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Final ICWAI ICWAI – Final Old Syllabus December 2009 Q1. (a) Fill in the blanks: (iv) Import of simulators of helicopter is ________ (chargeable to/exempt from) customs duty (v) Where security has been furnished to the central sales tax authority in the form of a surety bond, death of surety should be intimated within ______ days of such occurrence and fresh surety bond furnished within ______ days (vi) Where the Excise Tariff rate is 10% but as per exemption notification the excise duty is 8%, additional duty of customs payable is _______. (b) State with reasons, whether the following statements are true or false: (iii) Exemption from excise duty does not mean exemption from registration (vi) Provisional assessment can be initiated by Excise Department (vii) EOUs are exempted from payment of customs duty. Q5(a) State the conditions to be fulfilled for obtaining a written order from proper officer that will enable the person-in-charge of the conveyance which has loaded any exported goods to depart from a customs station (b) Hemalatha Plastics Ltd. opines that it is entitled to refund of Rs. 12,000 representing excess amount of Rs. 12,000 paid as interest under section 11AB of the Central Excise Act, 1944. The refund application is opposed by the Department on the ground that section 11B provides for refund of duty erroneously paid and not the interest paid. Is the same justified? (c) On 15.03.2009, Siddharth Ltd., Kolkata effected inter-state purchase of 1,000 watches from X Ltd., another registered dealer in Kochi. On 17.03.2009, Siddharth Ltd. entered into an agreement with Tagichi Inc. of Tokyo and exported the goods immediately. Can the sale by X Ltd. be regarded as penultimate sale for export? (8+4+4 = 16 marks) Q6(a) Janak Metals Ltd. manufactures metal sheets which are captively consumed for manufacturing an end product. The end product is exempt from payment of central excise. Department contends that as the metal sheet is an intermediary product which by itself is marketable, excise duty should be paid on them since the end product is exempt from duty. The Department is, however, unable to prove the marketability of the metal sheet. Discuss whether the Department’s contention is justified (b) Subramani Turbines Ltd., is engaged in manufacturing turbines, a dutiable product. From the following details of excise duty paid, ascertain the Cenvat credit admissible to them, for the year ended 31.03.2009 - Raw Metals - Rs 90,000, Petrol – Rs 45,000, Cylinder making machinery – Rs 60,000, Office equipment – Rs 17,000, Effluent Treatment Plant – Rs 40,000, Lubricant oil – Rs 12,000 (c) Income tax question (4+8+4 = 16 marks) Q8 Write short notes on the following – (a) Primacy of circulars issued by CBEC over the decisions of Court (b) MRP valuation for excise purposes where more than one product is packed in package. (c) Goods improperly removed from a warehouse under section 72 of the Customs Act, 1962 (d) Liability of directors of a private limited company for Central Sales Tax dues (e) Powers of the registering authority to forfeit the security under the Central Sales Tax Act, 1956 (f) Income tax question (4 x 4 = 16 marks)
STRATEGIC TAX MANAGEMENT Final June 2009 Q1. (a) Fill in the gaps: (i) to (iii) – Income tax (iv) The maximum amount of penalty leviable u/s 117 of Customs Act, 1962 is Rs. ______. (1,00,000/2,00,000/50,000) (v) The customs duty on project imports is ________ (5%, 10%, 15%). (vi) Where excise duty has been paid on provisional basis, refund claim should be filed within __________ after duty has been adjusted in final assessment. (90 days, one year, six months) (1 mark each). (b) State with reasons, whether true or false: (i) to (iv) – Income tax (v) In case of transactions of taxable service with an associate enterprise, service tax is required to be paid not on receipt basis, but on receipt or date of credit/debit entries in the books of account, whichever is earlier (2 marks each). Q5 (a) Janak Electricals Ltd., manufactures two products L and M, L being a product specified under section 4A of the Central Excise Act, 1944 (section number is a mistake). The sale prices of L and M are Rs.60 and Rs. 40.80 per unit, respectively. The above includes 14% basic excise duty, as increased by 3% education cess and secondary higher education cess, also 2% CST. For product L, 30% abatement is allowable under section 4A. 10,000 units of each product were removed from the factory to sales depots. You are required to compute the excise duty liability. (b) What are the documents required to be furnished by an exporter for claim of rebate of excise duty? (c) State briefly the provisions relating to storage of non-duty paid goods outside the factory, contained in Rules 4(4) of the Central Excise Rules, 2002 [8+6+2 = 16 marks]. Q6 (a) Explain the meaning of the term “Bill of export” and “import report” under the provisions of the Customs Act, 1962. (b) How is the valuation for CVD carried out as per section 3(1) of the Customs Act, 1962, when the goods are under MRP provisions? (c) Domino Computers Ltd., has placed before you two options relating to import of 10,000 laptop computers - (i) Import the laptop, pre-loaded with operating system (ii) Import the laptop computer without the operating system, and under agreement with the