Part-B Indirect Taxes 50 Marks Q4. is compulsory Do any 2 questions out of Q5, Q6 and Q7 Chapter No. Dec.

2010 June 2011 Dec. 2011 What to Study during exams Excise 1 1+1+5=7 ---1+1+5=7 1+1=2 Case law 2. 5 --5 -Case law 3. 1+1+5=7 1+5=6 1+1+1+5=8 5+5=10 Detail 4. 1+5+3=9 5 1+5=6 1+1+5=7 Detail 5. General procedure 3 5+2+4=11 5 --ration 6. SSI --5 ---6 Case law Total 31 27 31 25 Customs 7 8 9. 10. 11. 12. 13 Total 1 -----1 5 --5+5=10 17 1+5=6 ----1+5=6 1+4=5 1 1 19 1+1+5+5=12 ---1+5=6 ---1+4=5 1 6 5 -----------18 27 5 1+5=6 5 4 15 1 5 1+2=3 1+5=6 15 5+5=10 Detail ----Practical Detail Sec.74, 75 Chances to come May leave

June 2012

Rule 6,7, regist

Common Topics 14 Recovery 1 15 Refund 1+5=6 16 Advance Ruling 17 Appeal & revision Total 16 20

5 1 5 4

Sec.11A, Sec.28, 114A Read 1+4=5 Read 4 Chart

Amendment and Important Case Laws (other than Notes) Chapter-1 1. Testing and grading of Helium Gas, relabelling and repacking of gas in small cylinders, helium gas rendered marketable to ultimate consumers, this process am ounts to manufacture. [Air Liquidate North India Pvt. Ltd Vs. CCEx. (2011)] 2. CCEx. V. Osnar Chemical Pvt. Ltd. (2012) The process of mixing polymers and additives to heated bitumen which results in emergence of Polymer Modified Bitumen (PMB) and Crumbled Rubber Modified Bitumen (CRMB) does not amount to manufacture because there was no change in characteri stics or identity of bitumen only its grade or quality was improved. The said pr ocess did not result in transformation of bitumen into new product having differ ent identity characteristic and end use; the end use also remained same viz. mix ing of aggregates for constructing roads. Further the said process was not speci fied in Section or Chapter notes of the Tariff Act as amounting to manufacture. Conclusion: Mixing polymers & additives to heated bitumen Merely results in impr ovement in quality- Not manufacture. 3. CCEx. V. GTC Industries Ltd. (2011) The assessee used to purchase a roll of aluminium foil with backing of white pap er and the roll was cut in pieces and on one side of each piece the word PULL was embossed in which the cigarettes were filled in with the help of machines and a luminium paper back foil holding cigarettes was directly placed in cigarette pa cking machine. The cigarettes were filled in aluminium foil in such a way that t he word PULL came on the upper side of the packet. The department contended that the said process amounted to manufacture and was therefore liable to excise duty

. Held that, the cutting and embossing of aluminium foil do not transform such alu minium foil into distinct and identifiable commodity; it doesnt change the nature and substance of aluminium foil. The cutting to the size and embossing is only for making it usable for the purpose of packing. Hence, the said process doesnt a mount to manufacture. Conclusion: Cutting aluminium back paper foil and embossing the same for packing cigarette- Not amounts to manufacture. 4. Metalite Industries v. CST (2012) Cable trays (perforated as well as ladder types) are manufactured out of mild st eel sheets of 2 mm thickness. These sheets are cut into strips in required sizes . The perforated types cable trays are cut into strips punched and slotted befor e bending it into channel shaped trays; finally the trays are galvanized by the hot-dip process. In case of ladder type cable trays sheets strips are first bent and then welded together in required dimensions and finally galvanized. These a re sold in the market to meet different mechanical and engineering needs as dist inct from the plain or chequered plates. These are used in power projects for la ying down of heavy cables instead of cement trenches or pipes. The types of proc esses involved brings an ultimate product which is distinct and different. The p lates undergo transformation into cable trays and the process involved is manufa cturing . Conclusion: Bending and punching iron plates and making them cable trays Manufac ture. 5. CCEx. V. Elecon Engineering Co. Ltd. (2012) The assessee was engaged in the process of fabricating, columns, purlines etc. b y cutting drilling punching and welding on duty paid channels and angles and the reafter assembling to post at work site and fixing in the exact position for con struction of a building or shed. The department contended that said process amou nted to manufacture. Held that, cutting drilling punching and welding do not result in transformation . The products resulting out of these processes are merely structural shapes; an d assembling them for constructing building gor shed is febrication and not manufa cture as no new article different in name character or use emerges. 6. CCEx. V. Shital International (2010) Processes of shearing (cutting) and back coating of knitted pile fabrics/ hosier y do not amount to manufacture. 7. Grasim Industries Ltd. V. UOI (2011) Waste and scrape resulting from repair/ maintenance of plant/ machinery- Not a manufactured product- Not liable to duty. Chapter-2 1. CCEx. V. Wock-hardt Sciences Ltd (2012) The assessee was a manufacturer of Povidone Iodine Cleansing Solution USP (PICSU) and Wokadine Surgical Scrub (WSS). The assessee contended that the said products w ere Medicaments under Tariff Heading 3003 as it was used for surgical cleaning whi le the department contended that they were detergent under Tariff Heading 3402.90. The products in question were understood as medicaments in common parlance and t rade. Therefore merely because of alternative used in making detergents, they co uld not be classified as detergents. 2. CCEx. V. Minwool Rock Fibres Ltd. (2012) Rockwool/Slagwool (Minwool) having more than 25% by weight blast furnace slag cl

