Hello, dear friends,
Hope you must be working hard to revise all the papers.  In continuation of our efforts for your success, Revisionary test paper is being sent to you.  This contains few conceptual and important questions and all the recent cases and circulars along with amendments made by Finance Act 2007 and notifications upto 30th April, 2008.

An Answered Prayer

•	I asked for prosperity,
        And God gave me brain,
						And brawn* to work!		       *Physical strength
					
•	I asked for love,
And God gave me,
Troubled people to help!

•	I asked for favours,
And God gave me,
Opportunities to grab!

•	I asked for strength,
And God gave me diffi-
-culties to make me strong!

•	I asked for wisdom,
And God gave me,
Problems to solve!

•	I asked for courage,
 And God gave me,
  dangers to overcome!

•	I received nothing I wanted
I got everything I needed

Friends you must be feeling very tense.  This tension is created by the institute to develop more capabilities in you, so that you are prepared for the future challenges.  
It is said that the maximum development of the world took place during two world wars.  Because it is only during challenges that our mind becomes creative and our capabilities increase.
Therefore take this tension as a challenge and just think that God has given you this opportunity to grow.

Here are few important tips:-

Before the examination day

1.	Don’t waste any time on checking the paper of direct taxes, you can wait for one day.  Just think what next.

2.	Allocate time for each and every topic before starting the revision and don’t at all exceed those limits.  A tentative plan is being given for revision.  

To get maximum utility of this plan try to devote two days during October in revising the entire syllabus as per this plan.  

Start revision at 7.00 p.m., as you would in the exams, upto 12.00 p.m. on the examination day. 
								
Excise:-								  	      Minutes
(i)	 	Basic Concepts							30
(ii)	 	Valuation & Basis of calculation					60
(iii)	 	CCR 2004								160
(iv)	 	SSI									30

Customs:-
(v)	   	Basic Concepts							30
(vi)	 	Type of Duties								30	
(vii)	Valuation								90
(viii)	Warehousing								30
(ix)	 	Duty Drawback							30

Others
(x)	 	Demand and Refund							90
(xi)	  	Service Tax Concepts other than services				120
(xii)	Chapter X, CER, Export Procedure					90
(xiii)	Transit, coastal goods, stores, postal articles & SEZ			60
(xiv)	Baggage and transportation 						40
(xv)	Classification								30
(xvi)	Appeal, advance ruling & settlement commission			30	
(xvii)	Excise warehousing and penalties					30
(xviii)	Services								40
Total			17hrs 
3.	Don’t get stuck to one particular point.  If you are not able read any concept quickly and that is disturbing you, just leave it and move ahead.

4.	Don’t try to recall the things; just try to read the topic.  Just keep on reading, don’t think whether you will be able to recall or not in the examination hall. You will be definitely able to recall the topics provided you have gone through that topic before examination day.  

Don’t at all compromise on your sleep.
Generally students think that as this is the last paper they can work for the entire night.  But this doesn’t help in any way, rather this will reduce your efficiency in the examination hall.  If you are fresh then you will solve even the most difficult questions and vice-versa. 
So, please, take proper sleep and not only in this paper but in all the papers.

In the examination hall:-
1.	Don’t rush to attempt the question paper.  First go through the entire question paper and select your best and shortest possible question.

2.	Even in the most difficult papers, there are always few questions which are very easy.  If you once start doing easy questions, your confidence boosts up and you are able to do even the difficult ones.  Therefore, instead getting demoralized from difficult questions, try to search for the easier ones.

3.	Allocate time for each question and don’t exceed the limits.

4.	Don’t leave the case studies or numerical questions for the end, try to attempt them somewhere in the middle of the paper.

How to present Answers

1. Read the question carefully – underline important words.

2. Try to understand what the examiner wants. Identify the key point asked in the question and underline it.

3. Answer according to marks assigned to that question. Do not write irrelevant point or things just to increase length.

4. Try to make more heading, subheading, points and small paragraphs.

5. Use underlining for key words in the answer.

And finally friends, it is said that great battles are always won at the end.  You still have lots of time.  If you work with regularity and discipline then your success is definite.  Relax and work hard.

For successful people there is only one second of tension and all, all the remaining seconds of work
             
With Best Wishes

Ajay Jain.

AMENDMENTS APPLICABLE FOR NOV 2008 (upto 30th April, 2008)
Note – Page No. given in these amendments belong to 8th edition of IDT notes by CA. Ajay Jain.

SERVICE TAX
1.	Rule 5 of STR, 1994 (Pg. 192)
(2)  Every assessee shall furnish to the Superintendent at the time of filing his return for the first time, a list in duplicate, of
(i)	All records prepared or maintained by assessee for accounting of transactions in regard to
(a)	providing of any service, whether taxable or exempted;
(b)	receipt or procurement of input services and payment for such input services;
(c)	receipt, purchase, manufacture, storage, sale, or delivery, as the case may be, in regard of inputs and capital goods;
(d)	other activities, such as manufacture and sale of goods, if any. 
(ii)	All other financial records maintained by him in the normal course of business.
(4)	Every assessee shall make available, at the registered premises, at all reasonable time, such records as mentioned in sub-rule (3), for inspection and examination by the Central Excise Officer authorised in writing by the AC/DC.

2.	Rule 7C of STR, 1994  – (Pg. 193)
Provided also that where the gross amount of service tax payable is NIL, the CEO may, on being satisfied that there is sufficient reason for not filing the return, reduce or waive the penalty.

3.	Rule 7B of STR, 1994  – (Pg. 193)
An assessee may submit a revised return in Form ST – 3, in triplicate, to correct a mistake or omission, within a period of ninety days from the date of submission of the return under Rule 7.

4.	Rule 5A of STR, 1994 			            (To be incorporated after Rule 5 of STR at Page 192)
(1) 	An officer authorized by the Commissioner shall have access to any premises registered under these rules for the purpose of carrying out any scrutiny, verification and checks as may be necessary to safeguard the interest of revenue.
(2) 	Every assessee shall, on demand, make available to the officer authorized under (1) or the audit party deputed by the Commissioner or the Comptroller and Auditor General of India, within a reasonable time not exceeding fifteen working days from the day when such demand is made, or such further period as may be allowed by such officer or the audit party, as the case may be, -
(i)	the records as mentioned in Rule 5(2);
(ii)	trial balance or its equivalent; and 
(iii)	the income-tax audit report, if any, under section 44AB of the Income-tax Act, 1961, for the scrutiny of the officer or audit party, as the case may be.”.

5.	Rule 6 of STR, 1994  – (Pg. 190)
(1A) without prejudice to (1), every person liable to pay service tax, may, on his volition,
→	pay service tax in advance to the credit of Central Government and 
→	adjust the amount so paid in advance against the service tax which he is liable to pay for the subsequent period.
Provided that the assessee shall
(i)	intimate the amount deposited in advance to the Supdtt within 15 days from the date of payment.
(ii)	Indicate the details of advance payment made and adjustment, if any, in the subsequent return to be filed u/s 70.

(4B) Adjustment under (4A) shall be possible only if the following conditions are satisfied.
(iii)	for others the maximum amount that can be adjusted is Rs. 50,000 [1,00,000] for a relevant month or quarter.
6.	Rule 3(1)(ii) of Export of Services Rules, 2005  – (Pg. 199)
(ii)  Services specified under this clause shall be treated to have been exported 
if such services as are performed outside India :
Provided that if such a taxable service is partly performed outside India, it shall be considered to have been performed outside India;

Provided further that where
•	Management, Maintenance or Repair Service, or
•	Technical Testing and Analysis Service, or 
•	Technical Inspection and Certification Service
is provided
•	remotely through internet or an electronic network including a computer network or any or any other means
•	in relation to any Goods or Materials or any Immovable Property, as the case may be, situated outside India at the time of provision of service
then such taxable service, whether or not partly performed outside India, shall be treated as performed outside India.

7.	Rule 3(1)(ii) of Import of Service Rules, 2006 – (Pg. 201)
(ii)	Services specified under this sub-rule, shall be treated to have been imported 
if such services are performed in India.
	Provided that part performance in India of these services shall also tantamount to be import of services.

Provided further that where
•	Management, Maintenance or Repair Service, or
•	Technical Testing and Analysis Service, or 
•	Technical Inspection and Certification Service
is provided
•	remotely through internet or an electronic network including a computer network or any or any other means
•	in relation to any Goods or Materials or any Immovable Property, as the case may be, situated in India at the time of provision of service
then such taxable service, whether or not partly performed outside India, shall be treated as performed in India and leviable to service tax under reverse charge method.

[Comments – Services covered in clause (i) are taken to be exported, if they are provided in relation to immovable property outside India.
With this notification, the above mentioned 3 services are deemed to be covered under clause (i) only, when they are provided through internet or electronic networking.]

8.	Exemption to Small Scale Service Provider – (Pg. 197)
Exemption to small scale service provider raised from 8 lakhs to 10 lakhs. Consequently the limit for registration has also been raised to 9 lakhs from earlier limit of 7 lakhs. 

9.	Exemption to GTA – (Pg. 211)
The service tax payable under GTA service, by the consignor/consignee or service provider, has been exempted to the extent of 75%.
Also the restrictions under NN12/2003 and non availment of credit have been dispensed with.

