ICAI Question Paper Indirect Tax Laws – June 2009
CA Final – Group II : Indirect Tax Laws June 2009
This Paper has 25 answerable questions with 0 answered.
Total No. of Questions — 9] [Total No. of Printed Pages — 3
Time Allowed : 3 Hours Maximum Marks : 100
Answers to questions are to be given only in English except in the cases of candidates who have opted for Hindi medium. If a candidate who has not opted for Hindi medium, answers in Hindi, his answers in Hindi will not be valued.
Answer all Questions
SECTION — A
1. (a) Determine the total amount of excise duty payable on a machine using the details given below:
(i) Sale price of the machine excluding taxes and duties 2,00,000
(ii) Sales tax 20,000
(iii) Cost of durable and returnable packing included in the sale price given at (i) above 5,000
(iv) Design and development charges paid by buyer on behalf of seller to a third party 20,000
(v) Warranty charges charged separately by the seller 5,000
Rate of excise duty
Education cess 16%
Calculations should be supported by notes, wherever required.
(b) X, a manufacturer purchased 500 kgs of inputs on 1.10.2007. Total assessable value of inputs was Rs. 10,000 and excise duty of 16% and 2% of excise duty as education cess was paid on the input. On the day of receipt itself, inputs were sent to the job worker. Job worker sent back 50% of the inputs on 1.4.2008 and balance 50% on 31.5.2008. X received back the processed the inputs on the same day. Calculate the CENVAT credit required to be reversed or that can be availed on relevant dates and net availment and reversal in the financial years 2007–08 and 2008–09. 5 (0)
(c) Y & Co. is a small scale unit located in a rural area and is availing the benefit of small scale exemption under Notification No. 8/2003-C.E. during the year 2007- 08. Determine the value of the first clearances of the unit and duty liability on the basis of data given below:—
- Total value of clearances of goods with own brand name
- Total value of clearances of goods with brand name of other parties
- Clearances of goods which are totally exempt under another notification
(other than an exemption based on quantity or value of clearances)
Normal rate of Excise duty – 16%
Education cess @ 3% of Excise duty. 75,00,000
Calculations should be supported with appropriate notes.
It may be assumed that the unit is eligible for exemption under Notification No. 8/2003.
2. (a) M/s ABC Ltd. was a cement manufacturer. The company used ropeway system for bringing crushed limestone from the mines located 4 – 5 kms away from the factory. A part of ropeway system was installed in the factory and the system was controlled from the factory. M/s ABC Ltd. availed CENVAT credit on parts / spares for ropeway system treating the same as capital goods. The Central Excise Department denied CENVAT credit on the ground that ropeway is used for transporting raw materials from the mines to the factory and can not be considered as material handling system within the factory premises. Examine, with the help of a decided case law, whether the stand taken by the Department is correct in law. 5 (0)
(b) A Port Trust used cement concrete armour units in the harbour for keeping water calm. Each unit weighed about 50 tons and is like a tripod and keeps water calm and tranquil. These units are essentially in prismoid form and were made to order. They are harbour or location specific. The Central Excise Department contended that the armour units are excisable goods and chargeable to duty. Examine the validity of the Department’s contention in the light of decided case law. 5 (0)
(c) I Scream Ltd. is engaged in manufacture of ice–cream falling under sub–heading 2105 of the Central Excise Tariff Act, 1985. The company supplied the ice cream in four litres pack to catering industry or hotels, who sell the same in scoops. The pack contained a declaration that the pack was not meant for retail sale. The Department contended that packs have to be assessed on the basis of value arrived at as per the provision of section 4(A) of Central Excise Act, 1944, which provides for assessment based on M.R.P and not under section 4 of the Central Excise Act, 1944. Assessee contended that the ice–cream pack sold was a bulk pack of 4 litres which was not meant to be sold in retail and they were not required to print the Maximum Retail Price and hence the transaction was a wholesale transaction and assessment under section 4 of the Central Excise Act, 1944 was correct.
Further contention of the assessee was that they are entitled to exemption under rule 34 of the Standard of Weights and Measures (PC) Rules, which exempts packs meant for industrial use. Examine whether the stand taken by the Department is correct in the light of decided case law.
3. (a) Explain special procedure and facilities made available to large tax payer under rule 12BB of Central Excise Rules, 2002 in respect of intermediate goods. 6 (0)
(b) What are the provisions relating to the payment of excise duty on used capital goods cleared by an assessee on which CENVAT credit has been availed? 2 (0)
(c) What are the situations in which duty can be remitted under rule 21 of Central Excise Rules, 2002. 2 (0)
SECTION — B
4. (a) Purchases by S & Co. for the month of December are as follows:
(1) Rs. 1,00,000 at 4% VAT
(2) Rs. 5,00,000 at 12.5% VAT.
Sales of S & Co. for the month of December are as follows:
(1) Sales of Rs. 3,00,000 at 4% VAT
(2) Sales of Rs. 3,00,000 at 12.5% VAT.
Compute eligible input tax credit and VAT payable for the month. –