assifiable under Heading 6807.10,not 6803: The assessee a manufacturer of slagwool/rockwool containing more than 25% by wei ght blast furnace slag, classified that said goods under Tariff Heading 6807.10 , while the department sought classification under Tariff Heading 6803. Heading 6803 : Slagwool, rockwool and similar wools (Rate of duty 18%) Heading 6807.10 : Goods in which more than 25% by weight of .. blast furn ace slag .. is used (Rate of Duty 8%) Held that(i) Heading 6803 specifically cover slagwool/ rockwooll, while heading 6807.1 0also covers slagwool/rockwool, as they contain more than 25% by weight blast furn ace slag/. (ii) Classification beneficial to assessee to be adopted: In a classification dispute in case of two competent tariff entries an entry which is beneficial to the assessee shouldbe applied. Therefore the products in question were classif iable under heading 6807.10 (iii) Alternatively heading 6807.10 is heading based entirely materials used i n composition of goods. A heading based on composition of goods is a more specif ic heading as it is based on commercial nomenclature. Hence goods fell under 680 7.10. Chapter-3 1. The provisions of Sec.11A shall apply for demand of duties u/s 3A of Central Excise Act, 1944. [Hans Steel Roll ing Mill Vs. CCEx. (2011)] 2. Packing charges incurred to avoid scratch and breakage to motor cycles form p art of the assessable value of the motor cycles. [Royal Enfield V s. CCEx. (2011)] 3. Bought out battery supplied with UPS system is includible in the value of the UPS system. [Electronics & Controls Power Systems Pvt. Ltd. Vs. CCEx .(2011)] Chapter-4 1. C Cr can be taken in respect of inputs may be taken by the provider of outpu t service without receipt at premises of output service provider if documentary evidences relating with delivery and location are maintained. [w.e.f 1-4-12] 2. Rule 6(3) if separate a/c are not maintained, pay 6% rather than 5% [F.A. 20 12]

3. Capital Goods means (A) The following goods, namely:-

(i) All goods falling under chapter 82 (Tools, implements..), chapter 84 (Machin ery and mechanical appliances), chapter 85 (electricals and electronic machinery) , chapter 90 (optical, photographic equipments.), heading No. 6804 (grinding whee ls and the like), heading No. 6805 (natural or artificial abrasive powder on a b ase of textile article) of the First Schedule to Excise Tariff Act, 1985. (ii) Pollution control equipment. (iii) Components, spares and accessories of the goods specified at (i) and (ii) above (iv) Moulds and dies, jigs and fixtures. (v) Refractories and refractory material. (vi) Tubes, pipes and fittings thereof and (vii) Storage Tank viii) Motor vehicles other than those falling under tariff headings 8702, 8703, 8704 and 8711 and their chasis [w.e.f. 1-4-12] Used (1) In the FACTORY of the manufacturer of the final products, but does NOT i nclude any equipment or appliance used in an OFFICE; or (1A) Outside the factory of the manufacturer of the final products for generatio n of electricity for captive use within the factory; or [w.e.f. 1-4-2011] (2) For providing output service (B) Motor vehicle falling under tariff headings 8702, 8703, 8704 and 8711 and th eir chasis registered in the name of provider of output service for providing t he SPECIFIED TAXABLE SERVICES which are as under: (a) Courier Agency (b) Goods Transport Agency (c) Tours & Travelling Agency (d) Rent-a-cab operator (e) Cargo Handling Agency (f) Outdoor Caterer (g) Shamiana/Pandal Heading 8702: Motor Vehicles for transport of 10 or more persons (including driv er) Heading 8703: Motor Cars and other motor vehicles principally designed for trans port of persons including station wagons and racing cars) Heading 8704: Motor vehicles for transport of goods (including dumpers) Heading 8711: Motor cycles (including mopeds) and cycles fitted with auxiliary m otor, with or without side cars (C) Dumpers or tippers falling under Chapter 87 of 1st Schedule to CETA, 1985 re gistered in the name of provider of output services for providing following taxa ble services: (1) Site formation and clearance, excavation and earthmoving and demoliti on and such other similar services; and (2) Mining of mineral, oil or gas service. (D) Components, spares and accessories of motor vehicles which are capital goods for the assessee. [w.e.f. 1-4-12] 4. Cenvat Credit of capital goods to be allowed to service provider without brin ging them into premises subject to due documentation. Rule 4(2)[w.e.f. 1-4-12] 5. If capital goods are removed after being used as capital goods or as scrap or waste [Rule 3(5A)] Sol: Higher of the following two (A) or(B) : (A) Amount of Cenvat credit taken Less: The following percentage points calculate by straight line method for each quarter of a year or part thereof from the date of taking the Cenvat credit-