EXCISE
1.	Rule 11 of CER, 2002 (Pg. 36)
Provided that in case of a 
•	proprietary concern or 
•	a business owned by Hindu Undivided Family, 
the name of the proprietor or Hindu Undivided Family, as the case may be, shall also be mentioned in the invoice.								

2.	Rule 3(5) of CCR, 2004 (Pg. 53)
Provided that if the capital goods
•	on which Cenvat credit has been taken
•	are removed after being used 
the manufacturer or provider of output service shall pay an amount equal to the CENVAT Credit taken on the said capital goods reduced by 2.5 per cent for each quarter of a year or part thereof from the date of taking the Cenvat Credit.                                         				

[Comments – Students should note that earlier there was regarding removal of capital goods after use, wherein the entire credit had to be reversed.
With the above amendment, all the disputes have been set at rest.
The block appearing on Page 53 regarding removal of capital goods after use shall now be replaced with this sub-rule.]

3.	Rule 2 of CCR, 2004 : Definition of Input Service  – (Pg. 48)
•	Means any service used by manufacturer
•	in or in relation to manufacture of final products, whether directly or indirectly 
•	in or in relation to clearance of final product upto the place of removal, whether directly or indirectly.

[Comments - Earlier there were two views for the availment of credit of tax paid on transportation of goods from the factory to the buyer’s premises.
The Board’s circular also took the view that the credit shall not be allowed.]

4.	Rule 3(5) of CCR, 2004 : Removal by service provider – (Pg. 52)
Provided that such payments shall not be required to be made where any inputs or capital goods are removed outside the premises of provider of output service for providing output service.
•	Provided further such that payments shall not be required to be made 
•	when any capital goods are removed outside the premises of provider of output service 
•	and the capital goods are brought back to the premises within 180 days, or such extended period not exceeding 180 days as may be permitted by AC/DC, of their removal.

[Comments – Earlier the service provider was required to bring back the capital goods removed from his premises within a period of 180 days, otherwise he had to reverse the credit taken on such capital goods.
This condition has now been dispensed with]

5.	Rule 6 of CCR, 2004 (Pg. 61)
(3) Notwithstanding (1) and (2) the manufacturer or a provider of output service, opting not to maintain separate accounts shall follow either of the following conditions, as applicable to him, namely :- 
(i)   the manufacturer shall pay an amount 	  = 	10% of sale price exempted final product.
      the output service provider shall pay amount  	 =	8% of value of exempted service.

(ii)  pay an amount equivalent to CENVAT credit attributable to input and input services used in or in relation to manufacture of exempted good or provision of exempted service subject to conditions and procedures specified in (3A).

Explanation I – If the above option is exercised, it shall remain exercised for all the exempted goods manufactured by him or all the exempted services provided by him and such option shall not be withdrawn during the remaining part of the year.

Explanation II - The credit shall not be allowed on inputs and input services used exclusively for the manufacture of exempted goods or exempted services. 

(3A) (a) While exercising his option, the manufacturer or provider of output service shall intimate in writing to the Supdtt. giving the following details
i)	name, address and registration no. 
ii)	date from which option is exercised or proposed to be exercised.
iii)	description of dutiable goods or taxable services.
iv)	description of exempted goods or exempted services.
v)	Cenvat credit of inputs or input services lying in balance as on the date of exercising the option under this condition.
(b)	the manufacturer or output service provider shall provisionally pay on the basis of preceding financial year, for every month, the amount of Cenvat credit attributable to inputs and input services used in manufacture of Exempted Goods and provision of Exempted services.
(c)	He shall pay an amount equal to the difference between amount finally determined and provisionally paid by the 30th June of the succeeding financial year.
(d)	The manufacturer or the output service provider shall, in addition to the amount short-paid pay interest @ 24% p.a. from the due date till the date of payment.
(e)	If the amount deposited provisionally is more than the final amount, the manufacturer shall take credit of such amount.

6.	Rule 7A of CCR, 2004 – Distribution of Credit  
(To be incorporated after Rule 7 of CCR at Page 65)

•	A provider of output service shall be allowed to take credit 
•	on inputs and capital goods received
•	on the basis of challan, bill or an invoice issued by any other office or premises of the said service provider
•	which receives invoices, issued under rule 11 of CER, 2002

7.	Rule 15A of CCR, 2004 – General Panalty  
(To be incorporated after Rule 15 of CCR at Page 70)
•	Whoever contravenes the provisions of these rules
•	for which no penalty has been provided in the rules,
•	he shall be liable to a penalty which may extend to Rs. 5,000.
 
[Comments – Prior to the insertion of this Rule, there was no penalty for contravention of any provision for which no specific penal provision exist.]

8.	Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 
(To be incorporated after Section 4A(4) of CEA at Page 29)

Rule 3
The RSP under Section 4A(4) shall be determined in accordance with these rules.

Rule 4
Determination of RSP
Where the manufacturer removes the goods specified u/s 4A(1)
a)	without declaring RSP on the package or
b)	by declaring the RSP, which is not the RSP under law or
c)	by declaring the RSP but obliterates the same after their removal

the RSP of such goods shall be 
(i)  RSP of identical goods	If manufacturer manufactured and removed identical goods within a period of one month, before and after removal.	
(ii) ascertained by conducting inquiries in the retail market at or about the same time	In any other case	

Provided that if more than one RSP is ascertained by above method, highest of such RSP’s shall be taken.

Explanation – For the purpose of this rule, where RSP is required to be ascertained based on market inquiries, the said inquiries shall be carried out on sample basis.

Rule 5
Alteration of RSP declared
Where the manufacturer alters or tampers the RSP on the package after its removal from the place of manufacture, resulting into
•	increase in RSP        -  such increased RSP shall be taken as the RSP of all goods removed during a period of one before and after the date of removal of such goods.
•	More than one RSP  -  highest of such RSP shall be taken as RSP of all such goods.

Rule 6
RSP not ascertainable 
If RSP cannot be ascertained under these rules, RSP shall be ascertained in accordance with the principles and provisions of Section 4A and the rules aforesaid.

List of 32 services applicable for November 2008 attempt. 
As per the latest announcement by ICAI only the following 32 services are applicable for November 2008 exams.

Intellectual Property Services
1. Franchise services
2. Intellectual property services

Financial services
3. Banking &other financial services
4. Credit rating agency ’s services
5. Stock broking services

Transport of goods services
6. Goods transport agency ’s services
7. Courier services
8. Mailing list compilation and mailing services
9. Transport of goods by air services
10. Clearing and forwarding services
11. Cargo handling services
12. Customs house agent ’s services
13. Storage and warehousing services
14. Transport of goods through pipeline or other conduit
15. Transport of goods in containers by rail by any person, other than government rail way

Professional Services
16. Practising chartered accountant ’s services
17. Management or business consultancy services
18. Consulting engineer ’s services
19. Scientific and technical consultancy services
20. Technical testing and analysis services
21. Market research services
22. Opinion poll services
23. Public relations services

Real estate &infrastructure services
24. Construction services in respect of commercial or industrial buildings or civil structures
25. Construction services in respect of residential complexes
26. Architect ’s services
27. Real estate agent ’s services
28. Site preparation and clearance, excavation, earthmoving and demolition services
29. Interior decorator ’s services

Business services
30. Business auxiliary services
31. Business support services
32. Manpower recruitment or supply agency ’s services

 RECENT CASE LAWS 
There is no need to remember the names of the case laws.

EXCISE
Basic Concepts

1.	XYZ Ltd. manufactured crayons. During the course of production an intermediate product known as crayplas compound was manufactured. 
The Department had evidence to show that one of the competitors of XYZ Ltd. i.e. ABC Ltd. had been importing into India a product identical to the crayplas manufactured by the assessee and hence, crayplas was marketable. Is the department’s contention correct?

Ans. Yes, the contention raised by department is correct. 
In the famous case of DCM Supreme Court held that 
To attract duty the goods must be marketable. The word marketable signifies that capability of being bought and sold.
The department has evidence to prove that one of the major manufacturers was importing the same product. It was observed by the Apex Court that when one of the major manufacturers in the country was importing this material, the marketability of the material was established. 

Very recently in the case of Camlin Ltd. the Supreme Court has decided that once it is shown that a product had actually been brought, marketability gets established. Therefore, XYZ Ltd has to pay excise duty on crayplas manufactured by them. 

2.	M/s ABC Ltd. is manufacturer of pipes. They make pipes of different dimensions. They have got an order to manufacture pipes of a specific length. To meet this order they carry out a process of joining of three pipes of different diameters with one another to obtain the desired length. This is done by a process of welding of pipes. The department is of the view that the process of welding to obtain the desired length will also amount to manufacture. Do you agree?

Ans. No, I do not agree with the department’s view. 
As per the famous judgment in the case of DCM, the Supreme Court held that
•	Manufacture implies a change but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation.
•	But something more is necessary and 
•	there must be some transformation; 
•	a new and  different article must emerge 
•	having a distinctive name, character or use. 

Therefore only because some change has been brought in an article by any process, that process will not automatically become manufacture.  The process should bring such change in the article that an entirely new product emerges which was not previously present.

