ICSI Final – New syllabus

DIRECT AND INDIRECT TAXATION – LAW & PRACTICE

December 2006

Part A of 40 marks pertains to direct taxes and not reproduced here.

Answer any four questions from this part.

Q 4. (a) “Though taxable event is ‘manufacture’, duty payable is as applicable on the date of removal under central excise.” Critically examine and state whether there are any exceptions to this rule. (b) What are the propositions laid down under section 12 of the Customs Act, 1962 to levy customs duty?  (c) Is there any exemption to small service providers from the scope of service tax levy? If so, indicate the limit, if any. Are there any other general exemptions available under section 93 of the Finance Act, 1994? (d) Can government be treated as ‘dealer’ for the purposes of the Central Sales Tax Act, 1956? What is the rate of tax applicable, if the inter-State sale is made by the government to a registered dealer? (4+4+4+3 = 15 marks)

Q 5. (a) State whether all Company Secretaries are covered by the service tax levy? What is ‘taxable service’ in the context of a Company Secretary? What will be the value of such taxable service? (b) Distinguish between the following: (i) ‘Clearance of goods for home consumption’ and ‘clearance of goods for warehousing’ under the Customs Act, 1962. (ii) ‘Special audit under section 14A’ and ‘Special audit under section 14AA’ of the Central Excise Act, 1944. (iii) ‘Safeguard duty’ and ‘anti-dumping duty’ under the Customs Tariff Act, 1975 (3 + 4x3 = 15 marks)

Q 6. (a) The management of your company is unable to determine the value of excisable goods manufactured by it. It wants to opt for provisional assessment for the present. As a Company Secretary, prepare a note on provisional assessment for the benefit of your company. (b) An importer provided the producer with a mould to be used in production of imported goods. The cost of mould is Rs. 5,00,000, which is expected to produce 25,000 pieces. The importer has imported 5,000 pieces in the first lot. Is it necessary to add the cost of mould in transaction value? If yes, what will be the amount to be added? The importer is expecting an increase in the rate of customs duty next month, so he has requested to the proper officer that if cost of mould is required to be added in transaction value, the full cost of mould, i.e., Rs. 5,00,000 may be added in the transaction value of first lot of 5,000 pieces itself. Is the demand valid in law?  (c) Smart Computers Ltd. is engaged in manufacturing of mini computer processing system with floppy drive, keyboard and CPU. Though, it did not manufacture monitors and printers, it bought duty-paid monitors and printers from market and supplied to customers, if required by them. Such supply of monitors and printers was made in approximately 30% of the cases. The department has contended that the value of monitors and printers is includible in the value of computers claiming that they are parts of the computers. The assessee has approached you to advise – (i) Whether the value of monitors and printers is includible in the value of computers? (ii) Whether for the entitlement to the benefit of Notification No. 8/2003 dated 1^st March, 2003, the value of monitors and printers shall be included? (d) The consignments imported by Young Ltd. were assessed provisionally under section 18 of the Customs Act, 1962 and provisional duty was paid. On final assessment, the finally assessed duty was adjusted against the provisional duty paid and the excess duty paid became refundable to the assessee under section 18(2) of the Act. On claim of refund by assessee, the revenue contended that an application for refund should be made under section 27. The assessee contended that section 27 had no application in this case. Further, the assessee, after having recovered the amount of excess duty paid from the customers, argued that the doctrine of unjust enrichment is not applicable in the said case. The questions for consideration are – (i) Whether an application for refund of duty, provisionally paid under section 18, is required to be made under section 27 of the Customs Act, 1962? (ii) Whether the provisions of unjust enrichment as laid down under section 27 of the Customs Act, 1962 are applicable to a refund arising consequent to final assessment under section 18(2)? (iii) Whether the amount paid on provisional assessment under section 18 is a duty? (3+3+3+6 = 15 marks)