(i) For computers & computer peripherals: For each quarter in the 1st year : @ 10% ; For each quarter in the 2nd year: @ 8% ; For each quarter in the 3rd year @ 5%; and For each quarter in the 4th & 5th year : @1% . (ii) For capital goods other than computers and computer peripherals : @ 2.5% for each quarter . (B) Amount equal to the duty leviable on transactional value of such capital goods. 6. Refund of CCr. [u/r 5 of CCR, 2004] [w.e.f. 1-04-12] A manufacturer who clears a final product or an intermediate product for export without payment of duty under bond or letter of undertaking, or a service provider who provides an output service which is exported without payment of service tax, shall be allowed refund of CENVAT credit as determined by the following formula subject to procedure, safeguards, conditions and limitations, as may be specified by the Board by notification in the Official Gazette: Refund amount is as follows:[ Export turnover of goods + Export turnover of services * Net CENVAT credit] Total turnover This rule shall apply to exports made on or after 01.04.2012. (a) Refund amount means the maximum refund that is admissible; (b) Net CENVAT credit means total CENVAT credit availed on inputs and input sevices by the manufacturer or the output service provider reduced by the amoun t reversed in terms of sub-rule (5c) of rule3, during the relevant period; (c) Export turnover of goods means the value of final products and intermedi ate products cleared during the relevant period and exported without payment of Central Excise duty under bond or letter of undertaking; (d) Export turnover of services means the value of the export service calcul ated in the following manner, namely:Export turnover of services = payments received during the relevant period for e xport services + export services whose provision has been completed for which pa yment had been received in advance in any period prior to the relevant period ad vances received for export services for which the provision of service has not b een completed during the relevant period; (e) Total turnover means sum total of the value of (a) all excisable goods cleared during the relevant period including exempte d goods, dutiable goods and excisable goods exported ; (b) export turnover of services determined in terms of clause (D) of subrule (1) above and the value of all other services, during the relevant period; and (c) all inputs removed as such under sub-rule (5) of rule 3 against an invoi ce, during the period for which the claim is filed. (f) Export service means a service which is provided as per the provisions o f Export of services Rules, 2005, whether the payment is received or not. (g) Relevant period means the period for which the claim is filed. However, the refund may be claimed under the erstwhile rule 5 till 31.03.2013. Note1: No refund of credit shall be allowed if the manufacturer or provider of o utput service Avails the drawback allowed under the customs and central excise duties and serv ice tax Drawback Rules, 1995, or Claims rebate of duty under the Central Excise Rules, 2002, in respect of such d uty; or claims rebate of service tax under the Export of Services Rules, 2005 in respect of such tax,. Value of Services

For the purposes of this rule, the value of services, shall be determined in the same manner as the value for the purposes of sub-rule (3) and (3A) of rule 6 is determined. Note 2: Rule 5 applies to deemed exports as well. 7. Recovery of Cenvat Credit wrongly taken (U/R 14 of CCR, 2004) [w.e.f. 1-4-12] (a) Where CENVAT credit has been taken and utilized wrongly [earlier taken or ut ilised] or has been erroneously refunded. (b) CENVAT credit availed / utilized / refunded wrongly shall be recovered along with interest from the manufacturer of final product / provider of output servi ce. (c) The provisions of Sec. 11A and 11AA of Central Excise Act, 1944 or Sec. 73 a nd 75 of Finance Act, 1994 (in case of service tax) shall be applied for effecti ng such recovering. Note 1: No interest is to be paid if C Cr reversed before utilization. 8. Rule 10A Transfer of CENVAT credit of SAD [w.e.f 1-4-12] A manufacturer or producer of final products, having more than one registered premises, for each of which registration under the Central Excise Rules, 2002 has been obtained on the basis of a common Permanent Account Number under the In come-tax Act, 1961, may transfer unutilized CENVAT credit of additional duty leviable under sub-sect ion (5) of section 3 of the customs Tariff Act lying in balance with one of his registered premises at the end of a quarter, to his other registered premises by(i) making an entry for such transfer in the documents maintained under rule 9 (ii) issuing a transfer challan containing registration number, name and address of the registered premises transferring the credit and receiving such credit, t he amount of credit transferred and the particulars of such entry as mentioned i n clause (i), and such recipient premises may take CENVAT credit on the basis of the tansfer challan. However, nothing contained in this sub-rule shall apply if the transferring and recipient registered premises are availing the benefit of certain specified noti fications. The manufacturer or producer shall submit the monthly return, as specified under these rules, separately in respect of transferring and recipient registered pre mises. 9. CCEx. V. Prime Health Care Products (2011) Bought out toothbrushes supplied free with toothpaste-Credit of toothbrushes ava ilable. The assessee was engaged in manufacture of toothpaste and was clearing the same along with bought out toothbrushes (toothbrushes were supplied free with toothpa ste). The assessee availed CENVAT Credit of toothbrushes regarding the same as i nput, which was sought to be denied by the department on the ground that toothbr ush could not be an input in respect of toothpaste and further, its cost was not included in the MRP of the combo pack. Held that(i) Process of packing toothbrushes with toothpaste amounted to manufacture: Section 2(f) includes any process in relation to the goods specified in the Thi rd Schedule which includes packing or re-packing of such goods in a unit contain er. Toothpaste is specified in the Third schedule. Hence the process of packing and re-packing the input that is toothbrush and tooth paste in a unit container is manufacture and as such the assessee would be entitled to claim CENVAT credit