manufacturers, load the operating system as packaged software, after it is cleared from customs. One of the non-executive directors conversant with customs law argues that operating system software is separate from the hardware. The software should be classified separately from the laptop, under Heading 85.24, and not as a complete machine under the Heading 84.71. You are required to help the management in making a suitable decision from the customs duty point of view (d) Discuss briefly the penalty leviable under section 114 of the Customs Act, 1962 for improper exportation of goods (4+4+5+3 = 16 marks) Q7(a) Distinguish between Tax Planning and Tax Management (8 marks) (b) Income tax question. Q8 Write short notes on the following (any four) (a) Reverse mortgage (b) Exemptions from New wealth (c) ‘Capital goods’ under CENVAT Rules (d) Exemptions from Customs Duty u/s 25 of Customs Act (e) Goods and excisable goods (f) ‘Dealer’ as defined in CST Act (4 x 4 = 16 marks). STRATEGIC TAX MANAGEMENT FINAL Existing Syllabus – DEC-08 Answer Question No. 1 carrying 20 marks which is compulsory and any five from the rest. Total six questions are to be answered. Only questions relating to Indirect Taxes are given below - Q 1 (a) Fill in the blanks – (v) The normal time limit for passing an order of final assessment of excise duty is _ _ _ _ _ (6/12/24) months from the date of order of passing of provisional assessment (vi) Application for CST registration is to be submitted within _ _ _ _ (15/30/90) days from the date on which the applicant becomes liable for tax. Q1 (b) State with reasons, whether true or false (Mere conclusion will not suffice) : (iii) Cutting jumbo rolls of fax to convert fax paper of standard length and winding on spools is ‘manufacture’ for excise duty purpose. Q 5. (a) Total interstate sale for the financial year 2008-09 of X Ltd. is Rs. 1,50,70,000 which consists of the following; Sale upto 31.01.2008 Rs. 91,50,000 ( if the goods are sold within the State, sales tax rate is 12.5%), Sale during 01.06.2008 to 31.03.2009 - Rs. 59,20,000 ( if the goods are sold within the State, sales tax rate is 4%). The sales figures are net excluding sales tax. CST rate was 3% upto 31.05.2008 and 2% thereafter. Out of the goods sold for Rs. 1,50,000, on 16.07.2008 that were liable to CST @ 2%, goods worth Rs. 50,000 were returned on 12.12.2008 and goods worth Rs. 1,20,000 were returned on 01.02.2009. A buyer to whom goods worth Rs. 55,000 carrying 2% CST was dispatched on 16.04.2008, rejected the goods and the same were received back on 15.11.2008. Compute the taxable turnover and tax liability of X Ltd. since all the relevant forms have been received. (b) The assessee M Ltd. entered into a joint venture with a foreign collaborator N for promotion and selling antennas, accessories and other communication equipments. The agreement between them indicates that N owned majority of equity shares in M Ltd. Technical services were provided by N to M Ltd. for various functions that were carried out in respect of manufacture of antenna system in India, for which technical services fee was paid to N by M Ltd. Based on above facts, the department opined that both M Ltd. and N were related persons and that the technical fee paid by M Ltd. was includible in the assessable value of the imported components in terms of Customs Valuation Rules. Decide referring to decided case law [10+6 = 16 marks] Q 6. (a) An assessee cleared various manufactured final products during June, 2008. The duty payable for June, 2008 on his final products was as follows: Basic Rs. 2,00,000, education cess as applicable. During the month, he received various inputs on which total duty paid by suppliers of inputs was as follows: Basic duty Rs. 50,000, education cess Rs. 1,000. SAH education cess Rs. 500. Excise duty paid on capital goods received during the month was as follows: Basic Duty Rs. 12,000, education cess Rs. 240. SAH education cess Rs. 120. Service Tax paid on input services was as follows: Service tax Rs. 10,000, education cess Rs. 200. SAH education cess Rs. 100. How much duty the assessee will be required to pay by GAR-7 challan for the month of June, 2008, if assessee had no opening balance in his PLA account? What is last date for payment? (b) Explain situations where the provisions of unjust enrichment under section 11B(2) of the Central Excise Act, 1944, will not apply and the applicant will be entitled to refund [10+6 = 16 marks] Q 8. Write short notes on any four of the following: (a) “Business” as defined under CST Act: (b) DEPB scheme: (c) Distinction between ‘Identical goods’ and ‘Similar goods’ with reference to Customs Valuation Rules, 2007: (d) Classification of excisable goods when they are prima facie classifiable under two or more headings.(e) “Rectification of mistake” under Customs Act: (f) Payment of duty under protest under Central Excise Law [4 x 4 = 16 marks] ICWA Final June 2008 – Strategic Tax
Management Answer Question No. 1 carrying 20 marks which is compulsory and any five from the rest. Total six questions are to be answered. Only questions relating to Indirect Taxes are given below - Q
5. (a) Explain highlights of new section 14 of Customs Act for valuation
of imported goods. (b) Deepak Bazar Ltd. a trading company, supplies
fabrics to an independent processor. The cost of fabrics supplied is Rs.