Q 7. (a) Examine the following statements with reference to CENVAT Credit Rules, 2004 and indicate, giving brief reasons, whether they are true or false: (i) An assessee can claim CENVAT credit in respect of – capital goods acquired on lease; and – capital goods on which depreciation has been claimed under the Income-tax Act, 1961. (ii) A manufacturer selling his business to another person cannot transfer his unutilised CENVAT credit to the purchaser. (iii) Where the capital goods are cleared as waste and scrap, the manufacturer has to pay an amount equal to the duty leviable on transaction value and such amount paid can be availed as CENVAT credit. (iv) Credit of basic excise duty can be utilised for payment of education cess whereas the vice-versa is not possible. (v) A company manufacturing beverages can avail CENVAT credit in respect of duty paid on an inkjet printer purchased for printing the date of manufacture and sale price on bottles containing beverages manufactured and cleared by it. (b) Pearl ltd. is a manufacturer of mineral water. It has declared all the retail prices meant for different States on each bottle. The department has proposed to levy duty on the basis of the highest retail price printed on the bottles. But, Pearl Ltd. claims that each such price should be taken depending on the State to which the goods are being cleared. Discuss the validity of the stand of the department. (c) Anthony has stored excisable goods in a warehouse. He is neither a manufacturer nor a producer nor a procurer of excisable goods. Is Anthony liable to pay excise duty on removal of goods from the warehouse? (10+3+2 = 15 marks)

Q 8. Attempt any five of the following: (i) In a case where stock of goods is transferred from one State to another State otherwise than by way of sale, on whom the burden of proof lies and how can it be discharged? (ii) Write a short note on sale to foreign diplomatic mission, etc., in India under the Central Sales Tax Act, 1956. (iii) ‘Authority for advance ruling’ formed under section 245-O of the Income-tax Act, 1961 functions as Central Sales Tax Appellate Authority also. Do you agree? Also state the period within which the appeal has to be filed to the Appellate Authority. (iv) Are recipients of taxable services discharging their service tax liability under section 68(2) of the Finance Act, 1994 entitled to avail credit of the service tax paid on taxable services received by them under the CENVAT Credit Rules, 2004? If so, what is the procedure to be adopted? (v) Anuj Ltd. is a supplier of goods and engages the services of a transporter company Brij Ltd. for transporting the goods to its customer Chirag Ltd. Transportation charges shall be paid by Anuj Ltd. to the transporter Brij Ltd. (input service provider) along with service tax. How can the service tax so paid by Anuj Ltd. be recovered from its customer Chirag Ltd.? Is there any revenue loss to Chirag Ltd. in this case? (vi) Define ‘residential complex’ for the purpose of service tax. How is it relevant for the purpose of service tax levy? (5 x 3 = 15 marks)

June  2006

Part A of 40 marks pertains to direct taxes and not reproduced here

Answer any four questions from this part.

Q 4 (a) Explain the concept of ‘related person’ under section 4 of the Central Excise Act, 1944 (b) State the circumstances under which refund of export duty is permissible under the Customs Act, 1962. (c) When is the sale or purchase said to take place in the course of import or export of goods under the Central Sales Tax Act, 1956? (d) Discuss the revisionary powers of the Commissioner of Central Excise in relation to service tax [4+4+4+3 = 15 marks].

Q 5 (a) What are powers of the Settlement Commission under the Customs Act, 1962? (b) Summarise the provisions of the Central Sales Tax Act, 1956 relating to rates of tax on sales made to unregistered dealers in the course of inter-State trade or commerce. (c) PQR Ltd., Ghaziabad purchased plastic granules valued Rs. 1,16,000 (inclusive of central excise) for manufacture of plastic moulded chairs. It availed  CENVAT credit of excise duty of Rs. 16,000 paid on the said inputs. It subsequently cleared the said inputs as such from the factory in the following manner: (i) Sales to Sansar Ltd. (purchased price : Rs. 20,000) – Rs. 40,000 (ii) Sales to Krishna Trading Co. (purchased price : Rs. 10,000) – Rs. 10,000 (iii) Clearance to PQR Ltd.’s own factory at Kanpur (purchase price : Rs. 70,000) – Free of cost. PQR Ltd. has sought your advice on the excise duty payable by it on the above clearances. Give your advice in the matter. (d) What is the penalty leviable in the following cases under Chapter-V of the Finance Act, 1994: (i) Failure to pay service tax (ii) suppressing value of taxable service and (iii) contravention of any of the provisions of the aforesaid chapter for which no penalty is separately provided in the chapter? [5+4+3+3 = 15 marks]