on such input. (ii) Toothbrush is an accessory whose value already included in value of toot hpaste : Even otherwise input in Rule 2(k) (ii) includes any goods including acces sories cleared along with the final product the value of which is included in th e value of the final product. The toothbrush is put in the packet along with the tooth paste and no extra amount is recovered from the consumer on the toothbrus h. Since the cost of toothbrush was already included in value of toothpaste it w as eligible for CENVAT credit. Chapter-6 1. Where the 2 units have separate legal identity but having same effective fina ncial control and management. Therefore, their clearances should be clubbed for the purpose of SSI exemption. Use of code names of other persons amounts to use of brand name of another person. [Parle B isleri Pvt. Ltd. Vs. CCEx. (2011)] 2. If two persons equally entitled to a same brand name, then it will not be ass ume that one person is using the brand name of another person. It means SSI exem ption is available. [CCEx. Vs. mini-max Industries (2011)] 3. When trade mark of a foreign country is assigned with all rights to the asses see , the assessee becomes the owner of such trade mark in India. Therefore, it will not be considered that assessee is using the brand name of another person. [CCEx.Vs. Convertech Equipment Pvt. Ltd. (2011)] 4. Ready made garments & textile made ups like uniforms, blankets, towels; logo or name on uniforms of schools, university, etc is not treated as brand name. It means if any manufacturer manufacturing the uniforms, etc using the logo of sch ools, etc on the uniforms not treated as using the brand name of another person. It means SSI exemption is available. [Circular No. 94 7/8/201, dated 21-6-2011] 5. If SSI unit wrongly affixes a trade mark of another person, be it registered or not, then such default would not be eliminated by the provisions of Trade Mar ks Act granting retrospective registration. Thus, the grant of registration cert ificate with retrospective effect under Trade Mark Act will not automatically pr ovide benefit of exemption to SSI unit. [CCEx. Vs. Meyer Health Care Pvt. Ltd. ( 2011)] Custom Duty Chapter-7 Basic Concepts 1. If goods rendered useless by the natural causes, then importer requests for r elinquishment u/s23(2), then Sec.22 is not applicable, Sec.23(2) is applicable. [CC Vs. Symphony Services corporation India Ltd.(2012)] Chapter-8 Types of Custom Duties 1. Extending ant-dumping duty to articles imported by altering form/ description (Amendment by the Finance Act,2011 w.e.f. 8-4-2011) : Where the Central governm ent on such inquiry as it may consider necessary is of the opinion that circumv ention of anti-dumping duty has taken place,Either by altering description or name or composition of the article sub ject to such anti- dumping duty or By import of such article in an unassembled or disassembled form or By changing the country of its origin or export or In any other manner, Whereby the anti-dumping duty so imposed is rendered ineffective it may extend t he anti dumping duty to such article or an article origin or exported from such country as the case may be. 2. Section 9AA Section 9AA provides that where upon determination by an officer authorized in t

his behalf by the Central Government an importer proves to the satisfaction of t he Central government that he has paid anti- dumping duty imposed u/s 9A on any article in excess of the actual margin of dumping in relation to such articleThe Central government shall as soon as may be reduce such anti dumping duty as is in excess of actual margin of dumping so determined in relation to su ch article or such importer and Such importer shall be entitled to refund of such excess duty. (Amdt. By FA, 2011 w.e.f. 8-4-2011)

3. Difference between Safeguard Duty and Anti-dumping duty Basis Safeguard Duty Anti dumping duty Section It is levied under section 8B of the Customs Tariff Act, 1975. It is le vied under section 9A of the Customs Tariff Act, 1975. Purpose It is levied to ensure that the goods imported in increased quantity do not cause or threaten to cause serious injury to the domestic industry. It is le vied on the dumped articles in order to protect the domestic market from dumping . Nature it relates to quantum of imports It is concerned with the valuati on of imported goods. Duration It is effective for 4 years but in appropriate cases can be exte nded but cannot exceeds 10 years from the date of its imposition. It is ef fective for upto 5 years and can be extended in certain cases for a further peri od of 5 years. Conditions In case of articles originationg from developing country safegua rd duty can be imposed only if(i) Imports of such article from that developing country exceed 3% of total imports of that article into India. (ii) Where the article is originating from more than one developing country ( with each less than 3% import share) then aggregate of imports from all such cou ntries exceeds 9% of the total imports of that article into India. Anti dum ping duty can be levied by the Central government only where any article is expo rted from any country to India at less than its normal price. Further the amount of this duty cannot exceed margin of dumping . Margin of dumping = Normal value of the article Export price of article. Chapter-9 1. CCEx. V. Living Media India ltd. Import of Recorded audit CDs- Royalty payable on sale Payment of royalty as a c ondition of sale Royalty includible in assessable value. 2. CC v. Agarwal IndustriesLtd. (2011) Contract price acceptable even if there is price rise due to market factors on d ate of import if importer doesnt pay anything over and above the contract price a nd the contract price is genuine.