In the case of Hindustan Poles Corporation Supreme Court held that The process of mere joining of three pipes of different diameters with one another to obtain the desired length does not amount to manufacture. The pipes do not lose their original character, and get converted into something, which is a commercially distinctive product. Pipes/poles do not lose their original character and identity as pipes. The pipes retain their character as pipes, hence, no process of manufacture as per Section 2(f) of the Central Excise Act is carried out.

3.	The assessee was engaged in the activity of cutting/ slitting of jumbo rolls of toilet/ tissue paper of a width exceeding 36 cms. The jumbo rolls were purchased on payment of excise duty from various suppliers. The process undertaken by assessee reduced the width of the jumbo rolls to less than 36 cms. The rolls with width less than 36 cms and 36 cms and more were covered under two different headings. Does the activity of cutting/ slitting amount to manufacture? 

Ans. No, the activity of cutting/ slitting does not amount to manufacture. As per the famous judgment of the Supreme Court in Delhi Cloth & General Mills Co.
•	Manufacture means bringing a change in an article but every type of change cannot be treated as manufacture.
•	something more is necessary
•	there must be some transformation 
•	A new and different article must emerge 
•	having a distinctive name, character or use.

Therefore, only because some change has been brought in an article by any process, that process will not automatically amount to manufacture.  The process should bring such change in the article that an entirely new product emerges which was not previously present.

Very recently the Apex Court has held in the case of S. R. Tissues that slitting/cutting of jumbo rolls of plain toilet paper into smaller size would not amount to manufacture as its character and end use viz., household purposes, have not undergone any change on account of winding, cutting/sitting and packing.

4.	During the process of manufacture of butachlor, two intermediate chemicals viz., diethyl Chloroacetanilide (DECA) and chloro methyl butyl ether (CMBE) are formed. The Revenue contended that these intermediate products were liable to excise duty as they were "coming into existence" and were stable. Further, they were mentioned in Chapter Note1 (a) to Chapter 29 of the Central Excise Tariff Act, 1985. The Department had brought on record the test report of a chemical examiner, according to which both the products DECA and CMBE were organic chemicals. It was stated that since the sample was tested, this showed that the products were stable and had adequate shelf life and thus, could be brought to the market for sale. This, according to the Department fulfilled the test of marketability. Discuss whether these intermediate chemicals are liable to excise duty or not.

Ans. No, the contention of the revenue is not correct if the department is not able to prove that wash is marketable.

In the case of Moti Laminates (SC)
it was held that intermediate goods produced and used for captive consumption are not liable to duty if not marketable.
In the case of Ambalal Sarabhai the apex court held that the goods with unstable character can be theoretically marketable if there was a market of such transient type of articles.  
Therefore even those items which have very short life can be treated as goods provided they are capable of being marketed during that short period.
In the case supra it was also held that onus to establish that an article is movable and marketable is on the department.							          
The only piece of evidence produced by the Revenue was a test report, which merely, stated that the items were organic chemicals. This did not in anyway establish marketability as marketability could not be established on the basis of mere stability. Sufficient proof that product was commercially known as such, was also necessary. Thus, DECA and CMBE were not liable to excise duty.

Recently Supreme Court has given a similar view in the case of Gujrat Nermada Valley Fertilizers and had held that marketability cannot be established merely on the basis of stability.

5.	M/s FLC cleared condensing units from their unit in Delhi to Mumbai, where they purchased cooling units from local manufacturers fabricated on order with motors, etc., supplied by the appellant. After carrying out certain tests for quality the complete unit was cleared to various customers from their warehouse/ godown at Mumbai. The invoices were raised by the appellant‘s Mumbai office for supply of split air-conditioners. The assessee contended that their is no manufacture at the Mumbai Branch. Is the assessee correct?

Ans.	No, the view taken by the assessee is not correct.
It is very well settled by various judgments of Supreme Court that any process would amount to manufacture within the meaning of section 2(f) only if a new product having a distinctive name, character or use has emerged. DCM(SC).
If new products have a character and use which it did not bear earlier then the process would amount to manufacture.
In the given case condensing units were manufactured by the appellant at its factory at New Delhi and the cooling units were procured from the local market for which the electrical motors were supplied by the appellant. Neither the condensing unit nor the cooling unit by itself is a complete air conditioner. It is only when these two, i.e. condensing unit and cooling units are put together the complete unit of air conditioner fit for use came into existence.

Recently in the case of Fedders Llyod Corporation the Apex Court gave a similar judgment that Air-conditioner is a commercially new article than either the condensing unit or cooling unit.

6.	M/s X had fabricated at site centralized air conditioner, refrigerator plant and cold storage plant from duty paid bought out goods. The department contended that such fabrication amounts to manufacture of a new marketable commodity and therefore, excise duty shall be levied. Discuss.

Ans. The contention of the department is unreasonable.
Excise duty is leviable on goods alone. But there is no definition of the term ‘goods’ in the Central Excise Act.  
The principle enunciated by the supreme court in the DCM case has stood the test of time, in which it was held that goods means something which is capable of being brought to the market to be bought and sold.
If any goods installed at site (example paper making machine) are capable of being shifted as such, without dismantling into its components/parts, the goods would be considered to be moveable and thus dutiable.(Order No. 58/1/2002).
Similar judgment was given in the case of Virdi Brothers in which the Supreme Court held that refrigerator, air conditioner are basically systems and not machines. They come into existence only by assembly and connection of various components and parts. Though each component is dutiable, the refrigerator/ air conditioning system cannot be considered to be excisable goods.

7.	Mr. A is engaged in the manufacture of Aluminium Billets from Aluminum Ignots and is consuming it captively for the manufacture of Aluminium Irrigation Pipes exempted from payment of duty. The assessee is also selling the said commodity in open market after paying excise duty. The department has contended that conversion of Aluminium Ignots into Aluminium Billets during the intermediate stage by the process of re-melting and adding other alloys amounts to manufacture. Is the department’s contention correct?

Ans. Demand of excise duty by the department is absolutely justified.
In the famous case of          DCM      Supreme Court held that 
there must be some transformation; a new and different article must emerge having a distinctive name and character or use.
In the given case the assessee is not only captively consuming Aluminum Billets but is also selling them in open market. Therefore Aluminium Ignots and Aluminum Billets are two different commercial commodities. As the process of conversion brings into existence a new product which did not exist earlier then such conversion would amount to manufacture.
Very recently the Apex Court held in the case of Mahavir Aluminium Ltd. that conversion of Aluminium Ignots into Aluminium Billets during the intermediate stage will amount to manufacture.

8.	M/s ABC is engaged in the business of purchasing various spices. They grind all the spices first and mix them to produce ‘masala powder’. The department has raised a demand notice considering such grinding and mixing as manufacture. Is the department correct?

Ans. Yes, the Central Excise Department is justified because the process of mixing and grinding amounts to manufacture as a new product has emerged.
It is very well settled by various judgments of Supreme Court that any process would amount to manufacture within the meaning of section 2(f) only if a new product having a distinctive name, character or use has emerged. DCM(SC)
If new products have a character and use which it did not bear earlier then the process would amount to manufacture.
An identical judgment was given by the Supreme Court in the case of A. P. Products where it was held that after grinding and mixing, ingredients loose their own identity/ character and a new product separately known to commercial world comes into existence. Thus, such preparation of ‘masala powder’ would amount to manufacture and hence shall be liable to excise duty.

9.	M/s XYZ is engaged in the business of export of tea. It purchases tea of diverse grades and brands and blends the same by mixing different kinds of tea. The department has raised a demand notice considering this blending of tea as manufacture. Is the department correct?

Ans. No, the department is not justified in raising a demand notice on the assessee as for a process to be termed as manufacture a new and distinctive commodity must come into existence.
In the famous case of          DCM      Supreme Court held that 
there must be some transformation; a new and different article must emerge having a distinctive name and character or use.
Therefore if the process is such as that it brings into existence a new product which did not exist earlier then the process would amount to manufacture.
The manufacture of tea happens in tea gardens when the tea leaves are plucked from tea bushes and are converted into tea by various mechanical processes. 

The Supreme Court has recently decided in the case of Tara Agencies that blending of tea is not manufacture but is mere processing of tea. 
Therefore the department cannot hold the process of blending as that amounting to manufacture.
Valuation - Excise

1.	The assessee received 20% subsidy from the government and 10% subsidy from the buyer of its products as per the policy of the government. It was contended by the department that the value of these subsidies should be included in the assessable value of the final product. Do you agree?

Ans. Yes, the department is partly correct in including the value of subsidies in assessable value.
As per Rule 6 of Excise Valuation Rules, 2000
•	Where the price is not the sole consideration for sale, 
•	the value of such goods shall be deemed to be 
•	the aggregate of such transaction value and the amount of money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.
The board has clarified under Rule 6 that the additional consideration should flow directly or indirectly from the buyer to the seller.  
In the given case the subsidy of 20% from the government could not be said to be additional consideration as it was not received from the buyer either directly or indirectly. Therefore, that would not be includible in the price of the goods for the purposes of excise. However, the 10% subsidy received by the assessee from the buyer was additional consideration. The fact that it was received under a policy of the government did not detract from the above position.
A similar judgment was given by the Supreme Court in the case of Mazagaon Dock Ltd. where the subsidy received from the buyer directly/indirectly was included in the assessable value. 