Q 6 (a) The clearances of Akash Electric Co. Ltd. were Rs. 350 lakh during the financial year 2004-05. The following are included in the said clearances: (i) Exports to Nepal and Bhutan – Rs. 20,00,000, (ii) Exports to countries other than Nepal and Bhutan – Rs. 1,00,00,000 (iii) Job work exempted from duty under Notification No. 214/86 - Rs. 90,00,000 (iv) Sales to 100% EOU against Form CT-3 – Rs 50,00,000. The company is of the view that it is not liable to pay any duty on its clearances in the financial year 2004-05 as per Notification No. 8/2003 dated 1^st March, 2003. Do you agree with the company? Give reasons for your answer. (b) What are the documents on the strength of which CENVAT credit can be taken under the CENVAT Credit Rules, 2004? (c) How do you determine the duty when imported goods consist of articles liable to different rates of duty? (d) Peter is running a sound recording studio and has obtained registration for the purpose of payment of service tax. He proposes to transfer his entire business to Akash. Is it necessary for Akash to obtain a fresh certificate of registration? Give reasons for your answer [5+5+3+2 = 15 marks]

Q 7 (a) The goods manufactured by Bright Ceramics Ltd. were included in the First Schedule to the Central Excise Act, 1944 for the first time with effect from 1^st March, 2005. Bright Ceramics Ltd. cleared the goods manufactured by it in the month of February, 2005 on 15t^h March, 2005 from the factory. The department of Central Excise has demanded excise duty on the goods cleared in March, 2005. Examine the validity of the demand in the light of decided case law, if any. (b) Ashok imports consignment of goods which were chargeable to duty at 60% ad valorem. The goods were warehoused on 18^th October, 2005 after filing the bill of entry for warehousing. The government issued notification on 31^st October, 2005 reducing the rate of customs duty to 30% ad valorem. Ashok filed Bill of Entry for home consumption on 15th November 2005 specifying the rate of duty as 30%. However, the customs department charged duty at 60%. Ashok wants to know from you whether the charging of duty at 60% is valid. Examine the issue in the light of the provisions of the Customs Act, 1962 and give your advice to Ashok (c) Kishan purchased cameras made in Japan from a hawker in Delhi. He did not have any document relating to the goods. While he was travelling from Delhi to Jaipur, the officers of the customs department seized the cameras under the reasonable belief that they were smuggled goods. Subsequently, they were confiscated. Cameras are not notified goods under section 123 of the Customs Act, 1962. Discuss the validity of confiscation of cameras in the light of decided case law, if any [5+5+5 = 15 marks].

Q 8. (a) Explain the provisions of Chapter-V of the Finance Act, 1994 relating to classification of taxable services (b) A rice miller purchased paddy and rice procured out of such paddy was sold to an exporter, who further exported the rice. Explain with brief reasons, whether purchase of paddy by rice miller will be exempt under section 5(3) of the Central Sales Tax Act, 1956. (c) State, giving reasons, whether the following statements are correct or incorrect : (i) An unregistered dealer can collect sales tax on sales made by him in the course of inter-State trade or commerce. (ii) Service tax has to be paid on half-yearly basis on or before 25^th October and 25^th April. (iii) A single declaration in Form-C is sufficient to cover all transactions between the two same dealers in a financial year [5+4+6 = 15 marks].

December  2005

Part A of 40 marks pertains to direct taxes and not reproduced here

Part – B – Indirect Taxation 60 marks

Answer any four questions from part B.

Q 4. (a) Define the following terms under the CENVAT Credit Rules, 2004: (i) Input service distributor (ii) Output service (b) What is meant by ‘Export General Manifest’ (EGM) under the Customs Act, 1962? Who is liable to submit EGM and what is the time period for filing the same? (c) Explain with reasons whether ‘canned software’ (i.e., computer software packages off the shelf) like Oracle, Lotus, Master key, N-Export, Unigraphics, etc., can be termed as ‘goods’ and as such be assessable to sales tax. (d) What is service tax liability of an insurer carrying on life insurance business under the Service Tax Rules, 1994? (6+4+3+2 = 15 marks)