Chapter-13 1. Manish Lalit Kumar Bavishi v. ADG (2011) Section 110 makes it mandatory for the department to make available copies of s eized documents when demanded . 2. O.T. Enasu v. UOI (2011) Penalty u/s 112 can be imposed on Managing Director only if he knowingly evaded

payment of duty No penalty if no deliberate attempt on the part of such MD. SECTION 111 Confiscation of improperly imported goods, etc. The following goods brought from a place outside India shall be liable to confis cation: (a) any goods imported by sea or air which are unloaded or attempted to be u nloaded at any place other than a customs port or customs airport appointed unde r clause (a) of section 7 for the unloading of such goods; (b) any goods imported by land or inland water through any route other than a route specified in a notification issued under clause (c) of section 7 for the import of such goods; (c) any dutiable or prohibited goods brought into any bay, gulf, creek or ti dal river for the purpose of being landed at a place other than a customs port; (d) any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force; (e) any dutiable or prohibited goods found concealed in any manner in any co nveyance; (f) any dutiable or prohibited goods required to be mentioned under the regu lations in an import manifest or import report which are not so mentioned; (g) any dutiable or prohibited goods which are unloaded from a conveyance in contravention of the provisions of section 32, other than goods inadvertently u nloaded but included in the record kept under sub-section (2) of section 45; (h) any dutiable or prohibited goods unloaded or attempted to be unloaded in contravention of the provisions of section 33 or section 34; (i) any dutiable or prohibited goods found concealed in any manner in any pa ckage either before or after the unloading thereof; (j) any dutiable or prohibited goods removed or attempted to be removed from a customs area or a warehouse without the permission of the proper officer or c ontrary to the terms of such permission; (k) any dutiable or prohibited goods imported by land in respect of which th e order permitting clearance of the goods required to be produced under section 109 is not produced or which do not correspond in any material particular with t he specification contained therein; (l) any dutiable or prohibited goods which are not included or are in excess of those included in the entry made under this Act, or in the case of baggage i n the declaration made under section 77; (m) any goods which do not correspond in respect of value or in any other pa rticular with the entry made under this Act or in the case of baggage with the d eclaration made under section 77 in respect thereof, or in the case of goods und er transhipment, with the declaration for transhipment referred to in the provis o to sub-section (1) of section 54; (n) any dutiable or prohibited goods transited with or without transhipment or attempted to be so transited in contravention of the provisions of Chapter VI II; (o) any goods exempted, subject to any condition, from duty or any prohibiti on in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the no n-observance of the condition was sanctioned by the proper officer; (p) any notified goods in relation to which any provisions of Chapter IVA or of any rule made under this Act for carrying out the purposes of that Chapter h ave been contravened. SECTION 112. Penalty for improper importation of goods, etc. Any person, (a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or ab ets the doing or omission of such an act, or (b) who acquires possession of or is in any way concerned in carrying, remov

ing, depositing, harbouring, keeping, concealing, selling or purchasing, or in a ny other manner dealing with any goods which he knows or has reason to believe a re liable to confiscation under section 111, shall be liable,(i) in the case of goods in respect of which any prohibition is in force und er this Act or any other law for the time being in force, to a penalty not excee ding the value of the goods or five thousand rupees, whichever is the greater; (ii) in the case of dutiable goods, other than prohibited goods, to a penalty not exceeding the duty sought to be evaded on such goods or five thousand rupee s, whichever is the greater; (iii) in the case of goods in respect of which the value stated in the entry m ade under this Act or in the case of baggage, in the declaration made under sect ion 77 (in either case hereafter in this section referred to as the declared val ue) is higher than the value thereof, to a penalty not exceeding the difference between the declared value and the value thereof or five thousand rupees, whiche ver is the greater; (iv) in the case of goods falling both under clauses (i) and (iii), to a pena lty not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest; (v) in the case of goods falling both under clauses (ii) and (iii), to a pen alty not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees, whiche ver is the highest. SECTION 113. Confiscation of goods attempted to be improperly exported, etc. The following export goods shall be liable to confiscation:(a) any goods attempted to be exported by sea or air from any place other th an a customs port or a customs airport appointed for the loading of such goods; (b) any goods attempted to be exported by land or inland water through any r oute other than a route specified in a notification issued under clause (c) of s ection 7 for the export of such goods; (c) any goods brought near the land frontier or the coast of India or near a ny bay, gulf, creek or tidal river for the purpose of being exported from a plac e other than a land customs station or a customs port appointed for the loading of such goods; (d) any goods attempted to be exported or brought within the limits of any c ustoms area for the purpose of being exported, contrary to any prohibition impos ed by or under this Act or any other law for the time being in force; (e) any goods found concealed in a package which is brought within the limit s of a customs area for the purpose of exportation; (f) any goods which are loaded or attempted to be loaded in contravention of the provisions of section 33 or section 34; (g) any goods loaded or attempted to be loaded on any conveyance, or water-b orne, or attempted to be water-borne for being loaded on any vessel, the eventua l destination of which is a place outside India, without the permission of the p roper officer; (h) any goods which are not included or are in excess of those included in t he entry made under this Act, or in the case of baggage in the declaration made under section 77; (i) any goods entered for exportation which do not correspond in respect of v alue or in any material particular with the entry made under this Act or in the case of baggage with the declaration made under section 77; (ii) any goods entered for exportation under claim for drawback which do not c orrespond in any material particular with any information furnished by the expor ter or manufacturer under this Act in relation to the fixation of rate of drawba ck under section 75; (j) any goods on which import duty has not been paid and which are entered f or exportation under a claim for drawback under section 74; (k) any goods cleared for exportation which are not loaded for exportation o n account of any willful act, negligence or default of the exporter, his agent o r employee, or which after having been loaded for exportation are unloaded witho