2.	The registered office of Mr. A and one of his bulk buyers is located in the same premises. The factory of Mr. A was located in the same industrial area owned by such bulk buyer, for which Mr. A used to pay a suitable rent. Mr. A gave 40% discount to the said bulk buyer. The department questioned this discount on the ground that the two parties were related. Discuss the validity of department’s contention.

Ans. The department’s contention is wrong and the discount shall be allowed as deduction.
As per Section 4(3) (b) of Central Excise Act, 1944
Persons shall be deemed to be related if –
(i)	they are inter connected undertakings; or
(ii)	they are relatives; or
(iii)	amongst them the buyer is a relative and a distributor of the assessee or
(iv)	they are so associated that they have interest directly or indirectly, in the business of each other.
In the very famous judgment of ATIC Industries, Supreme Court had held that Interest should be of financial nature and the interest should be mutual i.e. both manufacturer & buyer should have interest in one another’s business. However degree of interest is irrelevant.
In the given case since there is no evidence of any mutuality of interest between the two parties, they would not be deemed to be related just because there registered offices were situated in the same premises and manufacturing unit of Mr. A was situated in the same area owned by the buyer. Further there was no evidence that Mr. A received anything extra from the bulk buyer other than the price charged. Thus there was nothing wrong in giving 40% discount to the bulk buyer.
Very recently Supreme Court has given out a similar judgment in the case of Damnet Chemicals Pvt. Ltd. and had allowed the discount of 40% as deduction from the assessable value.

3.	On account of a prolonged strike in the factory of the assessee, it is decided to cut down the expenditure incurred on labour, packing, inventory advertising etc. One of the bulk buyers of the company’s products starts advertising the products purchased from assessee in order to boost its sales. The Assistant Commissioner of Excise contends that assessee has gradually transferred the expenditure on sales promotion/advertisement of its products to the said buyer and thus, such expenditure should be treated as additional consideration and should be included in the assessable value of the assessee's products. Is the AC correct?

Ans. No the AC is not correct in including the sales promotion/ advertisement expenditure in assessable value.
As per Rule 6 of Excise Valuation Rules, 2000
•	Where the price is not the sole consideration for sale, 
•	the value of such goods shall be deemed to be 
•	the aggregate of such transaction value and the amount of money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.
The board has clarified under Rule 6 that the additional consideration should flow directly or indirectly from the buyer to the seller.  
In the instant case there was no evidence with the AC to conclude that there was any tacit understanding between the assessee and the bulk buyer. Hence, addition could not be made in the AV.
A similar judgment was given in the case Alembic Glass Industries where the Supreme Court observed that where advertisement cost is incurred by the customers compulsorily and where manufacturer has enforceable right against the customers to insist on incurring of such advertisement expenditure, the advertisement cost would be includible in the AV. 

4.	The assessee has four factories located at four different places. They have a practice of giving 20% discount to bulk buyers. However some of the bulk buyers i.e. 10% have been given a discount of only 8%. The assessee contends that it shall be allowed a deduction of discount @ 20%. Whereas the department is of the opinion that they should be given a deduction of 8% as the additional 12% is given to those bulk buyers who are related with the assessee. Give your opinion.

Ans. In my opinion the contention raised by the department is not sustainable in law. 
As per Section 4(3)(d) of the Central Excise Act, 1944 transaction value means
•	The price actually paid or payable for the goods. 
•	Includes any amount, which the buyer is liable to pay to the assessee or on behalf of assessee.
•	The amount may be payable whether at the time of sale or at any other time.
•	The amount payable should be by reason of or in connection with the sale.
As per Circular No. 354/81/2000 
Discount of any description actually given to buyer shall be allowed as deduction. However it should be known at time of removal & if it is not known then intention of allowing such discount should be disclosed with department at time of removal of goods and make a request for provisional assessment.
Therefore, the discount given to majority of buyers shall be allowed as deduction.

A similar view was taken by the Supreme Court in the case of Elgi Equipments Ltd. where it was held that the department did not have evidence to prove that the additional 12% discount is given for those buyers who are related to the assessee. The discount of 20% is given to 90% of buyers, so the normal rate of discount shall be 20% and not 8% and hence, discount of 20% shall be allowed as deduction.

5.	The assessee manufactured aerated waters and sold the same to the wholesaler dealers. The rent equivalent to interest was collected by the assessee on account of delay in returning the empty bottles from wholesale dealers. The Department contended that the assessee has undervalued the AV by excluding the rent of containers. Thus, necessary inclusions should be made in the AV. Is the department correct?

Ans. No the department is not correct in including the rent of containers in the assessable value.
As per Rule 6 of Excise Valuation Rules, 2000
•	Where the price is not the sole consideration for sale, 
•	the value of such goods shall be deemed to be 
•	the aggregate of such transaction value and the amount of money value of any additional consideration flowing directly or indirectly from the buyer to the assessee.
The board has clarified under Rule 6 that the additional consideration should flow directly or indirectly from the buyer to the seller.  
In the given case the purpose of charging interest was to get back empty bottles immediately as otherwise the assessee was required to make additional investment towards stock inventory on empty bottles. Thus, it cannot be included in the AV.

The Supreme Court has also given a similar judgment in the case of Bisleri International Pvt. Ltd. and had held that the levy of rent did not form part of the price of the aerated water and therefore, rent of containers was not includible in the assessable value.

6.	The assessee, a manufacturer is not selling the goods produced by him but captively consumes the same. The department has contended that the assessee has to pay excise duty on the basis of Rule 8 of Excise Valuation Rules, 2000. Thus, the department has taken the AV as 110% of cost of production. The assessee is of the opinion that since his unit has been incurring loss, Rule 8 shall not be applied. Discuss.

Ans. The view taken by the department is absolutely justified.
Valuation of the given case shall be done according to Rules made under section 4(1)(b) as the goods are not sold rather used for captive consumption.
Rule 8 of central excise valuation (Determination of price of excisable goods) rules, 2000 deals with the situation where goods are used for captive consumption. 
According to which value of goods used for captive consumption shall be 110% of the cost of production. 
Also, the board has clarified that cost of production shall be determined as per the principles of CAS-4 issued by ICWAI.
For simplification, law maker introduces a fixed amount which may be less than or more than the actual amount. As per the principles for interpretation of statues if the notional amount is introduced then actual amount becomes irrelevant. 

The Apex Court also took an identical view in the case of GTC Industries where it was held that once notional amount is introduced, actual data is of no relevance. Hence, department is absolutely correct in assessing the goods as per Rule 8. 

7.	The assessee is engaged in manufacture of certain goods. The goods are delivered at the customer’s place. The assessee pays the transportation charges for delivering the goods at customer’s place and recovers a lesser amount from customer. The department contends the difference between the charges paid and charges recovered shall be added to the AV. Do you agree?

Ans. I do not agree with the view taken by the department.
Rule 5 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.
•	Accordingly if the excisable goods are sold at a place other than factory, 
•	then the value of such excisable goods shall be deemed to be the transaction value, 
•	excluding the cost of transportation from the place of removal up to the place of delivery of such excisable goods.
Therefore assessable value shall be transaction value i.e. price paid or payable by the buyer to the assessee excluding actual freight and insurance.
But only actual cost of transportation and insurance can be excluded under this rule.
Hence, it can be said that the actual cost of transportation shall be excluded from the assessable value.

The tribunal recently gave out a similar judgment in the case of Tyota Kirloskar where it was held that when the assessee has charged lower charges for transportation of goods from place of removal (i.e. either factory of depot) to the place of delivery i.e. godown of purchaser, as compared to the actual amount incurred for such transportation, the difference cannot be added to the transaction value.

8.	M/s MUL manufactured cars. They discharged duty liability by including cost of normal two years warranty in the assessable value of the manufactured cars. By way of a separate agreement, they offered a warranty for third and fourth year, which was optional in nature. The department contended that the cost of warranty for third and fourth year shall be includible in the assessable value of the cars. Do you agree?

Ans.	No, the argument given by the department is not tenable in law.

As per Section 4(3)(d) of CEA,
Transaction value is the 
•	price actually paid or payable for the goods when sold and
•	includes any amount  that  the  buyer  is  liable  to  pay  to  or  on  behalf  of  assessee  
•	by  reason  of  or  in connection with the sale.

In the given case the extended warranty was optional; it was not a condition of sale. The sale of the car and sale of extended warranty were two different businesses, which had no direct or proximate connection. Thus only the first sale transaction is relevant for the purpose of valuation of manufactured goods.

A similar judgment was given by the Supreme Court in the case of Maruti Udyog Ltd. where it was held that cost of extended warranty was not includible in the assessable value of the cars.

CER & CCR

1.	Mr. A applied for registration of his factory in the prescribed manner under Rule 9 of the Central Excise Rules, 2002. However, the application was rejected by the department on the ground that the earlier holder of the registration certificate had not paid their outstanding dues and failed to surrender their registration certificate with Respect to the same factory premises. Thus, it was contended by the revenue that no other unit in the same premises could be registered under the rules unless the original registration was deregistered or cancelled or surrendered by such registrant and all excise dues cleared. Do you agree with the department?