8,150. The job worker charges Rs. 4,500 which includes Rs. 3,500 as
processing charges and Rs. 1,000 as its profit. Deepak Bazar Ltd. sells
the goods from the factory of job worker at Rs. 18,000. The rate of
excise duty is 14% plus education cess as applicable. Determine the
assessable value of the goods (8+8 = 16 marks) Q
6. (a) Explain the non-applicability of “transaction value” with
reference to section 4 of the Central Excise Act, 1944. (b) Discuss
various circumstances where the small scale exemption will be available
to the manufacturer of excisable goods bearing the brand name of another
person (8+8 = 16 marks) Q
7. (a) Discuss the principles relating to “Promissory Estoppel”. (b)
Enumerate transactions, which are not ‘sale’ for purposes of CST Act
(8+8 = 16 marks) Q
8. Write short notes on any four of the following: (a) (i) Customs Port,
(ii) Goods, both with reference to Customs Act. (b) Dutiability of waste
and scrap. (c) Conditions for allowing deduction of bad-debts under
Income Tax Act. (d) Declared goods under CST Act with six instances. (e)
“Manufacture” under Central Excise Act. (f) Remission of customs
duty on lost, destroyed or abandoned goods (4 x 4 = 16 marks) ICWA Final December 2007 – Strategic Tax
Management Answer Question No. 1 which is compulsory and any
five from the rest. Total six questions are to be answered. Only
questions relating to Indirect Taxes are given below - Q 1 (a) State with reasons, where necessary, if the following are True or False: (iv) S.T. is leviable on sale of stocks, shares and securities traded by a dealer in shares. (v) Hides and skins are “declared goods”. (2 marks each) (b) Fill in the gaps. (iii) The State from which ________ commences shall be the ____ State empowered to assess, collect and enforce payment of CST. (iv) Clearance in relation to any imported goods (cargo) means _____. (2 marks each) Q 2(a) State some important factors affecting management decisions in regard to making a product (part of a component), or buy it from manufacturers, for its existing unit (8 marks) Q 4 Write short notes on the following (a) Computerization of invoices for central excise purposes (b) Supplementary invoice for differential central excise duty (c) Value of goods and tooling supplied by buyer under the Customs Act (4 marks each). Q 6 (a) Big Ltd., supplies raw material to a job worker Small Ltd. After completing the job-work, the finished product of 5,000 packets are returned by Small Ltd. to Big Ltd. putting the retail sale price as Rs. 20 on each packet. The product in the packet is covered under MRP provisions and 40% abatement is available on it. Determine the assessable value under Central excise law from the following details: * Cost of Raw material supplied Rs. 30,000/- * Job worker’s charges including profit Rs. 10,000/- * Transportation charges for sending the raw material to the job worker Rs. 3,000/- * Transportation charges for returning the finished packets to Big Ltd. Rs. 4,000/- (b) List the ‘capital goods’ which are eligible for purpose of availment of Cenvat credit (c) Explain restrictions on availing depreciation in respect of capital goods on which Cenvat credit has been availed (6+7+3 = 16 marks) Q 7 An importer has imported a machine from UK at FOB cost of 10,000 UK Pounds. Other details are as follows: (a) Freight from UK to Indian port was 700 pounds. (b) Insurance was paid to insurer in India: Rs. 6,000. (c) Design and development charges of 2,000 UK pounds were paid to a consultancy firm in UK. (d) The importer also spent an amount of Rs. 50,000 in India for development work connected with the machinery. (e) Rs. 10,000 were spent in transporting the machinery from Indian port to the factory of importer. (f) Rate of exchange as announced by RBI was : Rs. 68.82 = one UK pound. (g) Rate of exchange as announced by CBE&C (Board) by notification under section 14(3)(a)(i): Rs. 68.70 = One UK pound. (h) Rate at which bank recovered the amount from importer Rs. 68.35 = One UK pound. (i) Foreign exporter have an Agent in India. Commission is payable to the agent in Indian Rupees @ 5% of FOB price. Customs duty payable was 10%. If similar goods were produced in India, excise duty payable as per tariff is 24%. There is an excise exemption notification which exempts the duty as is in excess of 16%. Education cess is 2% and Secondary and Higher Education Cess is 1%. Find customs duty payable. How much Cenvat can be availed by importer, if he is manufacturer? (16 marks) Q 8 (a) What are the goods eligible for registration by a dealer under Central Sales Tax. A certificate in prescribed form is required to be given by registered dealer to avail the concessional rate of CST. Name any two such forms (b) A registered dealer was eligible to purchase certain goods at concessional rate of CST. However, through oversight, the goods were not included in his registration certificate. He issued C form for purchase of the goods. State the consequences. (7+3 = 10 marks) Answer Question No. 1 which is compulsory and any