ut the permission of the proper officer; (l) any specified goods in relation to which any provisions of Chapter IVB o r of any rule made under this Act for carrying out the purposes of that Chapter have been contravened. SECTION 114. Penalty for attempt to export goods improperly, etc. Any person who , in relation to any goods, does or omits to do any act which act or omission wo uld render such goods liable to confiscation under section 113, or abets the doi ng or omission of such an act, shall be liable, (i) in the case of goods in respect of which any prohibition is in force und er this Act or any other law for the time being in force, to a penalty not excee ding three times the value of the goods as declared by the exporter or the value as determined under this Act, whichever is the greater; (ii) in the case of dutiable goods, other than prohibited goods, to a penalty not exceeding the duty sought to be evaded or five thousand rupees, whichever i s the greater; (iii) in the case of any other goods, to a penalty not exceeding the value of the goods, as declared by the exporter or the value as determined under this Act , whichever is the greater. Common Topics Chapter-14 Exemptions 1. Grasim Industries Ltd. V. CCEx.(2011) Erroneous refund- Appeal not required Recovery to be made u/s 11A: 2. CCEx. V. Diamond scaffolding Co. (2011) Bonafide view that process not manufacture- Extended period not invocable. SECTION 25. Power to grant exemption from duty (1) If the Central Government is satisfied that it is necessary in the public in terest so to do, it may, by notification in the Official Gazette, exempt general ly either absolutely or subject to such conditions (to be fulfilled before or af ter clearance) as may be specified in the notification goods of any specified de scription from the whole or any part of duty of customs leviable thereon. (2) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by special order in each case, exempt from the paymen t of duty, under circumstances of an exceptional nature to be stated in such ord er, any goods on which duty is leviable. (2A) The Central Government may, if it considers it necessary or expedient so t o do for the purpose of clarifying the scope or applicability of any notificatio n issued under sub-section (1) or order issued under sub-section (2), insert an explanation in such notification or order, as the case may be, by notification i n the Official Gazette, at any time within one year of issue of the notification under sub-section (1) or order under sub-section (2), and every such explanatio n shall have effect as if it had always been the part of the first such notifica tion or order, as the case may be. (3) An exemption under sub-section (1) or sub-section (2) in respect of any good s from any part of the duty of customs leviable thereon (the duty of customs lev iable thereon being hereinafter referred to as the statutory duty) may be grante d by providing for the levy of a duty on such goods at a rate expressed in a for m or method different from the form or method in which the statutory duty is lev iable and any exemption granted in relation to any goods in the manner provided in this sub-section shall have effect subject to the condition that the duty of customs chargeable on such goods shall in no case exceed the statutory duty. Explanation. - Form or method, in relation to a rate of duty of customs, means the

basis, namely, valuation, weight, number, length, area, volume or other measure with reference to which the duty is leviable. (4) Every notification issued under sub-section (1) or sub-section (2A) shall, (a) unless otherwise provided, come into force on the date of its issue by t he Central Government for publication in the Official Gazette; (b) also be published and offered for sale on the date of its issue by the D irectorate of Publicity and Public Relations of the Board, New Delhi. (5) Notwithstanding anything contained in sub-section (4), where a notificatio n comes into force on a date later than the date of its issue, the same shall be published and offered for sale by the said Directorate of Publicity and Public Relations on a date on or before the date on which the said notification comes i nto force. (6) Notwithstanding anything contained in this Act, no duty shall be collected if the amount of duty leviable is equal to, or less than, one hundred rupees. SECTION 5A. Power to grant exemption from duty of excise.

(1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette exempt genera lly either absolutely or subject to such conditions (to be fulfilled before or a fter removal) as may be specified in the notification, excisable goods of any sp ecified description from the whole or any part of the duty of excise leviable th ereon: Provided that, unless specifically provided in such notification, no exemption t herein shall apply to excisable goods which are produced or manufactured (i) in a free trade zone or a special economic zone and brought to any other pla ce in India; or (ii) by a hundred per cent export-oriented undertaking and brought to any place in India. Explanation. In this proviso, free trade zone, special economic zone and hundred per cent export-oriented undertaking shall have the same meanings as in Explanation 2 to sub-section (1) of section 3. (1A) For the removal of doubts, it is hereby declared that where an exemption under sub-section (1) in respect of any excisable goods from the whole of the du ty of excise leviable thereon has been granted absolutely, the manufacturer of s uch excisable goods shall not pay the duty of excise on such goods. (2) If the Central Government is satisfied that it is necessary in the public in terest so to do, it may, by special order in each case, exempt from payment of d uty of excise, under circumstances of an exceptional nature to be stated in such order, any excisable goods on which duty of excise is leviable. (2A) The Central Government may, if it considers it necessary or expedient so to do for the purpose of clarifying the scope or applicability of any notification issued under sub-section (1) or order issued under sub-section (2), insert an e xplanation in such notification or order, as the case may be, by notification in the Official Gazette at any time within one year of issue of the notification u nder sub-section (1) or order under sub-section (2), and every such explanation shall have effect as if it had always been the part of the first such notificati on or order, as the case may be. (3) An exemption under sub-section (1) or sub-section (2) in respect of any exc isable goods from any part of the duty of excise leviable thereon (the duty of e