Ans. Yes, the department is correct in not accepting the application for registration.
As per Rule 9 of Central Excise Rules, 2000
Every person, who produces, manufactures, carries on trade, holds private store-room or warehouse or otherwise uses excisable goods, shall get registered.
However, Rule 9(3) prescribes certain conditions for registration and one of the conditions contained therein states that, whenever a business is transferred, fresh registration is required to be taken by the assessee and whenever a manufacturer ceases to carry on his business, he should apply for de-registration.
In the given case, the earlier holder has not applied for de-registration and hence, fresh registration cannot be done for the same premises.

A similar judgment was given by the Bombay High Court in the case of Manibhadra Processors where it was held that the person holding earlier registration certificate must surrender registration certificate in respect of that premises, then only, a new person could get registration in respect of that premises.

2.	Assessee used Low Sulphur Heavy Stock (LSHS) as fuel for generating electricity which is captively consumed for manufacture of final product such as caustic soda, cement etc. Without continuous supply of such electricity generated in the plant, manufacture of cement/caustic soda not possible.
Assessee claimed credit on LSHS in view of expression “used in relation to the manufacture” in Rules 2(k) and 3 of Cenvat Credit Rules, 2004. The department contended that the LSHS is utilized for manufacturing electricity which is not an excisable product. Hence, credit shall not be allowed. Discuss.

Ans. Yes, the credit will be allowed.

As per Rule 2 of CCR, 2004
Inputs means goods
•	used in or in relation to the manufacture of final products 
•	whether directly or indirectly and 
•	whether contained in the final product or not,

Thus, Inputs used as fuel for generation of electricity captively consumed will qualify for credit only if they are used “in or in relation to manufacture of final product” such as cement, caustic soda etc.
Therefore, credit used LSHS used in production of electricity cannot be denied.

A similar view was taken by the Supreme Court in the case of Solaris Chemtech Ltd. where it was held that credit shall not be denied.
3.	The assessee claimed certain exemption, which was available subject to non availment of Cenvat credit. The assessee initially availed the Cenvat credit, but before utilization reversed the same. The department denied the exemption contending that once Cenvat credit is availed, the condition of exemption is violated and no exemption is available even if the Cenvat credit is reversed. Is the department correct?

Ans.   No, the contention raised by the department is not correct.
Availment and utilization of credit are two different stages and the two cannot be interchanged. In the given case the assessee, although, availed the credit but he reversed it before its utilization. 
Thus reversal of credit amounts to not taking credit. Therefore, the assessee was entitled to the exemption.

A similar view was taken by the Supreme Court in the case of Bombay Dyeing & Mfg. Co. Ltd. where it was held that the act of reversal of credit by the assessee before utilization thereof amounts to non-availment of Cenvat credit.

4.	Mr. A has been selling goods from his registered premises at Delhi. He issues all the invoices from that premise. Now he has shifted to Noida and issues the invoices from that place. The buyer of the goods had taken the credit of duty paid on the basis of the invoice issued from such previous premises. The department had raised a demand notice on the buyer alleging that he was not allowed to take credit on the basis of the invoice which was issued from such premise. Is the department correct?

Ans. No, the contention raised by the department is not sustainable in law.
Rule 9(1) of Cenvat Credit Rules, 2004 states that Cenvat credit can be taken on the basis of an invoice issued by a manufacturer for clearance of  inputs or capital goods from his factory or from his depot or from the premises of the consignment agent.

Therefore, credit can be allowed to the buyer of the goods on the basis of the invoice issued from the previous premises. 

A similar view was taken by the Punjab & Haryana High Court in the case of Myron Eletricals Pvt. Ltd. where it was held that the manufacturer can avail credit on inputs on the strength of invoices issued by a dealer from the premises other than for which Central Excise registration has been granted.

5.	M/s ABC manufacture certain products which are chargeable to 16% rate of excise duty. M/s ABC inadvertently paid duty at the rate of 24%. The manufacturer sells goods to M/s PFL. The buyer of the goods wants to avail credit of duty that was paid by the manufacturer. The revenue contended that the M/s PFL could only take credit of duty that should have been paid i.e. @ 16%. Discuss whether the department’s contention is correct or not?

Ans.   No, the contention raised by the department is not correct.
As per Rule 3 of CCR, 2004
assessee can take credit of duty paid on the inputs, capital goods or input services used in the manufacture of the final products.
It is a settled law that the duty paid by the manufacturer is eligible to be taken as credit at the receiver’s end.
In the given case M/s ABC has paid duty @ 24%. Since the department did not initiate a dispute at M/s ABC’s end, the Central Excise Authorities having jurisdiction over M/s PFL cannot dispute the duty liability of M/s ABC and cannot restrict the credit on the ground that inputs manufacturer should have paid lesser amount of duty.

Very recently in the case of Purity Flexpack Ltd. the Gujarat High Court has a similar judgment where it was held that the buyer of goods can take credit of duty paid at a higher rate.
6.	M/s XYZ has received certain capital goods. The assessee availed credit of 50% duty paid in the year of receipt and claimed depreciation on the principal amount and remaining amount of duty on which he had not availed credit. The department has disallowed the depreciation claimed. Discuss.

Ans. The assessee is absolutely justified in claiming depreciation on the amount of duty of which credit has not been taken.

As per Rule 4(4) of Cenvat Credit Rules, 2004 assessee cannot claim depreciation u/s 32 of Income Tax Act on that part of the excise duty paid on capital goods which is taken as credit.

In the given case, the assessee has taken credit of 50% of the excise duty paid on capital goods in the year of receipt of capital goods. The balance 50% duty of which he had not taken credit can be added to the principal part of the capital goods and depreciation on the same shall be allowed.

The Chennai tribunal had opined a similar view in the case Roots Cast Pvt. Ltd. It was held that the assessee had not violated any rule. As per Rule 4, credit cannot be taken of that part of duty on which assessee avails the benefit of depreciation u/s 32 of Income Tax Act. Therefore, there wasn’t contravention of any provision.

SSI
1.	The appellant were selling biscuits under the brand name “Meghraj”. A SCN was issued alleging that the appellant had sold the biscuits under the brand name “Meghraj”, which was a registered trade mark of Kay Aar Biscuits (P) Ltd. who was using the said trade mark on manufacture of biscuits themselves, and therefore, the appellant were not eligible to the benefit of SSI notification. The appellant had contended that he had applied for ownership of the brand name “Meghraj” and the registrar had issued registration certificate with retrospective effect. Discuss.

Ans. Yes, department’s view is correct. Assessee cannot avail the benefit of said exemption notification as one of the conditions of this notification is that the goods manufactured by SSI should not bear the brand name of other person.

Very recently in the case of BHALLA ENTERPRISES supreme court has held that assessee will be debarred only if it uses on goods in question, the brand name with intention of indicating a connection with the assessee’s goods and such other person or uses the name in such manner that it would indicate such connection.  If assessee is able to satisfy the assessing authorities that there was no such intention it would be entitled to benefit of exemption.

In the given case discontinuation of business in respect of a product dies not necessarily amount to abandonment. The abandonment of the trade mark by the other company has to be proved by the appellants. The burden to satisfy the adjudicating authority that there was no intention of indicating a connection with the goods of the assessee and such other person was on the assessee. 
Thus, the issuance of registration certificate with retrospective effect will not tantamount to conferment of exemption benefit under the Excise Law once it is found that the appellants had wrongly used the trade mark.

The Supreme Court also gave a similar judgment in the case of Meghraj Biscuits Industries Ltd. Where it was held that issuance of registration certificate with retrospective effect cannot allow the benefit of SSI exemption.

2.	The assessee was engaged in the manufacture of plywood. The CEO found that the assessee was also using others brand/logo “MERINO” along with own brand name “Pelican” on the plywood being manufactured by him and the officers of the Department entertained a view that as the logo of “MERINO” is also being shown on the plywood being manufactured by him, apart from his own logo of “Pelican”, the assessee was not entitled to the benefit of exemption Notification. Is the department’s contention correct?

Ans. Yes, Department’s view is correct. Assessee cannot avail the benefit of said exemption notification as one of the conditions of this notification is that the goods manufactured by SSI should not bear the brand name of other person.

Very recently in the case of BHALLA ENTERPRISES supreme court has held that assessee will be debarred only if it uses on goods in question, the brand name with intention of indicating a connection with the assessee’s goods and such other person or uses the name in such manner that it would indicate such connection.  If assessee is able to satisfy the assessing authorities that there was no such intention it would be entitled to benefit of exemption.

From the facts given in the question, it appears that even though product contained brand name/trade name/logo of manufacturer, the product contains the brand name of other person which shows connection between assessee’s goods and person using MERINO Logo. 

Thus, assessee cannot avail the benefit of exemption.

Recently Supreme Court in the case of Emkay Investments (P) Ltd. held that assessee using brand/logo “MERINO” along with his own brand name “Pelican” on plywood manufactured by him cannot avail the benefit of SSI Exemption even though product also contained brand name/trade name/logo of manufacturer. 

3.	The assessee manufactured and cleared products on their own account and on job work basis for other parties. The goods manufactured for third parties bore the brand name of such third parties. The assessee availed the SSI exemption for goods manufactured on its account and took CENVAT credit of goods manufactured on job work basis. The department issued show cause notices on the assessee. Discuss.