Q 5. (a) Explain the different types of valuation under the Central Excise Act, 1944. (b) Write a note on ‘additional duty’ (countervailing duty) under the Customs Tariff Act, 1975. (c) Anderson is a consulting engineer and citizen of Canada. He does not have any office in India. He renders taxable service in India to an Indian company. Advise whether Anderson is liable to pay service tax in India. (d) Ashok sells goods in the course of export out of the territory of India. Is he liable to pay central sales tax? (6+5+2+2 = 15 marks)

Q 6. (a) An SSI unit paid central excise duty for the month of December, 2004 on 15^th January, 2005 by demand draft with TR-6 challan. However, the bank received and stamped TR-6 challan on 17^th January, 2005 on account of weekly holiday. Whether any interest will be charged on the SSI unit for late payment of duty? If yes, then whether such interest will be charged as per the provisions of Rule 8(3) of the Central Excise Rules, 2002 or as per provisions of delayed payment of duty under section 11AB of the Central Excise Act, 1944? Also calculate the amount of interest payable by the SSI unit, if the amount of duty is Rs. 31 lakh. (b) Rosy Di-Gen Co. is a manufacturer of diesel generating sets. In the process of manufacture, it uses certain components manufactured by Cosy & Co. The diesel generating sets manufactured by Rosy Di-Gen Co., do not bear the brand name of Cosy & Co., but in the invoices issued to the purchasers, the diesel generating sets are described as ‘Cosy & Co. Diesel Generating Sets.’ Discuss with the help of decided case law, if any, whether the SSI exemption is available to Rosy Di-Gen Co. or not? (c) Every Fresh Ltd. purchases edible vegetable oil from the open market. The oil is subjected to certain processes for the purpose of refining it. The refined edible oil is sold in the market but no excise duty is being paid by Ever Fresh Ltd. claiming that since no manufacturing activity is involved, no duty is payable on their clearances. A show cause notice has been issued by the proper officer demanding duty on clearance of refined edible oil classifying the product under Tariff Item 1503.10.The contention of the excise department is that refining the edible oil amounted to manufacture, as the process undertaken by Ever Fresh Ltd. is mentioned in Tariff Item 1503.10. which is not disputed. Since subsequent to the refining process, a new and distinct product has emerged, hence, duty is payable on the same. You have been asked to advise whether refining/ processing of edible oil can be deemed as manufacture or not? Cite case law in support of your views (5+5+5 = 15 marks).

Q 7 (a) Green Gel Ltd. imports chemicals from Russia. Compute the education cess payable by the company on the basis of following data : (i) Landed value (CIF) Rs. 5,00,000 (ii) Customs duty @ 16% (iii) Countervailing duty (CVD) @ 16% (iv) Education cess @ 2% (b) Enumerate the list of persons who can be searched under section 100 of the Customs Act, 1962. (c) Link Engineering Ltd. purchases a machine for manufacturing of certain mechanical parts which are exempt from payment of central excise duty. It also occasionally uses the machine for manufacture of small quantities of components which are cleared on payment of duty. Is Link Engineering Ltd. entitled to take credit of the excise duty paid on the machine? Decide by referring to specific legal provisions [5+5+5 = 15 marks]

Q 8. (a) State, giving reasons in brief, whether the following statements are correct or incorrect : (i) A person, who is not a dealer registered under the Central Sales Tax Act, 1956, can collect central sales tax on the sales made by him in the course of inter-State trade and commerce (ii) Newspapers, actionable claims, stocks, shares and securities are ‘goods’ under the Central Sales Tax Act, 1956. (iii) The cost of freight does not form part of the sale price under the Central Sales Tax Act, 1956 if it is separately charged in the invoice. (b) Discuss the instances wherein the goods move out of the selling State, but do not amount to inter-State sales under section 3 of the Central Sales Tax Act, 1956. (c) What are the conditions for taking the CENVAT credit under the CENVAT Credit Rules, 2004? (6+4+5 = 15 marks)

ICSI Final – New syllabus

DIRECT AND INDIRECT TAXATION – LAW & PRACTICE

June  2005

Part A of 40 marks pertains to direct taxes and not reproduced here

Part – B – Indirect Taxation 60 marks

Answer any four questions from part B.