five from the rest. Total six questions are to be answered. Only
questions relating to Indirect Taxes are given below - Q
1(b) Specify the correct answer: (i) Sale under CST Act includes a
transaction in the nature of delivery of goods on ________. (A) job work
(B) hypothecation (C) hire purchase (D) pledge (ii) CST is not
chargeable on the following as it is not sale of goods _______. (A)
business (B) copyright (C) trade mark (D) advance license (iii) The
following item is normally included (not excluded) in determining
assessable value under central excise : (A) erection charges (B)
notional interest on security deposit (C) transport charges after place
of removal (D) optional after sales service charges. (iv) A SEZ (Special
Economic Zone) unit has to submit the following forms to the
manufacturer to obtain goods without CST from him ________. (A) Z form
(B) S form (C) H form (D) I form (v) In case of sale to registered
dealers and Government agencies which issue C/D forms the maximum rate
of CST tax is _______. (A) 0% (B) 1% (C) 4% (D) 12%. (2 x 5 = 10 marks) Q 4(a) Prithvi
Computer Ltd., sells computers to its customers, with a branded
operating system software pre-loaded therein. The Department contends
that in ascertaining the transaction value for excise duty purposes,
cost of operating system software should also be added, since a computer
cannot function without an operating system. Is this contention correct?
(b) XYZ Pharma Ltd. wishes to distribute free samples of medicines
routinely manufactured to leading hospitals. How should they be valued?
What will be the case if it is a newly developed produce? (c) X receives
raw materials from Y, an outsider merchant manufacturer, on which job
work is done. How should valuation be done for excise purposes? Will the
answer differ if X and Y are related persons? (6+4+6 = 16 marks) Q 7(a) Explain
briefly the procedure for fixing anti-dumping duty on a product. (b)
Explain in brief the procedure for assessment and clearance of imported
goods from customs port (8+8 = 16 marks) Q 8. (a) Discuss
the binding nature of a Court’s decision “sub
silentio” and judgment “per
incuriam”. (b) Write a note on ‘Declared Goods’ under CST Act
(8+8 = 16 marks)
ICWA Final December, 2006 – Strategic Tax Management Answer Question No. 1 which is compulsory and any five from the rest. Total six questions are to be answered. Only questions relating to Indirect Taxes are given below - Q 1.(b) Specify the Correct Answer: (i) Immovable property located in the border areas is treated under the CST Act as (a) goods, (b) not goods, (c) declared goods, (d) prohibited goods. (ii) The unutilised CENVAT credit can be carried forward (a) upto 6 years, (b) upto 8 years, (c) without any time limit, (d) up to 16 years. (iii) A manufacturer availed himself of input services for his business – (1) Mobile phones used by sales executives, (2) Audit fees paid to Auditors. Cenvat credit of service tax is available in respect of the excise duty on the final product (a) on mobile phones, (b) on Audit fees, (c) on all these, (d) on none of these. (iv) CST is not payable on (a) sale of lottery tickets, (b) sale of newspaper, (c) lease of machinery, (d) sale of steel goods. (v) Goods returned are not liable to CST if they are returned (a) at any time during the financial year in which these were sold, (b) within 6 months from the end of the said financial year, (c) within 6 months of sale, (d) none of these. (2 x 5 = 10 marks) Q 2. (b) Mr. Gupta, a practising cost accountant has been appointed Cost Auditor of X Ltd. for a fee of Rs. 6 lakh, out of which he received an advance of Rs. 4 lakh on 18th February, 2006 and the balance fees on 16th August, 2006. What are the service tax implications for both the payments? (4 marks) Q 3. (a) B, a trader, buys artsilk yarn and gives it to C, a job work contractor for further processing. The cost of the artsilk yarn supplied to C is Rs 12,000. C bills B at Rs. 3,000 which comprises of process charges Rs. 2,500 and profit Rs. 500. Cost of carriage for moving goods to C’s place is Rs. 100 and for moving these back to B, after processing, is Rs. 90. B sells the final product for Rs. 16,200. What is the assessable value of the goods under section 4 of the CE Act? (b) Under the CE Act, when can two persons be said to be inter-related? (c) What is the assessable value of goods under section 4 of the Central Excise Act? (7+4+5 = 16 marks). Q 6. (a) VP Ltd. purchases edible groundnut oil and deodorises the same and refines it. The company is advised that there is no manufacture, as the item comes under Chapter 15 of the First Schedule to CE Tariff, there being no Section note or Chapter Note to the effect that refining of vegetable oil amounts to manufacture. Give your opinion. (b) PX Ltd. manufactures coffee makers at their plant in Bangalore from where these are moved to various depots. The goods are packed in plain white cartons at the factory as a protection during transit. At the depots