The Hindu Business Line : An exercise in Central Excise

(i) Service tax paid on service of share registry received and utilised at corporate office distributed to the factory was availed of the Cenvat credit by the factory in its Cenvat credit account under the CENVAT Credit Rules, 2004.

(ii) Waste and scrap generated in a workshop of a sugar mill due to repair and reconditioning of machinery was considered dutiable by the central excise department.

(iii) Notional interest on `interest free advances' received by a manufacturer was required to be added to the value of the goods as additional consideration, under Rule 6 of the C.E. Valuation Rules, 2000 by the Department. (3 X 2 = 6)

(c) Analyse the following and state whether they constitute manufacture under the Central Excise Act, 1944.

(i) Fullers Earth Lumps (mineral clay) were crushed, pulverised and heated to 200 degree C to 300 degree C and then treated with sulphuric acid. The bleaching earth thus obtained can be used for decolourising vegetable mineral oils, fats, waxes etc.

(ii) Process of refining, that is, treatment of groundnut oil with alkali, bleaching and decolourisation to get refined groundnut oil failing under Chapter 1502 of the CETA, 1985. (3 X 2 = 6)

(d) What are the forms of levy adopted in the Central Excise Tariff Act, 1985 for levy and collection of Central Excise duty. (4)

2. (a) Central excise duty refunds under Section 11B of the Central Excise Act, 1944 are subject to the principle of unjust enrichment of the assessee. One of the exceptions thereto is refund of balance in the Cenvat credit a/c. Briefly bring out the provisions, procedure and conditions subject to which such a refund can be obtained under the CENVAT Credit Rules, 2004. (5)

(b) Can an assessee paying central excise duty on manufactured goods on removal from the factory adopt more than one transaction value for the purpose? Explain your answer based on the relevant provision in the Central Excise Act, 1944. (4)

(c) (i) Define the term "Related Persons" under the CE Act, 1944 relating to valuation of goods in central excise. (2)

(ii) Determine the value on which excise duty is payable in the following instances. Quote the rule.

(a) ABC Ltd sold goods to PQR Ltd at a value of Rs 100 per unit. In turn, PQR Ltd sold the same to X Ltd at a value of Rs 110 per unit. ABC Ltd and PQR Ltd are related persons, where as PQR Ltd and X Ltd are unrelated.

(b) A Ltd sells goods to B Ltd at a value of Rs 100 per unit. The said goods are captively consumed by B Ltd in his factory. A Ltd and B Ltd are not related. The cost of production of goods to A Ltd is Rs 110 per unit. (2 X 2 = 4)

3. (a) State whether the following are right or wrong according to the relevant provisions in central excise law explaining the reasons thereto.

(i) An SSI unit gets avails (itself of) Cenvat credit on inputs which are used in the manufacture of dutiable goods which are exported from the beginning of the financial year.

(ii) An SSI situated in a rural area avails (itself of) the concession applicable to SSI units when it only manufacturers goods with a `brand name' belonging to another big manufacturer who is not eligible for the SSI concession.

(iii) A manufacturer of detergent powder clears it in bulk-packings on payment of excise duty. He takes them to another premises and repacks them in smaller packings and sells them without payment of duty claiming that the said process is not manufacture.

(iv) An assessee who has availed (himself of) Cenvat credit of the additional excise duty (Goods of Special Importance) Act, 1957 on inputs utilises the said credit not only for payment of the above duty but also for the payment of Cenvat duty and special excise duty on the final product. (3 X 4 = 12)

(b) State the relevant dates for the purpose of determination of the rate of central excise duty as laid down in Rule 5 of the Central Excise Rules, 2002. (3)

4. (a) Is there any provision in the Central Excise Act, 1944, whereby an assessee.

can pay duty on receipt of a show cause notice from the Central Excise Officer to avoid further proceedings?, and

(ii) can pay duty voluntarily on his own ascertainment or being pointed out by the Central Excise Officer?

If so explain the provision therein. (5)

(b) Who are the persons who are not required to take registration with the Department as per Rule 9 of the Central Excise Rules, 2002? (4)

(c) What constitute offences under the Central Excise Act, 1944? (4)

(d) Who is the officer of Central Excise empowered to effect recoveries of sums due to Central government? Is there any delegation of power in this regard? (2)

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

(i) Difference between penalty and fine,

(ii) Difference between B1 General Bond and and letter of undertaking,.

(iii) Excisable goods and dutiable goods;

(iv) Export under Rule 18 and Rule 19 of the Central Excise Rules, 2002. (3 X 3 = 9)

(b) A Ltd manufacturers shoes on the basis of bulk orders received from various departments of Central Government. Footwear is covered under the Third Schedule to the Central Excise Act 1944. The company neither makes any retail sale nor affixes any MRP on the shoe packages sold by it. Explain the provision by which the goods should be valued for purpose of payment of duty. (4)

(c) Is an input service distributor required to have registration and file return with the department? (2)

Part B - Customs

6. (a) Explain any two of the following with reference to provisions of the Customs Act, 1962.

(i) Customs station and Customs area

(ii) Indian Customs waters

(iii) Prohibited goods. (2 X 2 = 4)

(b) State at least five reasons by which the Central government is empowered to issue a notification prohibiting importation or exportation of goods. (4)

(c) What is meant by `Transaction Value' under the Customs Valuation (DPIG) Rules, 1988? Explain the provision therein as to how to arrive at the Transaction Value. (5)

(d) An importer purchased goods at high seas from MMTC. which charged a service commission for such a sale. Bring out the includibility or otherwise of the transaction in the assessable value of the importer goods. (4)

(e) The claim for drawback on the goods supplied as stores to a foreign going vessel has been rejected by the Customs Department on the contention that the goods in question do not have a foreign destination. Discuss. (3)

7. (a) What is the relevant date for determination of the rate of duty or other purposes in the following cases.

(i) Import duty on goods imported as cargo.

(ii) Duty on pilfered goods while in customs area.

(iii) Export duty on cargo.

(iv) Import duty on goods cleared from bonded ware house.

(v) For application of rate of exchange for the determination of value of imported goods.

(vi) For issue of showcause notice demanding duty, interest, etc., in a case involving fraud.

(vii) Duty on baggage imported.

(viii) Import by post.

(ix) Regular drawback of Customs duty.

(x)For making an appeal to the CESTAT (1 X 10 = 10)

(b) Write the Procedure for making an appeal to the Commissioner of Customs (Appeal). (5)

8. (a) Write short notes on any three of the following.

(i) Pre-deposit of duty

(ii) Filing fees for making appeal to CESTAT

(iii) Authorised representatives

(iv) Withdrawal of cases from Tribunal for application to Settlement Commission (3 X 3 = 9)

(b) Write the Procedure for clearance of Imported goods from the Cstom House (Seaport) (6)

Part - C

9. (a) Mention four persons who are liable to pay service tax as per Rule 2(d) of the Service Tax Rules, 1994. (4)

(b) Briefly state the concession available to small service providers under Notn No. 6/2005 ST. dt. 1.3.2005 (5)

(c) Answer any two of the following with reference to the Finance Act, 1994 as amended relating to applicability of service tax

What is the abatement allowed on value of services in respect of transport of goods by road in a goods carriage? Explain the purpose of giving such abatement.

(ii) Business auxiliary service provided on job work basis.

(iii) Accounting services provided by a practising Chartered Accountant outsourced by business entities. (3 X 2 = 6)

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