Ans. NEBULAE HEALTH CARE LTD. (Tri. Chennai)
In SSI notification, while defining the term “aggregate value of clearances” for the purpose of determination of exemption, as well as eligibility limit (i.e. value of clearances during the preceding financial year), the value of clearances of the specified goods, bearing the brand names of other persons had been excluded, for the reason that manufacturers were required to pay full duty on such goods. Therefore, the Notification itself recognized that a manufacturer while availing the benefit of exemption under the said Notification could also manufacture goods bearing the brand name of other persons on which full rate of duty was payable. The assessee had correctly availed the exemption under the notification and the impugned order is passed on incorrect reasoning.
SSI unit not prohibited from availing CENVAT benefit for goods cleared under the brand name of third parties and full exemption for other specified good under the SSI notification. 

4.	The appellant were using the brand name of another person. The brand name owner was not paying excise duty as his goods were exempt and was not registered with the excise department during the disputed period. The appellant contended that they were eligible for the small scale exemption as they were using the brand name of person who, according to the appellant, was entitled to the small scale exemption under the said exemption. Is the appellant’s contention correct?

Ans. The Supreme Court held in the case of Super Delicacies that merely because the owner of the brand name manufactured goods which were exempt from excise duty, it did not mean that such owner was a small scale industry entitled to the benefit of the notification. Further, it could not be presumed that just because the owner of the brand name was not registered during the disputed period, it was a small scale industry during the period in question.

5.	The department has contended that the assessee were using the name of M/s. Grasim Industries Ltd. with the purpose of indicating a connection between the product i.e. the cement manufactured by them, and M/s. Grasim Industries Ltd. which is a well known cement manufacturer. In reply, it has not been denied that M/s. Grasim Industries Ltd. is a well known cement manufacturer. It has also not been denied that the purpose of putting the name “M/s. Grasim Industries Ltd.” was to show a connection between the product and M/s. Grasim Industries Ltd. However, what has been contended is that the words “M/s. Grasim Industries Ltd.” are neither a brand name nor a trade name. It is contended that mere use of the name of a company does not amount to using a brand name or trade name of some other company. Do you agree with the department’s contention?

Ans. No, contention of Department is not correct. Assessee cannot avail the benefit of exemption under notification no. 8/2007 as this notification provides that clearance of goods bearing the Brand name of other person shall not be included in the calculation of limit of 150 lakhs/400 lakhs. 

Very recently in the case of BHALLA ENTERPRISES supreme court has held that assessee will be debarred only if it uses on goods in question, the brand name with intention of indicating a connection with the assessee’s goods and such other person or uses the name in such manner that it would indicate such connection.  If assessee is able to satisfy the assessing authorities that there was no such intention it would be entitled to benefit of exemption.

And from the given facts it appears that this name indicated connection in course of trade between the product and ‘Grasim Industries Ltd.’ which is well known manufacturer.

On the basis of above discussion, assessee cannot avail the exemption.

Supreme Court in the recent case of Grasim Industries held that the brand name indicated a connection in course of trade between the products and ‘Grasim Industries Ltd.’, which is a well known manufacturer, and the exemption will not be available

DEMAND & REFUND

1.	The assessee used to label its product with a foreign brand name and claimed exemption under a notification. The classification list was approved by the department after carrying out verifications. The invoices containing description of goods were also regularly approved by department. The department denied the benefit of exemption to the assessee by invoking extended period of limitation under section 11A on the ground that it failed to declare the particulars regarding affixing of labels. Is the department justified?

Ans. 	No, the contention raised by the department is invalid.
This is because as per section 11A of Central Excise Act 
Show cause notice has to be served within one year from the relevant date.
•	But it can be served within 5 years
•	if manufacturer had with the intention of evading payment of duty, 
•	committed fraud, collusion or willful mis-statement or suppression of facts or contravention of any provisions.

Chemphar Drugs & Liniments (SC) It was held that conscious or deliberate withholding of information by manufacturer is necessary to invoke larger limitation of five years. If department had full knowledge or manufacturer had reasonable belief that he is not required to give a particular information then one year limitation is applicable.
And in the given case the assessee was under bona-fide belief that it was not liable to pay duty and it had not deliberately suppressed the facts.

Recently in the case of Pahwa Chemicals Private Limited the Apex Court held that since all facts were in knowledge of the department, there was no willful mis-declaration or willful suppression of facts. Therefore, extended period of limitation could not be applied.

2.	The assessee is engaged in the manufacture of LPG gas stoves under the brand name ‘Surya Flame’ and are availing the benefit of small scale units. The assessee was not entitled to the benefit as the brand name belonged to some other industry. The respondent paid the duty before a show cause notice was issued. The department imposed a penalty under Section 11AC. The assessee deposited the duty along with interest and 25% penalty. The department contended that the assessee was liable to pay 100% penalty as no SCN was issued to him. Is the department correct?

Ans. 	No, the department is incorrect.
According to Section 11AC of Central Excise Act, 1944
•	If duty u/s 11A and interest u/s 11AB is paid within 30 days from the date of communication of the order of the proper officer determining such duty, the penalty shall be 25% of the duty so determined.
•	To avail the benefit of reduced penalty, the penalty should also be deposited within the period of 30 days referred above.	
•	If the duty is increased or reduced the penalty shall be increased or reduced.
In the present case, the assessee had paid the duty before the SCN was issued. So there was no reason to levy a penalty of 100%.

Recently in the case of Malbro Appliances, the Delhi High Court gave a similar judgment that penalty of 25% will be levied.

3.	M/s. ITC Ltd. manufactures cigarettes. It gets the work done also by way of job work through various factories. M/s ITC paid excise duty on provisional basis. The department issued a show cause notice before finalization of provisional assessment on the ground that M/s ITC had undervalued goods. The assessee contended that the show cause notice issued prior to the finalization was invalid. Discuss.

Ans.	No, The show cause notice issued on M/s ITC Ltd. is not valid.
Section 11A (1) provides the time limit within which SCN must be served.
	Time for issue of SCN
If any excise duty has not been levied or paid or short paid or erroneously refunded 
•	Central Excise Officer may serve a Show Cause Notice 
•	within one year  (5 years in cases of fraud)
•	from the relevant date 
•	to show cause that why he should not pay the duty.

If Department fails to serve the SCN within the aforesaid time limit, then demand becomes time-barred by limitation and no duty can be recovered in pursuance of such SCN.
Section 11A also provides the relevant date in case where the duty is assessed provisionally, is the date of adjustment after final assessment. 
Therefore, a proceeding u/s 11A cannot be initiated without completing the assessment proceedings. 
A similar view was taken by the Apex Court in the case of I.T.C ltd. where it was held that show cause notice issued before finalization of provisional assessment is not valid under law. 

4.	M/s RIL are engaged in the manufacture of gelatin. While manufacturing gelatin a by-product named mother liquor gets emerged. Mother liquor is an exempted product whereas gelatin is a dutiable commodity. The assessee contended that since the entire quantity of input is used in the manufacture of gelatin and the by-product gets emerged on its own, Rule 6 of CCR does not apply to him. 
The mother liquor is in the nature of by-product and hence cannot be considered to be a final product manufactured by him. Do you agree with the contention of the assessee?

Ans.	No, the contention raised by the assessee is not correct.
Rule 6 of CCR provides the obligations of manufacturer of dutiable and exempted final product. 
It does not make any distinction between an intended final product and unintended emergence of a by-product.

Rule 6(3)(b) provides that if the exempted goods are other than those described in clause (a) above, the manufacturer shall pay an amount equal to 10%of the total sale price of the exempted final product, excluding sales tax and other taxes, if any, paid on such goods. 
The said rule in simple terms requires the assessee to pay an amount equal to 10% of the value of the goods cleared at NIL rate of duty, even where the inputs have been used in the manufacture of such final product.

A similar judgment was given by the Larger Bench of the Tribunal in the case of Rallies India Ltd. where it as held that where an input was used in manufacture of a dutiable final product and a non dutiable product gets emerged the manufacturer will be liable to pay 10% of the sale price of the non-dutiable product.

5.	M/s NJPC, a Joint venture between the Government of India and Govt. of Himachal Pradesh, was set up for the purpose of construction of a power-project between the towns of Nathpa-Jhakri in Himachal Pradesh. The department issued a show cause notice to the assessee alleging that M/s. NJPC were manufacturing Ready Mix Concrete (in short ‘RMC’) on which no central excise duty is being paid. As per the assessee they were manufacturing mix concentrate and were not liable to pay duty. The department contended that since the assessee did not give full information, the same would tantamount to suppression. Do you agree? 

Ans. 	No, the contention raised by the department is not correct.

As per section 11A of Central Excise Act 
	Show cause notice has to be served within one year from the relevant date.
•	But it can be served within 5 years
•	if manufacturer had with the intention of evading payment of duty, 
•	committed fraud, collusion or willful mis-statement or suppression of facts or contravention of any provisions.

The expression “suppression” used in proviso to Section 11A of Central Excise Act, 1944 has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with intent to evade payment of duty. An incorrect statement cannot be equated with a wilful mis-statement. 

Recently in the case of Continental Foundation Jt. Venture, the Apex Court held that there cannot be suppression or mis-statement of fact, which is not wilful and yet constitute a permissible ground for purpose of proviso to Section 11A ibid. Mis-statement of fact must be wilful.

