paid basic customs duty Rs.5 lakhs, surcharge on customs duty Rs.50,000 and CVD Rs.1 lakh. Calculate the amount that he can claim as CENVAT credit. Would it make any difference, if the assessee is not a manufacturer but a service provider?

(c)

Explain the meaning of:

(i) Similar goods

(ii) Identical goods

(d)

Briefly elucidate the meaning of "Importer" under the Customs Act.

(e)

(i)	If the applicant does not co-operate or obtains order by fraud, whether the Settlement Commission is empowered to send the case back to the officer for further action as per law ? Answer in the light of amended provisions of section 127MA of the Customs Act, 1962.
(ii)	What is meant by 'boat notes'?

5+2

(a)

What is the purpose of interpretation rules regarding Customs Tariff? Do they form part of the tariff schedule? Explain the ‘Akin Rule’ of interpretation.

(b)

What do you understand by first appraisement and second appraisement systems under the Customs Act, 1962?

(c)

State the procedure for clearance of goods imported by post.

(d)

Can the rate of drawback be determined provisionally by the exporter? Briefly explain.

(a)

M/s. XYZ Ltd. were liable for the duty assessed and payable on certain import which, it paid under protest and filed a claim for refund of duty on the ground that duty had been wrongly levied. On rejection of claim for refunds, the assessee filed an appeal before Tribunal which was also dismissed on the ground that as no appeal had been filed against the assessment order, the refund claim was not maintainable. Assessee seeks your advice for remedy. Discuss whether the stand taken by the Tribunal is correct.

(b)

Write a note on warehousing period under section 61 of the Customs Act, 1962.

(c)

What is residual method of valuation? Bring out your answer with reference to the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988.

P.T.O.

( 4 )

Marks

PART—C

(a)

Explain whether the following activities come under the service tax liability:

(i)	Reimbursement of expenses like cess, customs duty, port dues claimed by custom house agents;
(ii)	Surveillance fee collected by a credit rating agency;
(iii)	Transporters who are rendering "Express Cargo Service" for delivery.

3x2=6

(b)

(i)	M/s. Renu Consultants are a labour contractor of manpower to M/s. Sanu Creations. They charge to the principal employer for the wages of their labour which amounts to Rs.1,20,000 plus their service charge of 12,000 for arranging the labour. The issue is whether service tax is payable on the gross amount charged by them or only their charges for labour. Examine the case and advise suitably.
(ii)	For providing beauty treatment services, a parlour uses materials such as cosmetics and toilet preparations. Whether the cost of such materials will be included in the value of taxable service? Whether any abatement is admissible on account of the value of materials consumed in providing the service?

4+3

(c)

(i)	What is the time limit under Rule 4A for raising/issuing an invoice for services?
(ii)	What is the due date for monthly/quarterly payment of service Tax?

1+1=2