these cartons are discarded and replaced by printed cartons before effecting sales. The company claims that the cost of the plain white cartons is not includible in the assessable value under the CE Act, 1944. Whether the company’s claim is tenable? (c) X availed of Cenvat Credit of Rs. 42,000 for manufacture of dutiable goods, which were lying in the factory till 28.2.2006. From 1.3.2006, the final product was made exempt from duty. How would you deal with the Cenvat credit? (6+5+5 = 16 marks). Q 7 B cleared his manufactured final product in July 2005. The duty payable was - Basic Rs. 49,000, NCCD Rs. 1,000 and other duties and education cess were payable as applicable. During the month, B received various inputs on which the suppliers had paid duty as bellow: Basic Rs. 40,000, SED Rs. 4,000, Education cess Rs. 880, Service Tax Rs. 8,000 plus education cess. How much duty will B have to pay through account current for the month of July, 2005? (16 marks) June 2006 Strategic Tax Management [Portion relating to indirect taxes] Answer Question No. 1 which is compulsory and any five from the rest. Total six questions are to be answered. Only questions relating to Indirect Taxes are given below - Q 1 Specify the correct answer giving brief reasons where necessary (2 marks each). (f) In order to attract CE duty, the goods must be - - (i) excisable, movable and marketable (ii) manufactured or produced in India (iii) all of these (iv) none of the above. (g) The amounts not includible in the transaction value for the purpose of CED are - - (i) packing charges (ii) design and engineering charges (iii) loading and handling charges within the factory (iv) none of the above. (h) Tourists visiting India have been defined in the Baggage Rules as persons coming to India for legitimate - - (i) non-immigration purpose like touring, recreation, study etc. (ii) immigration purpose such as settling down in India (iii) non-immigration purpose other than religious pilgrimage (iv) non-immigration purpose other than health reasons. (i) Inter-State sale is defined in Section 3 of CST Act as a sale or purchase that occasions movement of goods from - - (i) One State to another (ii) one country to another (iii) One State Government to another (iv) One district in one State to another district in the same State through another State. (j) Which one of the following is incorrect? - - (i) Form C can be issued by a registered dealer (ii) CST is collected in the State in which the goods are delivered (iii) Sale in the course of export are exempt from CST (iv) Electricity is chargeable to CST. Q 5 B Ltd. manufactures two products, viz. Eye Ointment E and Skin Ointment S. S is a specified product u/s 4A of the CE Act, 1944. The sales prices of E and S are Rs. 43 and Rs. 33 per unit. These prices include 16% excise duty as BED, 8% excise duty as SED and education cess of 2%, as also CST of 4%. Additional information available - Units cleared: E– 1,00,000 units, S – 1,50,000 units; Deduction permissible u/s 4A: 40%. Calculate the total excise duty liability on each products (16 marks). Q 6 (a) (i) M/s. A Ltd., Mumbai sells iron rods to M/s B Ltd. in Vijaywada, both being registered dealers, for a value of Rs. 10,00,000 including 4% CST. The local sales tax on iron rods in Mumbai is 3%. Ascertain the CST payable. (ii) If B Ltd. is unable to submit form ‘C’ being an unregistered dealer, what will be the CST liability, if the local sales tax rate is 12%? N.B. – Iron rods are not declared goods (b) Explain what are the essentials of a valid sale. What is a deemed sale? [5+5+6 = 16 marks] Q 7 An importer imported raw materials @ 25,000 US $ FOB. The goods were packed for which packing charges of 600 US $ were charged extra. Goods were stuffed in a returnable container, the price of which is 2,000 US dollars. Insurance and sea freight were 250 US $ and 800 US $. Brokerage paid by importer is 500 US dollars. Customs duty is 20%, Education Cess is 2%. Excise duty on similar goods in India is 16%. Find the duty payable (1 US $ = Rs 42.38). How much Cenvat can be availed of by importer, if he is manufacturer? (16 marks). December 2005 Strategic Tax Management [Portion relating to indirect taxes] Answer Question No. 1
which is compulsory and Q 1 (c) In order to attract excise duty under the Central Excise Act, 1944 goods must be (i) Movable (ii) Movable or immovable (iii) Immovable (iv) Neither (d) Notional interest on security deposit/advance received by manufacturer from buyer is includible in the transaction value if (i) Price is the sole consideration for sale (ii) If there is evidence that selling price is lowered due to such advance/deposit (iii) The transaction is at arms length (iv) In all cases (h) Which of the following is not liable to sales tax under CST Act? (i) Lottery tickets (ii) Newspapers (iii) Sim Cards (iv) Trade Licenses (i) Goods returned are not liable to sales tax if they are (i) Returned by the buyer at any time in the financial year in which sale takes place (ii) within six months of the end of the financial year in which sale takes place (iii) Within six months of sale (iv) Within six months of sale but not later than three months from end of the relevant financial year in which sale took place ( 2 marks each) Q 2 (b) Mr. Bharghava had filed an appeal against higher collection of provisional antidumping duty and the issue is decided in his favour on 12-04-2004, the amount levied in excess being Rs. 2.3 lacs. The refund is issued after ten months from the date of finalization of duty. The authorities refuse to grant interest on the ground that the claim for refund was filed belatedly. Discuss.