Q 4. (a) Explain the powers of the Central Government to increase or levy export duties. (b) When can the CENVAT credit in respect of input service be availed under the CENVAT Credit Rules, 2004? (c) Enumerate the matters on which the advance ruling can be sought under the Central Excise Act, 1944. (d) What is the minimum and maximum penalty imposable for failure to collect or pay service tax under the Finance Act, 1994? (e) Define ‘place of business’ under the Central Sales Tax Act, 1956 (3 x 5 = 15 marks).

Q 5. (a) A manufacturer having a factor at Jaipur has uniform price of Rs. 1,000 per unit (excluding taxes) for sale anywhere in India. During the financial year 2003-04, he made the following sales: (i) Sale at factory gate in Jaipur: 1,000 units – no transport charges. (ii) Sale to buyers in Delhi: 500 pieces – actual transport charges incurred Rs. 12,000. (iii) Sale to buyers in Chennai: 600 pieces – actual transport charges incurred Rs. 48,000. (iv) Sale to buyers in Mumbai: 900 pieces – actual transport charges incurred Rs. 30,000. Find assessable value per unit under the central excise. (b) Mrs. & Mr. Kapoor visited Germany and brought following goods while returning to India on 8^th February, 2004. (i) Their personal effects like clothes, etc., valued at Rs. 35,000. (ii) A personal computer bought for Rs. 36,000. (iii) A laptop computer bought for Rs. 95,000. (iv) Two litres of liquor bought for Rs. 1,600. (v) A new camera bought for Rs. 37,400. What is the amount of customs duty payable? (c) Ganpati Traders, Jodhpur, Rajasthan made various inter-State sales to registered dealers. Declaration in Form-C were received as follows: (i) One Form-C  covering sale of Rs. 2 lakh was lost. The buyer sent a Xerox copy duly certified as true copy by their commercial tax officer. (ii) One Form-C was received from buyer which covered eight invoices totalling Rs. 6 lakh. (iii) One Form-C was covering sale of Rs. 1 lakh was misplaced in post. The buyer sent another Form-C. It was marked ‘duplicate’. (iv) One Form-C was received in respect of one invoice of Rs. 5 lakh. If the goods are sold within Rajasthan, the local sales tax rate is 12%. You are required to find out the central sales tax payable, if a surcharge of 15% is also leviable in Rajasthan on sales tax. (d) Tax on professions, trades, calling or employments is a State subject, under entry 60 of List II (State List). It is argued that service tax cannot be levied by Union Government on profession of Company Secretary. Discuss (4+5+4+2 = 15 marks).

Q 6 As a Company Secretary, advise the Board of directors of your company in the following matters under central excise laws. Each case may be treated as a separate case: (i) Your company has reprocessed duty paid commercial plywood to produce slip proof commercial plywood. The process is an application of PF resin on duty paid plywood under 100% heat and pressure and coating it with wire mesh to make it slip proof commercial plywood. The product is used in body building of motor vehicles or flooring. Directors of your company are of view that there is no manufacture, because both the input (commercial plywood) and the output (slip proof commercial plywood) fall under the same classification (No. 44.08) and hence no duty is payable (ii) Some excisable goods were cleared under ARE-1 without payment of duty for export by your company. But due to certain problem, goods were not exported. Now, the directors of your company want to divert the goods in local market. The good can be sold at lower prices as these had got damaged. Directors of your company have suggested that duty is payable at actual sale price in local market (iii) Your company is manufacturing goods with a brand name of another, but the product is entirely different. The directors wish to avail SSI exemption. (iv) Your company has sold certain goods and paid duty under protest. Prescribed procedure as mentioned in Chapter 13, Part III, Para 4 of the CBE&C’s Excise Manual of Supplementary Instructions, 2001 was followed while paying duty under protest. A refund claim was filed later on pertaining to this duty. The directors of your company are very much hopeful of getting the refund (4+4+4+3 = 15 marks)

Q 7. You are a Company Secretary in Practice. Discuss the following matters under the customs law. They do not necessarily relate to the same client. (i) Gajanan & Co. has imported a plant from UK in June, 2004 paying customs duty of Rs. 50 lakh. Due to some major technical problem, the plant could not be installed. In September, 2004, the supplier sent his technicians to India to resolve the problem; but no solution was found. In November, 2004, Gajanan & Co. decided to return the plant to the foreign supplier. Your client (Gajanan & Co.) has approached you for advice whether import duty already paid can be got back from the Central Government, when the plant is returned. (ii) Jolly Ltd. had imported certain goods from USA and stored them in warehouse without payment of duty. Goods could not be cleared even after warehousing period was over and extension was not granted. Customs Officer has issued notice under section 72 of the Customs Act, 1962 demanding duty. Discuss, what is the relevant date for determination of the rate of duty. (iii) Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has granted a stay for recovery of duty and penalty pending appeal, in case of your client Goriputra. The appeal has not been disposed off by CESTAT within 180 days. Examine the consequences and the solutions available to Goriputra in this case (5+5+5 = 15 marks).

