The Hindu Business Line : A mock test before the exam

1(a) Explain briefly any two of the following based on the provisions of the Central Excise Act, 1944: i) factory; ii) remission of duty; iii) tariff value. (2x2 = 4 marks)

(b) Explain in brief the provision relating to grant of exemption from duty in the CE Act, 1944.

(c) With reference to CENVAT Credit Rules, 2004, discuss giving reasons whether the following statements are true or false: (i) motor vehicles are eligible capital goods both for manufacturers and all output service providers; (ii) cutting oils and coolants used for the machinery in the course of manufacture of dutiable goods; iii) refractories and refractory materials used for lining the blast furnace. (2x3 = 6)

(d) Explain the term “Normal Transaction Value” for the purpose of valuation of goods sold from depots of a manufacturer. (5)

2(a) Discuss, with reference to the CE Act and the Rules, the chargeability of excise duty in the following cases, quoting the relevant provisions.

(i) On the date of manufacture, the rate of duty was 16 per cent ad-valorem. However, prior to removal, the goods were exempted under a Tariff Notification issued under Section 5A(1).

(ii) On the date of manufacture, the goods did not find a place in the Excise Tariff. However, prior to removal of the goods, they were included in the Tariff attracting 16 per cent ad-valorem duty.

(iii) On the date of manufacture, the goods were enjoying full exemption from duty but prior to removal, the exemption was withdrawn and the goods became chargeable to excise duty at 16 per cent ad-valorem. (2x3 = 6)

2(b) When can an assessee apply for provisional assessment under the CE Rules, 2002? Highlight the procedure for the same. (5)

2(c) Explain the provision in the CE Rules, 2002 for exportation of goods without payment of duty. (4)

3(a) What is the eligibility criterion for an SSI unit to get the benefit of exemption from duty during the financial year 2007-08. (3)

(b) State the transactions, which will be excluded for the purpose of computing the clearance limit of Rs 150 lakh in respect of an SSI. (4)

(d) Explain the term ‘Large Tax Payer’. (3)

4(a) What are the matters on which an Advance Ruling can be sought from the Authority for Advance Ruling. (4)

(b) Refunds in Central Excise are subject to the principle of unjust enrichment as enshrined in Section 11B of the CE Act, 1944. State the cases where the said principle is not applicable. (5)

(d) Fuel is supplied to a foreign going vessel. Should excise duty be paid? (2)

5(a) Who are the persons who do not require registration under Rule 9 of the CE Rules. (4)

(b) State whether the following constitute manufacture:

(i) Conversion of sugar into big crystals; ii) Fuller’s Earth lumps (mineral clay) are crushed, pulverised and heated to 200° C to 300° C and then treated with sulphuric acid. The product, ‘bleaching earth’ is used for decolourising vegetable oils. (3x2=6)

Customs

6 (a) Explain any two of the following terms with reference to the Customs Act, 1962: i) Customs station and Customs Area; ii) warehousing station; and iii) transaction value. (2x2 = 4)

(b) Write a brief note regarding imposition of Safe Guard Duty on imported goods. (5)

(c) Cotton fabrics were loaded on the vessel ‘A’ based on the ‘Let Export’ order given by Customs on the shipping bill for exportation to the US. The vessel set sail from Cochin Port but sank while it was within the territorial waters of India. The cargo loaded by the exporter S&Co, was completely destroyed. However, S&Co claimed duty drawback under the Customs, Central Excise and Service Tax Duty Draw Back Rules, 1995. Do you agree with the stand taken by the exporter? Give reasons in support of your answer. (5)

(d) State the relevant date for determining the following discussing the related provision in the Customs Act, 1962:

(i) Rate of Exchange for calculation of the price of imported goods; (ii) rate of duty for payment of customs duty on pilfered goods by the custodian; and iii) rate of duty when warehoused goods are cleared there from for home consumption. (2x3=6)

7(a) Discuss the provisions in the Customs Act, 1962 for claiming drawback on re-export of duty paid imported goods. (5)

(b) An actual user imports the following goods from UX at Chennai Port: Machine at FOB cost of €7,50,000 Accessory; and Electric Motor FOB cost of €50,000. The other details are as follows:

i) Electric motor was compulsorily supplied with the main machine; ii) packing charges of €22,000 were charged extra separately; iii) sea freight to Indian port, €18,000; (iv) transit insurance — €10,000v) design and development charges of €9000 were paid to a consultancy firm in Germany by the importer for design of the machinery; vi) Rs 3 lakh was spent in design cost on the machine in India; viii) a selling commission of Rs 5,000 is to be paid by the Indian importer to the agent of the exporter in India; ix) As on May 21, 2007: Rate of exchange announced by the RBI — 53- 20;

Announced by bank on date of payment for clearing — 53-30; as on May 22, 2007:

Rate of exchange announced by the RBI — 53-80;

Announced by bank on date of payment for clearing — 53-80

Notified by CBEC under Section 14 (3)53-30 and 53-40

(B) Rates of basic Customs duty 20 per cent and 15 per cent, respectively.

Additional Customs duty under Section (1) of CTA, 1975: 16 per cent and 16 per cent, respectively;

Additional customs duty under Section 3 (5) of CTA, 1975: 4 per cent and 4 per cent, respectively;

(x) Bill of Entry was presented on May 21, 2007, but entry inwards was granted to the vessel on May 22, 2007

(xi) Education cess under FA 2004 was 2 per cent

(xii) Education cess (secondary and higher secondary) under FA 2007 was 1 per cent.

Compute: i) the assessable value of the imported goods; ii) the Customs duty payable; and iii) the Cenvat credit that can be utilised by the importer, if he is a manufacturer. (8)

7(c) What is the time limit for filing an import manifest by the master of a vessel.

What is the consequence if not filed in time? (2)

(8) Write short notes on the following: i) fine in lieu of confiscation; ii) penalty under Section 114-A; iii) warehousing period; iv) professional equipment under baggage rules; v) notified goods. (3x5=15)

Service Tax

9 (a) Write the procedure to be followed by an adjudicating authority for recovering service tax not levied/not paid/short levied/short paid or erroneously refunded, with reference to the provisions of the Finance Act, 1994 (Chapter V) (5)

(b) Answer the following with reference to service tax law:

(i) Who is liable to pay service tax in relation to sponsorship service provided to a body corporate?

(ii) What is the document to be issued by a service provider?

What is the time limit for it?

(iii) What is the percentage of abatement allowed from value in the service of construction of complex? State the conditions to be fulfilled.

(iv) Service tax liability of a bank owning an AT machine.

(v) Reproduction of original master to make further copies of audio tape/ C.Ds under sound recording service. (2 x 5=10)

Wishing you good luck.