(c) Nayandhara Granites Ltd. obtained a chemical in Netherlands for an exceptionally low price. Whilst the market price was an equivalent of INR 200 per kg., they got it at a low price of INR 160 per kg. In determining the customs valuation, the authorities contend that price to be adopted should be INR 160 (should be 200) per kg, even though the purchase is bona fide and supported by genuine purchase bill. Is this correct? (3+4 = 7 marks) Q 4. Briefly discuss in 3-4 sentences about the validity of the following statements: (c) X Ltd., having its head office at Raipur, dispatched goods to its branch in Chennai for Rs. 10 lacs. Sales Tax authority under the CST Act contends that since Form F is not received, CST of 10% is payable. (d) Mr. A has imported an equipment from Poland for 20,000 USD (CIF value). The rates prevailing on the date of presentation of bill of entry are (a) Bank realisation rate of the bill Rs. 46.50 (b) Rate notified by the Government under section 14(3) Rs. 46.70 (c) R.B.I. floor rate Rs. 46.30. The assessable value for customs purposes is taken as Rs. 93,400. (e) Ram imports machinery. He pays fee for transfer of technology to the importer, and also training charges. These items are includible in ascertainment of “price” for purposes of section 14(1) of the Customs Act. (f) 1000 units of Rs. 50 each raw material are purchased by Ram on which duty at 16% i.e. Rs. 8,000 has been paid. Ram avails Cenvat credit thereafter. Since these inputs are subsequently not required, he sells them for Rs. 55 each. On the date of clearance, the duty rate is 10%. The excise authorities contend that Rs. 8,000, being the duty at the first instance, should be paid. (g) 2,000 units of raw material were purchased on which duty paid was Rs. 32,000. 20 units were damaged during the course of unloading, rendering them unfit for consumption or sale. Cenvat credit can be claimed in respect of all the units (2 marks each). Q 5. (a) Assessable Value of an imported machinery falling under chapter heading 84 is Rs. 2,00,000. Rate of customs duty is 20%. Excise duty payable on the machinery, if manufactured in India, is 16%. There is an exemption notification, which provides that if the manufacturer does not avail Cenvat credit of inputs, the excise duty payable will be 8%. Education cess is 2%. Calculate the customs duty payable, if machinery is imported by a manufacturer for his own use. How much Cenvat credit will be available to the manufacturer? What are the restriction on availment of the Cenvat credit? (12 marks) Q 6. (a) A major step was initiated in Budget 2004 for integration of goods and service tax. Explain highlights of the provisions (10 marks) Q 7 (a) Explain distinguishing features between provisions of ‘pilferage’ and ‘loss or destruction of goods’ under Customs Act (b) What is ‘captive consumption’ under Central Excise? How the goods are valued in case of captive consumption? (8+8 = 16 marks) Q 8 (a) Explain provisions of valuation for excise purposes on basis of MRP printed on the product. (b) Discuss provisions for classification of Mixture or Combinations in Central Excise Tariff (10+6 = 16 marks). ICWA Final June 2005 Strategic Tax Management [Portion relating to indirect taxes] Answer Question No. 1
which is compulsory and Q 1 Answer any ten of the following, giving brief reasons not exceeding 3 or 4 sentences. [2 x 10 = 20 marks] (f) SSI units are exempt from excise duty, if their turnover is less than Rs 100 lakhs. While calculating the limit, state whether following turnover is includible or not includible – (i) Goods manufactured with other’s brand name (ii) Export through merchant exporter under bond. (g) Explain provisions regarding depreciation on capital goods when Cenvat credit is availed on excise duty paid on capital goods. Illustrate with an example. (h) Fill in the blanks :– A single member bench of CESTAT can hear the case when duty or penalty involved does not exceed Rs ____________ lakhs. However, a single member bench cannot decide an issue if the dispute is relating to ____________ (i) State correct or wrong :– (i) CST is not payable if goods are supplied to a unit in Special Economic Zone (ii) Countervailing duty is payable on Assessable Value plus basic customs duty plus anti-dumping duty. (j) X had dispatched goods from UP to Haryana. While goods were moving from one UP to Haryana, X made