6.	The assessee was engaged in the manufacture of both dutiable and non dutiable goods. As per Rule 6 of CCR, 2004 the assessee paid 10% of the sale price of the exempted final product to avail 100% credit of the inputs used in manufacture of exempted final product. The assessee then recovered this 10% from its buyers. The department was of the view that as per Section 11D, the assessee is required to deposit the duty collected by the buyer to the Central Government. Is the department correct?

Ans. 	No, the stand taken by the department is not correct.

As per Section 11D
every person who is liable to pay duty, has collected any amount from buyer as duty of excise in excess of duty assessed and paid, must pay the amount immediately to the credit of Central Government.
•	If the amount is not so paid, the officer may serve on such person a notice requiring to show cause why the said amount should not be paid by him.
•	Officer shall, after considering the representations made by such person, determine amount due.

In the present case the manufacturer does not retain any part of the duty collected from the buyer. Section 11D has application only when equivalent duty has not been deposited at the time of removal of goods from the factory. Therefore, the manufacturer cannot be made liable to pay the amount collected from the buyer.

The Larger Bench of the Tribunal has also taken a similar view in the case of Unison Metals Pvt. Ltd. Where it was held that since the 10% amount is already paid to the revenue, and the assessee does not retain any amount, Section 11D has no application.
CLASSIFICATION

1.	M/s Khan Ltd., is a small scale unit, manufacturing plastic name plates for motor vehicles as per specification provided to them by their customers, who are vehicles manufacturers. For purpose of classification under the firs schedule to the Central Excise Tariff Act, 1985 the assessee has claimed that the plastic name plates are “part and accessories of motor vehicles “, The central Excise Department has proposed classification as “other plastic products” in respect of these plastic name plates. The department’s view is that the motor vehicles is complete without the affixation of name plates and cannot be treated as a part of motor vehicles is complete Write a brief note on whether the stand taken by the department is correct in law.

Ans.   No, the stand taken by the department is not correct.

An accessory by its definition is something supplementary or subordinate in nature and need not be essential for the actual functioning of the product. It cannot be denied that the nameplates add for the convenient use of the motor vehicle. It gives an identity to the vehicle. Each vehicle comes with different brand name and in different models having distinct features. The manufacturers of different type of models of vehicles market them under a name and the vehicles are recognized and referred by the nameplates affixed on it. 
Therefore plastic nameplates used on motor vehicles add top the identity, value and convenient use of motor vehicles and are thus classifiable as ‘parts and accessories’ of motor vehicles.

The Supreme Court also gave a similar decision in the case of Pragati Silicons Pvt. Ltd. where it was held that the plastic nameplates are parts and accessories of motor vehicles.

2.	Alpha Ltd. imported laptops containing preloaded Hard Disc Drives (HDD). The said drives were preloaded with software. The assistant commissioner of Customs claimed the said laptop along with the operating software was classifiable as a machine under the Heading 84.71. However, the assessee contended that the software loaded hard disc should be classified separately from the laptop under Heading 85.24. The assessee classified the software separately and claimed exemptions from duty payable on the software vide an exemption notification. Discuss.

Ans.  Yes, the stand taken by the department is tenable in law.

The pre-loaded operating system recorded in Hard disc in the laptop forms an integral part of the laptop as the laptop cannot work without the operating system. The computer cannot even open without the operating system. A laptop without an operating system is like an empty building.

Hence, laptop should be treated as one single unit classifiable under Heading 84.71. However, if the operating system is imported as packaged software like an accessory, then it would be classifiable under Heading 85.24.
A similar view was taken by the Apex Court in the case of Hewlett Packard India Sales (P) Ltd. where it was held that when a laptop is imported with in-built pre-loaded operating system recorded on HDD, the said item forms a part of laptop.

Thus, view taken by the Assistant Commissioner of Custom is absolutely justified.

CUSTOM – VALUATION

1.	Assessee imported a second hand Rolls Royce car into India in the year 1998. He filed the Bill of entry for clearance thereof in 1998 itself. However, Customs Authority gave clearance of car in 2007 only. The assessee valued the car for the purposes of custom duty by taking “depreciated value” as assessable value. The department rejected the same and argued that value of the car shall be taken to be its value in the year 1998. Is the department correct?

Ans.	Yes, the department is absolutely justified.

As per Section 14(1) of the Custom Act, 1962 value of imported and exported goods shall be the Transaction Value of such goods.
Transaction Value means 
a.	the price actually paid or payable
b.	when goods are sold for 
i.	export to India		at the time and place of importation 
ii.	export from India		at the time and place of exportation
where
1.	the buyer and seller are not related 
2.	price is the sole consideration for sale
3.	subject to such conditions as may be prescribed.

Therefore the transaction value has to be declared by the assessee in the year 1998.

A similar view was taken by the Apex Court in the case of M.S. Shoes East Ltd. where it was held that the post import depreciation cannot be taken into account, despite the fact that while Bill of Entry was presented earlier but the clearance was given after 9 years.

2.	The assessee entered into an agreement with its Japanese counterpart to acquire TV components from it. It also entered into an agreement for obtaining technical assistance and know how agreement. The technical assistance agreement required the assessee to pay US$ 2 lakhs along with royalty at 3% on net ex-factory sale price of the colour TV, exclusive of taxes, freight and insurance but including the cost of imported components. The department contended that royalty of 3% would be includible in the assessable value. Do you agree?

Ans.	Yes, the department is right in including the value of royalty in the assessable value.
As per Rule 10(1) of Custom Valuation Rules, 2007, royalties and license fee related to the imported goods that the buyer is required to pay as a condition of sale of goods being valued, is added to transaction value. 
Therefore as per this Rule only royalties & fees which are relatable to imported goods are required to be added.

In the present case since the 3% royalty was computed on the net ex-factory price of manufactured goods after expressly including the value of imported components therein, it could safely be inferred that such royalty was paid as a condition of sale. Further, such royalty was related to the imported goods.
Therefore, the said royalty shall be included in the assessable value.

The Supreme Court also gave a similar judgment in the case of Matasuhita Television & Audio, where it was held that the royalty payments were included in the assessable value. 
3.	The assessee had imported certain equipment from a foreign supplier after a hectic bargain of US$ 15,000. The equipment required specialized knowledge for its installation. Such expertise was available with subsidiary of foreign supplier which signed an agreement with the importer. The agreement provided that the importer would pay Rs. 59 lakh as technical and installation fee to the said subsidiary of the foreign supplier over a period of 3 years. The Department contended that the whole practice was undertaken to bifurcate the cost of the equipment in order to pay less duty. Department relied on 9 imports of similar equipments during the relevant period. However, none of the nine transactions were of the similar technical specifications as that of the one imported by the assessee. Is the department correct?

Ans. 	No, the contention raised by the department is not justified. 
As per the interpretative notes
The value of imported goods shall not include the following costs, provided that they are distinguished from the price of the goods:			
(a)	Charges for construction, erection, assembly, maintenance or technical assistance, undertaken after importation on imported goods such as industrial plant, machinery or equipment;
(b)	The cost of transport after importation;
(c)	Duties and taxes in India.
The price actually paid or payable refers to the price for the imported goods. Thus the flow of dividends or other payments from the buyer to the seller that do not relate to the imported goods are not part of the customs value.
In the given case there is no evidence of any flowback or extra – consideration deflating the price.
Therefore, technical and installation charges should not be includible in the assessable value.
A similar view was taken by the Apex Court in the case Galaxy Entertainment (I) P. Ltd. where it was held that technical and installation charges agreement was a post clearance revenue generation agreement which had no nexus with the sale proceeds of the equipment.  

4.	Assessee imported a film and had to pay not only the cost of the movie materials, but also the royalty and the rights specified in the distribution agreement as a condition of sale. Without the right of exploitation, the print or trailer could not be of any use to the assessee to enjoy theatrical or video right. The department contended that the royalty shall be includible in the assessable value. Do you agree?

Ans.	Yes, the department is absolutely justified.
As per rule 10(1) of the Valuation Rules, 2007 
The following costs and services incurred by buyer but not included in price actually payable shall be added to price in determination of transaction value.
(i)	Commissions and brokerage except buying commission.
(ii)	The cost of containers & cost of packing whether for labour or materials.
(iii)	Value of goods and services to the extent to which they are not included in price payable, by way of materials, components, tools, dies or moulds, engineering designs, etc necessary for production of goods.
(iv)	Royalties on sale of goods. 
(v)	Any other payments to be made as condition of sale by buyer to the seller or to any third party to satisfy the obligation of seller.
However, the charges for the right to reproduce the imported goods in the country of importation shall not be added to the price for the imported goods.
Hence, in the light of statutory provisions and peculiar facts and circumstances of the present case, royalty paid is includible in the assessable value of imported goods.
Supreme Court also took a similar view in the case of Indo Overseas Films where such royalty was included in the assessable value. 

WAREHOUSING & DRAWBACK
1.	The assessee imported capital goods and deposited them in the warehouse. The said goods were not removed from the warehouse within the period permitted under Section 61(1)(a) i.e. 5 years. Subsequently, the assessee filed an application for relinquishment of title of such goods.
The Department contended that since the assessee did not file an application for extension of warehousing period before the expiration of 5 years, after the expiration of the said period, the goods could no longer be termed as ‘warehoused goods’. Therefore, the assessee lost its title to the same and consequently it lost its right to relinquish its title thereto. It was further claimed by the department that the relinquishment of title to the said goods ought to have been made by the assessee before the expiration of the warehousing period and not thereafter and therefore, the said goods were ‘deemed to have been improperly removed from the warehouse’. Consequently, the assessee became liable to pay duty, penalty and interest with respect of the said goods as provided u/s 72(1)(b). Do you agree?