xcise leviable thereon being hereinafter referred to as the statutory duty) may be granted by providing for the levy of a duty on such goods at a rate expressed in a form or method different from the form or method in which the statutory du ty is leviable and any exemption granted in relation to any excisable goods in t he manner provided in this sub-section shall have effect subject to the conditio n that the duty of excise chargeable on such goods shall in no case exceed the s tatutory duty. Explanation. Form or method, in relation to a rate of duty of excise means the bas is, namely, valuation, weight, number, length, area, volume or other measure wit h reference to which the duty is leviable : (4) Every notification issued under sub-rule (1), and every order made under su b-rule (2), of rule 8 of the Central Excise Rules, 1944, and in force immediatel y before the commencement of the Customs and Central Excises Laws (Amendment) Ac t, 1988 (29 of 1988) shall be deemed to have been issued or made under the provi sions of this section and shall continue to have the same force and effect after such commencement until it is amended, varied, rescinded or superseded under th e provisions of this section. (5) Every notification issued under sub-section (1) or sub-section 2(A) shall, (a) unless otherwise provided, come into force on the date of its issue by the Central Government for publication in the Official Gazette; (b) also be published and offered for sale on the date of its issue by the Dire ctorate of Publicity and Public Relations, Customs and Central Excise, New Delhi , under the Central Board of Excise and Customs constituted under the Central Bo ards of Revenue Act, 1963 (54 of 1963). (6) Notwithstanding anything contained in sub-section (5), where a notification comes into force on a date later than the date of its issue, the same shall be published and offered for sale by the said Directorate of Publicity and Public R elations on a date on or before the date on which the said notification comes in to force. Chapter-16 1. In re: Oracle India Pvt. Ltd. (2012) Expansion of existing/ ongoing business of import- No advance ruling can be soug ht. 2. UOI v. K. Amishkumar Trading Pvt. Ltd. (2011) No settlement application if no SCN issued. 3. J.R.B. Engineering works v. Settlement commission (2012) The assessee was wrongly claiming SSI-exemption despite using brand name of othe rs. When department withdrew exemption and demanded excise duty, the assssee filed a n application before the settlement commission the commission rejected the appli cation as not maintainable because the assessee had not complied with the condit ion of filing periodical returns. Held that, since the application was neither registered with central excises dep artment nor was filing any declaration/ return during relevant period hence the condition of clause (a) of proviso to section 32E(1) was not complied with and t herefore the settlement application was not maintainable at all. Chapter- 17 1. UOI v. Guwahati Carbon Ltd. (2012) Valuation & Classification Matters- Direct appeal to Supreme Court- No appeal to High courts- High court cannot also entertain writ petitions 2. Mohd. Fariz & co. v. CC (2010) Appeal dismissed as time barred No appeal lies to high court only writ lies.

3. UPSRTC v. CCEx. (2011) No SCN issued- not aggrieved person- No writ (SC) petition/ appeal lies: Part-C 20 Marks Attempt any 5 out of 6 questions

Part-A: 30 Marks Answer any 2 questions out of 3 questions Chapter No. Dec. 2010 June 2011 1. Constitution -1+1+1=3 2. Tax Planning 1+2+2+2+3+5=15 3.MAT 1=5=6 1+1=2 ----4.Adv Tax and int. 1 5. ROI and Ass. 1+2=3 1 6. Appeals and Revision 1=1+2=4 7 Penalties 1+1+1+1+5 8 Wealth Tax 5+2=7 5 Total

Dec. 2011 45

June 2012 2+5+5=12

-------1+1+1+4+5+3+5+5+5=30 15 3 ---------2 1 ---2+5=7 --2+2=4 -5

Important Questions 1. Kaavya was the manufacturer of the white cement. He repaired his worn ou

