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Excise question when complying with environmental law

V. Nagarajan

V. Nagarajan puts together a CA (Final) model paper on indirect taxes

DISCUSS the following with reference to the concept of manufacture based on case laws, if any:

1(i) Lean gas/off gas emerges during the manufacture of carbon black and this has to be let out into the atmosphere. The lean gas contains un-burnt carbon dust, carbon monoxide, and so on.

Because of environmental laws, the factory was asked to burn the carbon monoxide content in the off gas which results in its becoming carbon di-oxide.

The factory uses the heat generated thereby in production (incineration of carbon monoxide).

The Excise department demanded duty on CO{-2} considering the process as manufacture. (4 marks)

ii) Refining of vegetable edible oil by treating crude oil with an alkali, bleaching and de-odourisation. (3 marks)

iii) Packing of a bought-out item with a manufactured item. (3 marks)

iv) Upgradation of old and used computer systems. (2 marks)

1(b) How is valuation of goods done and duty paid when the goods produced in a factory are stock transferred to a depot from where they are sold. (4 marks)

1(c) A job worker manufactures goods affixing the brand name of the customer. Royalty charges for the brand name is paid.

Discuss whether the same is includable in the assessable value. (4 marks)

1(d) Can Cenvat credit be taken on capital goods exclusively used in the manufacture of exempted goods. Discuss the provisions in the CENVAT Credit Rules, 2004 relating to it. (4 marks)

2(a) Write the procedure in Central Excise for registration of an assessee. Who are all to get registered? (6 marks)

2(b) Explain the machinery provision in the Central Excise Act, 1944, wherein the officers of Central Excise are enabled to initiate proceedings against assessees in case of non-levy/short levy/non-payment/short payment, and so on. (6 marks)

2(c) Bring out the differences between excisable and dutiable goods. (3 marks)

3(a) What are the conditions laid down in the Cenvat Credit Rules, 2004 for getting Cenvat Credit of duty on inputs and capital goods. (6 marks)

3(b) What constitutes offences under the Central Excise Act, 1944. Discuss the penalty provision thereof. (6 marks)

3(c) Write the provision in Central Excise Rules, 1944 as regards the relevant date for determining the rate of duty of Central Excise. (3 marks)

4(a) Under Notification 8/2003, a unit is recognised as an SSI when the aggregate value of clearances of the manufactures in the preceding financial year does not exceeded Rs 300 lakh.

Mention six transactions which are excluded for the purpose of the said computation. (5 marks)

4(b) Branded goods are not eligible for the SSI concession where the brand owner is not an SSI. Is the statement correct? Are there any exceptions? (5 marks)

4(c) An SSI unit has effected clearances of goods of the value of Rs 380 lakh in the financial year 2003-04.

The said clearances include the following: i) Excisable goods without payment of duty to a 100 per cent EOU, Rs 60 lakhs;

ii) Export to Nepal and Bhutan, Rs 50 lakh;

iii) Goods manufactured in rural area with the brand name of others, Rs 70 lakh;

iv) Job works undertaken which are exempted, Rs 80 lakh.

Analyse the transactions and state whether SSI concession will be available to the manufacturer for the financial year 2004-05. (5 marks)

5(a) Write a note on: i) inputs; and ii) capital goods under Cenvat Credit Rules, 2005. (6 marks)

5(b) Write short notes on three of the following:

i) refund of pre-deposit under Section 35F of the CE Act, 1944; ii) conditions to be fulfilled for filing an application before the Settlement Commission; iii) matters which can be taken up for a ruling by the Authority for Advance Ruling; and iv) orders against which an appeal may be preferred to the CESTAT. (9 marks)


6(a) Explain with reference to the Customs Act, 1962 any two of the following: i) Adjudicating authority; ii) Customs station and Customs area; and iii) Prohibited goods. (4 marks)

6(b) Determine the assessable value and Customs duty on imported goods based on the following data:

i) quantity imported, 100 tonnes; ii) FOB value, Swiss frank 10,000; iii) air freight, SF 2,500; iv) insurance data, not available; v) Exchange rate 1 Swiss frank = Rs 34; vi) basic Cutoms duty, 30 per cent; vii) Cenvat duty under Schedule I to CETA, 16 per cent; viii) SED under Schedule II to CETA, 16 per cent; ix) AED (Goods of special importance) Act, 1957, Rs 10 per kg; and x) NC duty, 1 per cent ad-valorem. (8 marks)

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