a sale to Y by transfer of documents. Later, Y sold the goods to Z by endorsing documents in favour of Z. Now, Y is claiming that the subsequent sale is exempt from CST. State which forms are required to be submitted by him to substantiate his claim and which form he will have to submit to Z and X ? (k) Fill in blanks - Imported goods can be kept in customs bonded warehouse upto ____________ days without payment of any interest. Beyond that period, interest payable is ____________ %. Interest upto Rs 2 crores can be waived by ____________Q 2 (a) You have been appointed as Cost Auditor to conduct special audit of Cenvat credit under section 14AA of Central Excise Act. Discuss major areas where you will concentrate while conducting your audit [8 marks] Q. 3 (a) Goods can be cleared from factory for export without payment of duty. However, it is possible to clear goods on payment of duty and then claim refund of duty. State when the procedure of paying duty and claiming refund may be beneficial to assessee (b) (Income tax question) (c) A manufacturer of cement was excavating limestone from mines and using it for manufacture of cement. The mine was located 10 kilometers away from factory. The limestone excavated was brought in the factory by ropeway, which was connecting mine and the factory. Manufacturer was using explosives for blasting in mines. Manufacturer intends to claim Cenvat credit of excise duty paid on the explosives. Advise him about eligibility of Cenvat credit [6+5+5 = 16 marks] Q 4 (a) Income Tax question (b) Prestige Internationals Ltd. manufacture coffee makers, from their plant at Bangalore from where the products are moved to various depots. The company packs them in plain white carton from the factory, for protecting the goods during transportation. At the depots, the plain cartons are discarded and put inside a printed carton before effecting sales. The company includes the value of printed carton in the assessable value, but not the cost of plain white cartons. Is the same correct under the Central Excise Act, 1944? (c) X availed Cenvat credit of Rs. 42,000 for manufacture of an item chargeable to duty. These goods were lying in his factory till 28-02-2005, from 1.3.2005, the final product was made exempt from duty. Now, when the final goods are cleared, should the Cenvat credit of Rs. 42,000 availed earlier be reversed? (8+5+3 = 16 marks) Q 5. (a) Mr. Ram furnishes the following information pertaining to inter-state sales effected by him:
Additional information (i) In respect of product L sold in May, 2004, goods of total sales value of Rs. 67,200 were returned in July, 2004 and Rs. 44,800 in December, 2004: Rs. 56,000 were rejected and returned in January, 2005. (ii) Buyer of product N did not produce C forms. (iii) Buyer of product M for total sale value Rs. 43,200 did not furnish C form as the product was not covered in his registration certificate. - - Compute the taxable turnover and the sales tax liability of the three products L, M and N, for the financial year 2004-05 (b) Income Tax Question (c) Discuss whether inter-State sales of computer readable floppy discs containing standard computer software attract CST. Will your answer be different if the floppy contains customized software developed for a customer specifically? (9+3+4 = 16 marks) Q 6. (a) M/s Srivastava Heavy Electricals Ltd. manufactures industrial boilers, which are normally loaded openly on a containerised truck. A company having a unit in Kodaikanal Hills has ordered a boiler with special plastic packing as a safeguard to boiler during hazardous mountain climbing. Briefly discuss whether the cost of plastic packing should be included in the assessable value under section 4 of the Central Excise 1944. (b) An importer realised that he had paid excess customs duty at the time of import. These goods were not sold to customers but had been used for manufacture of other goods. Is his claim for refund of the excess duty paid, valid under the Customs Act? (c) Discuss the provisions relating to claim of refund under the Central Excise Act, where the refund arises due to Cenvat credit being in excess. (5+3+8 = 16 marks) December 2004 Strategic Tax Management [Portion relating to indirect taxes] Answer Question No. 1
which is compulsory and Final ICWAI Q 1 Answer any ten of the following, giving brief reasons not exceeding 3 or 4 sentences [2 x 10 = 20 marks]Q. 1(c) – State whether there is manufacture in the following process for the purpose of Central Excise – (i) Adding water, perfume and colour to liquid soap (ii) Pineapple fruit is canned, removing the inedible portion, slicing edible portion and adding sugar to preserve it. Q. 1(d) – State correct or wrong – (i) Trees when severed from earth are ‘goods’ under the Central Sales Tax (ii) A person who manufactures gold ornaments with the gold supplied by the customer is not a dealer under CST Act. Q. 1(g) – Some inputs were brought on which duty paid was Rs 8,000. These were used in the manufacture of final