t machineries/ parts of the cement manufacturing plant at its workshop such as d amaged roller shafts and coupling with the help of welding electrodes, mild ste el cutting tools M.S. Angles, M.S. Channels, M.S. Beams etc,. In this process of repair, M.S. scrap and Iron scrap were generated. Kaavya cleared this metal scr ap and waste without paying any excise duty. The department issued a show cause notice demanding duty on the said waste contending that he process of generation of scrap and waste amounted to the manufacture in terms of section 2(f) of the Central Excise Act. Hint: Grasim Industries Ltd. Vs. UOI 2. M/S Jagannath got its unit Jagannath Internationals Limited (JIL) regist ered after few days of the search conducted in its unit. Thereafter it filed con solidated return with the department for the period prior to search. After that it filed a settlement commission opined that the units were registered only afte r the search was conducted and prior to that there was no registration and no re turns as mandated by clause (a) of first proviso to section 32E(1) of the centra l excise Act, 1944 were filed . consequently, the commission rejected the settle ment application on the ground that the application did not conform to the param eters as stipulated under section 32E(1) of the Act. Explain with the help of decided case law whether the rejection order passed by settlement commission is valid in law? Hint: 3. Examine with the help of a decided case law whether for the purpose of c omputing interest of delayed refunds under section 11BB of the central excise Ac t, 1944 the periods commences with the date of receipts of application for refun d or date or which the order of refund is made? Hint: Ranbaxy Laboratory Ltd. Vs. UOI 3 months after the date of receipt of application, but payable only after the or der for refund has been made. 4. Mr. Subodh Mishra manufactures electronic items for selling them within India as well as exports to Germany. He has stored his goods in the warehouse fo r the purpose of export. However on account of certain unforeseen circumstance, goods cannot be exported to Germany. Now he wishes to divert the goods kept in t he warehouse for the purpose of export for home consumption. Explain briefly th e procedure under Central Excise act,1944 to be adopted by Mr. Subodh Mishra for diverting the said goods kept in the warehouse for the purpose of export to Ge rmany for home consumption. Hint: 1) With the permission of AC/DC of Central Excise 5. Examine the validity of the following statement with reference to the CE NVAT credit rules,2004:(i) If the capital goods are cleared as waste and scrap the manufacture has to pay an amount equal to the duty leviable on transaction value. (ii) Rules 4 of CENVAT credit rules 2004 allows credit of inputs without brin ging them into the premises of output service provider subject to due documenta tion regarding their delivery and location Hint: 6. Arigo Ltd. Is a small scale industrial unit which is producing Fast a to nic for growing children. Under the Annual report for the year 2011-12 the SSI u nit shows gross sales turnover of Rs. 19510000 inclusive of excise duty and VAT. The product Fast attracts excise duty @ 12% and VAT @1% Calculate the duty liab ility under Notification No.8/2003 dated 01.03.2003. Gross Sales Turnover of Rs. 19510000 is eligible for exemption under Notificatio n No. 8/2003. Further for the year 2010-11, the taxable clearances of SSI unit w as Rs. 16000000. Hint: 7. ABC Limited is engaged in the manufacture of Product X for the purpose of

captive consumption Determine the assessable value of Product X;Direct Wages & Salaries 19500 Consumable stores and repairs 5700 Research and development costs 3800 Direct Material (including excise duty of Rs.1800) 35000 Administrative overheads (relating to production activities) 5300 Selling and distributions costs 1500 Realisable value of scrap 1300 Amortised cost of fixtures 2500 Hint: 8. M/s Mehta Enterprise Limited was engaged in the manufacture of sugar. Th e Central Government directed him to maintain buffer stock of free sale sugar f or the specified period. In order to compensate M/s Mehta Enterprise Limited the government of India extended buffer subsidy towards storage interest and insura nce charges for the said buffer stock of sugar. Revenue issued a show cause notice to M/s Mehta Enterprise Limited raising the d emand of service tax alleging that amount received by M/s Mehta Enterprise Limit ed as buffer subsidy was for the services covered within the definition of Rs. S torage and warehousing services. Briefly discuss with reference to case law whether the show cause notice is sust ainable in law. Hint: 9. Malhotra Ltd. Imported certain parts of a machine and filed a Bill of en try. Malhotra Ltd. Paid the higher duty in ignorance of a notification which all owed him to payment of duty at a concessional rate. Later Malhotra Ltd. filed a refund claim under section 27 of the Customs act, 19 62 by producing the certificate issued by the Chartered Accountant (CA) to estab lish that the amount of duty in relation to which such refund is claimed has not been passed on by him to any other person. The refund claim was rejected by the department as there was no other evidence other than the certificate issued by CA. Discuss with reference to decided case law if any whether the stand taken by the department is correct in law. Hint: Yes, CA certificate is not alone evidence to rule out unjust enrichment. 10. Mr. Krishna Bhansali an importer has imported some garments from Paris on 02.04.2012. He is unable to make self-assessment under section 17(1) of Custo ms Act and hence has made a request in writing to the proper officer for Provisi onal assessment. Can he apply for Provisional assessment? Will your answer be sa me had he imported the goods on 10.1.2011. Hint: New provisional assessment provision applicable w.e.f. 8-4-11 11. Mr. Henry was the managing director of a company which had set up a unit in the Cochin Export Processing Zone for manufacture of certain equipments for cent percent export. On the basis of the relevant notifications the company wa s entitled to import capital goods and claim benefit of duty exemption on proof of total export. With the passage of time the business of the company fell and i t went into liquidation. In the mean while the customs authorities issued a noti ce to show cause against confiscation, in terms of section 111(0) of the Customs act, 1962 and in trams of the bonds executed by them and also against impositio n of penalty on the company and its directors under section 112 of the act. This was on the premise that the assistant commissioner of customs had reported that neither the capital goods not the raw materials and other goods were used in pr oduction of goods for export in terms of Notification No. 340/86, dated13.06.198 6 and in terms of the bond executed by the company. Briefly discuss with reference to case law whether the show cause notice imposin g penalty under section 112 is sustainable in law. Hint: No