Q 8. (a)  (i) Explain penalty in lieu of prosecution in relation to the Central Sales Tax Act, 1956. (ii) Is any central sales tax chargeable on the sale of discarded printing machines by the Central Government? (b) What is the value of any taxable service for the purpose of levying service tax? (c) Whether the following are includible in the value of taxable service under the Finance Act, 1994: (i) The cost of lubricants and coolants sold to the customers during the course of repair of motor cars (ii) The air fare collected by air travel agent in respect of service provided by him (iii) The commission or any amount received by the rail travel agent from the railways (7+2+6 = 15 marks).

December 2004

Part A of 40 marks pertains to direct taxes and not reproduced here

Part – B – Indirect Taxation 60 marks

Answer any four questions from part B.

Q 4 (a) ‘Processing’ is distinct from ‘manufacturing’ and mere processing does not mean manufacture. Elucidate. (b) Explain the provisions made under the Customs Tariff Act, 1975 for classification of packing materials and packing containers. (c) Define ‘sale price’ under the Central Sales Tax Act, 1956. (d) When payment is made by a client or customer to an assessee after deducting his income-tax liability under the provisions of tax deduction at source (TDS), whether the service-tax liability of the assessee is only towards the amount actually received from his client/customer or service-tax is to be paid on the amount of income-tax deducted at source as well? (5+5+3+2 = 15 marks)

Q 5 (a) An assessee purchased various inputs and credit of duty on inputs was taken up instantly. Later on, some inputs were pilfered from the store room of the assessee. The proper officer raised a demand under section 11A of the Central Excise Act, 1944 read with rule 12 of the CENVAT Credit Rules, 2002, for recovery of CENVAT credit wrongly taken on inputs lost from store room. The assessee has claimed that one to one corelation is not required for CENVAT credit and as he has suffered duty, CENVAT credit is available to him. Examine the case in the light of central excise provisions and decided case laws, if any, and state your views whether the demand can be confirmed or not (b) An importer has imported certain goods and while determining the assessable value, landing charges @ 1% of CIF value were added. The importer has claimed that actual landing charges are much lower than 1% of the CIF value in his case. You have been asked to advise whether the importer can file a bill of entry by adding actual landing charges instead of notional 1% of CIF value or not (c) State, with reasons in brief, whether the following services attract service-tax or not: (i) Services rendered by consulting engineer relating to computer softwares. (ii) Services provided by a customs house agent (iii) Beauty parlours providing services relating to hair dying (d) A registered dealer of Bikaner (Rajasthan) sold goods worth Rs. 4,36,000 (including tax @ 9%) to an unregistered dealer of Gujarat. Calculate the amount of central sales tax payable, if the sales tax rate on such goods in Rajasthan is 9% and surcharge @ 15% is also payable on it (5+5+3=2 = 15 marks).

Q 6 (a) State with reasons whether the following are includible in the assessable value of goods or not for the purpose of central excise: (i) Dharmada collected from the buyer (ii) Cost of cartons and labels supplied by customer (iii) Royalty collected from customers for use of trademark and (iv) Dealer’s commission, collected by dealer directly from customers, and not from assessee (b) A manufacturer has started manufacturing excisable goods and he want to remove these goods from the factory. He has asked you to specify the particulars the invoice should contain under rule 11(2) of the Central Excise Rules, 2002 (3 x 4 i.e. 12 +3 = 15 marks)

Q 7. (a) Distinguish between the following under the Customs Act, 1962: (i) ‘First appraisement procedure’ and  ‘Second appraisement procedure’. (ii) Duty drawback under section 74 and under section 75 (b) How is the customs value of export goods determined for assessment? Explain briefly (c) When can an application for settlement of a case before the Settlement Commission be filed under the Customs Act, 1962? (8+3+4 = 15 marks)