products. Discuss the eligibility of Cenvat Credit if – (i) Final product is exempt from duty (ii) Final product is dutiable, but duty payable on it is only Rs 3,000. Q. 1(h) – An Indian resident comes back to India after visiting Germany. He brings on return – (i) Personal effects valued at Rs 20,000 (ii) 1 litre liquor of value Rs 1,500. What is the customs duty payable? Q. 1(i) – S Mills Ltd., Salem, Tamil Nadu, has its own depot at Ichalkaranji in Maharashtra. Yarn is dispatched to that depot and then it is sold from there. Is there any liability to CST? State reason for your answer. Q 2 (a) Distinguish between tax planning and tax management (b) Discuss tax considerations with reference to specific management decision regarding ‘make’ or ‘buy’. [8+8 = 16 marks] Q 4 (c) A Ltd. is engaged in the activity of conversion of grey cloth into embroidered dyed cloth. In the course of the various activities, it gets the sizing done by S and dyeing by D. The cost of gray cloth is Rs 40 per metre. S charged Rs 5 per metre for sizing and D charges Rs 20 per metre. The finished product is sold by A Ltd. for Rs 75 per metre. In the context of C. E. Act, 1944, is there any manufacture involved? Who will be regarded as the manufacturer in this situation? (d) Mr. Bhattacharjee purchased some raw materials fro X Ltd., a SSI unit. The duty paid was at a concessional rate (70% of normal rate of 20%). The assessable value was Rs 20,000. Due to technical reasons, he had to sell the goods for Rs 19,000. What is the duty payable? [5+2 = 7] Q 6 (a) - -(b) ABC Co. Ltd. wanted a stainless steel tank for their manufacturing process. Since the tank was huge size, they decided to fabricate the same in their own factory to save problems of transportation. The contract of fabrication was given to XYZ Co. Ltd. who are experts in specialized stainless steel tank designing, manufacture and welding. The tank was fabricated at site as designed by XYZ Co. Ltd. Stainless steel sheets required for manufacture of tank were supplied by ABC Co. Ltd. The tank was affixed to ground with bolts but could be removed without dismantling. No excise duty was paid on the tank. Excise department wants to issue show cause notice demanding duty. Whether duty is payable ? If duty is found to be payable, whether demand notice should be issued to ABC Co. Ltd. or XYZ Co. Ltd.? [6 marks] Q. 7(a) Central Sales Tax Act provides that in respect of certain aspects, provisions of General Sales Tax Law of each State will apply to persons liable under CST Act. What are those aspects where provisions of local tax laws apply to persons liable under CST Act. (b) A demand of duty was raised on an assessee for previous five years, alleging suppression of facts with intention to evade duty. Assessee stated that there was no reason for him to avoid payment of duty as the buyer was in a position to avail Cenvat credit. There was no loss to him, even if he had paid higher duty. Hence, charge of suppression of facts with intention to evade duty is not sustainable. Is his stand sustainable ? (c) A manufacturer purchased a machinery falling under chapter heading 84 from supplier ‘X Co’. The invoice was for Rs 23,200, comprising of price of goods as Rs 20,000 and Rs 3,200 as excise duty. Pass journal entry in accounts book to record the purchase transaction. Explain how the balance will appear in Balance Sheet. [6+4+6 = 16 marks] Q. 8 (a) A manufacturer in Gujarat has a depot in Bangalore. His factory gate price is Rs 9,000. Transport charges from Gujarat to Bangalore are Rs 500 per piece. The manufacturer’s Karnataka depot price is Rs 10,000 exclusive of excise duty and Karnataka Sales Tax. Karnataka Sales Tax on the goods is 10%. As per Karnataka Sales Tax Law, sales tax is payable on selling price plus excise duty. The manufacturer is planning to make direct sale to Bangalore buyers from his Gujarat factory, instead of selling from depot. Bangalore dealers want that their present cum-duty invoice price (excluding Karnataka Sales Tax) should remain unaffected even if goods are sold from Gujarat. The reason they are giving is that if goods are directly sold to them from Gujarat, they will have to pay Karnataka Sales Tax. The Bangalore dealers are registered under CST Act and are in a position to issue C form for their purchases. The manufacturer has agreed to the request of dealers. You are required to calculate the assessable value and excise duty and CST payable if goods are sold directly from Gujarat, assuming that dealers’ request is accepted. The product is leviable to excise duty @ 16%. If the product is sold in Gujarat State, the sales tax rate is 8%. (b) State provision in respect of ‘burden of proof’ in respect of goods covered under section 123 of Customs Act. [12+4 = 16 marks] June 2004 [Portion relating to indirect taxes] Answer Question No. 1
which is compulsory and Q 1
Answer any ten of the following, giving brief reasons not exceeding 3 to 4
sentences.
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