Q 8 (a) State, giving reasons in brief, whether the following statements are correct or incorrect: (i) Consignment transactions are subjected to central sales tax after the Constitution (46^th Amendment) Act, 1982 (ii) Goods involved in works contracts are included in definition of sale under the Central Sales Tax Act, 1956 (iii) The offences under the Central Sales Tax Act, 1956 are cognizable and bailable. (iv) If the State Government issues a general exemption notification with no reference to any period of time, then promissory estoppel would be applied (v) Service-tax on Company Secretary’s services was introduced by the Finance (No. 2) Act, 1998 with effect from 16^th October, 1998. (vi) If any person liable to pay service-tax fails to apply for registration, a mandatory penalty of Rs. 1,000 will be imposed (b) Define ‘capital goods’ for the purposes of availing CENVAT credit (12+3 = 15 marks).

June 2004

Part A of 40 marks pertains to direct taxes and not reproduced here

Part – B – Indirect Taxation 60 marks

Answer any four questions from part B.

Q 4 (a) Adarsh, an NRI in collaboration with Sunshine Ltd. in India, wants to undertake the activity of manufacturing high technology registration number plates for motor vehicles and, thereafter, stamped them with chromohologram. Can they seek an advance ruling from the authority for advance ruling as to whether this process amounts to manufacture under the Central Excise Act, 1944 (b) What are the owner’s right to deal with the goods kept in a warehouse under the Customs Act, 1962? (c) Define ‘sale price’ under the Central Sales Tax Act, 1956. (d) Are the provisions of service tax applicable in the State of Jammu and Kashmir? [6+6+2+1 = 15 marks]

Q 5 (a) Is the administrative charge collected from the buyers on behalf of the State Government in terms of section 8(5) of the U.P. Sheera Niyantran Adhiniyam by a sugar factory for molasses sold, deductible from the price of molasses for the purpose of levying central excise duty? (b) An electricity company generates electricity by using coal. In the process, cinder (unburnt coal) is left as the residue. Is the duty of excise chargeable on such cinder? (c) What are the ‘relevant dates’ for the purpose of issuing the show cause notice for demanding customs duty not levied? (d) Can the goods imported and stored in a warehouse be re-exported without payment of import duty after expiry of warehousing period? [4+4+4+3 = 15 marks]

Q 6 (a) Your company is manufacturing readymade garments falling under heading 6201.00.  Tariff value under section 3(2) of the Central Excise Act, 1944 for such goods has been prescribed as 60% of the retail sale price of such goods as specified on the package. The managing director of your company is interested to pay duty on assessable value under section 4 of the Central Excise Act, 1944. As a secretary of the company, prepare a note explaining the legal validity of the intention of your managing director (b) U & V Ltd. manufactures 10,000 units of Product W, assessable value of which is Rs. 400 per unit. Duty payable is 16%. Duty paid on raw material is Rs. 3,00,000. U&V Ltd. sells 2,000 units in India and 8,000 units are exported through a merchant exporter. What is CENVAT credit available and what is the duty payable through personal ledger account (PLA)? Can U&V Ltd. get any refund of CENVAT credit? (c) A company is manufacturing ‘kitchen sink’ and classifying it as ‘sanitary-ware’. The department is insisting that correct classification of ‘kitchen sink’ should be as ‘household article of iron and steel’. The company intends to take the issue before settlement commission. Give your advice in the matter [5 x 3 = 15 marks].

Q 7 (a) What are the circumstances in which conveyances are liable to confiscation under section 115 of the Customs Act, 1962? (b) Rapid Ltd. imported non-prohibited goods from China. They had under-valued the goods to he extent of 50%. The Commissioner of Customs has ordered absolute confiscation of the said goods. Whether the prayer of Rapid Ltd. for release of goods on payment of certain fine is justified under the Customs Act, 1962? (c) Mention the relevant date for determination of rate of duty in respect of the following goods imported/exported: (i) If bill of entry is presented before he date of entry inwards of the vessel (ii) In the case of entry for export under section 50 of the Customs Act, 1962 (iii) In respect of goods imported by post [6+3+6 = 15 marks].