Ans. 	No, the contention raised by the department is not correct.
Sec 23(2) of Customs Act contains provisions regarding relinquishment of title to the goods. 
And Accordingly 
•	The owner of any imported goods may, 
•	at any time before an order for clearance of goods for home consumption or permitting the deposit of goods in a warehouse has been made, 
•	relinquish his title to the goods and 
•	thereupon he shall not be liable to pay the duty thereon.	
But as per proviso to section 68 
the owner of any warehoused goods may, at any time before an order for clearance of goods for home consumption relinquish his title to the goods 
Therefore, a combined reading of Section 23 and Proviso to Section 68 provides that the owner of warehoused goods has the right to relinquish his title to such goods at any time before an order for clearance for home consumption has been made in respect thereto.

The owner of the goods though looses control over the goods when he deposits them in the warehouse, but he does not lose his title or ownership to such goods so long as they remain in the warehouse either during the continuance or after expiration of the warehousing period. In the given case, the assessee wants to relinquish his title to the goods before an order of clearance for home consumption has been made. 
Section 23 and proviso to Section 68 makes it clear that upon relinquishment of his title any goods, including warehoused goods, the owner of such goods shall not be liable to pay duty thereon and when the owner of such goods shall not be liable to pay duty, the question of interest does not arise. However, the rent, interest payable u/s 68 would be recoverable from the date of deposit of the goods in the warehouse to the date of relinquishment of title of such goods.

A similar view was taken by the Karnataka High Court in the case of i2 Technologies Software (Pvt.) Ltd. where it was held that on the expiration of the warehousing period or on the expiration of the extended period, the owner of the goods does not lose his title. Therefore, he can relinquish his title to such goods.

2.	X an importer (other than 100% EOU) imported some goods and deposited them in the warehouse on 12.04.2006. These goods were re-exported on 15.08.2006 without payment of duty. The department has contended that X will have to pay interest u/s 61 of the Customs Act, 1962. Is the contention raised by the department correct?

Ans.  	No, the contention raised by the department is not correct. 

As per section 61 (2)(ii) of the Customs Act, 1962, 
•	if goods (belonging to importer other than 100% EOU) 
•	remain in a warehouse beyond 90 days,
•	interest at specified rate shall be payable, 
•	on the amount of duty payable at the time of clearance of the goods ,
•	for the period from the expiry of the said 90 days till the date of payment of duty on the warehoused goods.
In Pratibha Processors, the Apex Court has held that when goods at the time of removal from warehouse are wholly exempted from payment of duty, the liability to pay interest cannot be saddled on a non-existing duty. Liability to pay interest under section 61(2) of the Customs Act is solely dependant upon the exigibility or actual liability to pay duty. In case the liability to pay duty is nil, then, the interest will also be nil.
	In the present case, since the goods have been re-exported without payment of duty, no interest is payable by 'X'.
A similar view was taken by the Gujarat High Court in the case of SWIL Ltd. where it was held that since no duty was payable, the assessee could not be asked to pay the interest also.

3.	The assessee imported certain goods and filed Warehousing Bills of Entry. The Assistant Commissioner of Customs (Bonds) ordered warehousing of the goods under Section 60 of the Customs Act on 31/5/2007. The appellants completed all the formalities under the Customs Act and the goods were physically warehoused on 18/6/2007. At the time of clearance of the goods from the warehouse, the appellants were required to pay interest under Section 61 of the Customs Act. The department contended that the while calculating the interest the period shall commence from 31/5/2007. Is the stand taken by the department correct?

Ans. 	No, the contention raised by the department is not tenable in law.
As per section 61 (2)(ii) of the Customs Act, 1962, 
•	if goods (belonging to importer other than 100% EOU) 
•	remain in a warehouse beyond 90 days,
•	interest at specified rate shall be payable, 
•	on the amount of duty payable at the time of clearance of the goods ,
•	for the period from the expiry of the said 90 days till the date of payment of duty on the warehoused goods.
Section 61(2) clearly contemplates payment of interest only in cases where the goods have been physically warehoused and have remained physically in such warehouse. It is also clear that no interest needs be paid for the period when goods were actually lying in docks and not physically warehoused.
Therefore, the period under section 61 shall be calculated from 18/6/2007.

An identical view was taken by the Bangalore Tribunal in the case of Jindal Vijaynagar Steel Ltd. where it was held that that for calculation of interest, the period commences only on the date of actual physical warehousing and not on the date on which an order for permission is given under Section 60 of the Customs Act.  	 

Time allowed – 3 Hours					            		             Maximum marks- 100

Answers to questions are to be given only in English except in cases of candidates who have opted for Hindi medium. If a candidate who has not opted for Hindi medium, answers in Hindi, his answer in Hindi will not be valued.

Question Nos. 1, 6 and 9 are compulsory.
Answer any two questions from Part-A and one question from Part-B

Part – A

1. (a) Discuss briefly whether excise duty is attracted on the excisable goods manufactured 
(1 x 4 = 4 marks)
(i)	in Jammu & Kashmir			
(ii)	in Special Economic Zone
(iii)	in 100% EOU

(b) Briefly examine the correctness or otherwise of any three of the following statements giving reasons to support your answer:						         (3 x 2 = 6 marks)
(i)	As per Rule 6(3), one of the options available to a provider of output service, who opts not to maintain separate accounts, is to pay an amount equal to 8% of value of exempted services.
(ii)	The Deputy or Assistant Commissioner of Central Excise can remit the duty payable between Rs. 1,000 to Rs. 2,500.
(iii)	For the purpose of payment of duty, the expressions ‘duty’ or ‘duties of excise’ also includes the amount payable in terms of the CENVAT credit rules, 2004.
(iv)	An amount equal to the credit availed in respect of capital goods has to be paid when such capital goods are removed outside the premises of the output service provider for providing the output service are not brought back to the premises within 180 days of their removal. 

 (c)	M/s XYZ manufactures fan regulators and sells them in corrugated boxes under their own brand name which is affixed/printed on such boxes. However, after some time M/s XYZ starts printing hexagonal artistic design of its marketing company ‘Super Sales’ on such boxes along with its brand name. The said hexagonal shape/design is only printed on the visiting cards of the executives of the ‘Super Sales’. The design printed on the letterhead and sales invoices of the ‘Super Sales’ is different. ‘Super Sales’ has not claimed that the hexagonal design belongs to them and that they have permitted M/s XYZ to use the same on their corrugated boxes.
The Commissioner of Excise contends that the benefit of small scale exemption would not be available to M/s XYZ as they are using a brand name of another person on their goods.
You are required to examine the veracity of the Commissioner’s claim with the help of a decided case law, if any.								         (5 marks)

(d) ABC Ltd. is engaged in a particular kind of processing and pays duty on the final goods so produced. Excise duty paid on the inputs is availed as CENVAT credit. However, such processing is held as not chargeable to excise duty by the High Court. With reference to the Central Excise Act, 1944 briefly explain the provisions introduced vide the Finance Act, 2007 in this regard.										         (5 marks)

2. (a)	Can all cases of disputed excise duty be settled in a settlement commission? If no, then enlist the exception.										         (5 marks)

(b)	Pretty Prints Ltd. a trading company, supplies fabrics to Vijay Works, an independent processor. The cost of fabrics supplied is Rs. 10,150. Vijay Works charges Rs. 4,500 which includes Rs. 3,500 as processing charges and Rs. 1,000 as its profit. Pretty Prints sells the goods from the factory of Vijay Works at Rs. 18,000. The rate of excise duty is 16% plus education cess as applicable.
Determine the assessable value of the goods.  						         (6 marks)

(c)	How will the excisable goods be classified when they are prima facie classifiable under two or more headings?					         					         (4 marks)

3.(a) Explain the scope of duty demanded under explanation to section 35F of the central Excise Act 1944.	        										         (4 marks)

(b)	M/s. ITC Ltd. manufactures cigarettes. It gets the work done also by way of job work through various factories. M/s ITC paid excise duty on provisional basis. The department issued a show cause notice before finalization of provisional assessment on the ground that M/s ITC had undervalued goods. The assessee contended that the show cause notice issued prior to the finalization was invalid. Discuss.				  	                     	         (5 marks)

(c) Comment on the following:						             	         (4 x 1 = 4 marks)
(i)	It is necessary for the manufacturer of excisable goods to take all reasonable steps to ensure that the input or capital goods in respect of which he has taken the CENVAT credit are goods on which the appropriate excise duty as indicated in the accompanying documents has been paid by the manufacturer of such input or capital goods.
(ii)	Mr. A issues an excise duty invoice without delivery of goods mentioned therein. Mr. A shall not be liable to any penalty;
(iii)	SSI units whose turnover exceeds Rupees 90 lakhs per annum have to give a declaration in the prescribed form ;
(iv)	Annual Financial Information Statement (ER-4) is required to submitted by the department of defence production;

(d) What is CT-1 certificate?						          	 	         (2 marks)

4. (a)  With reference to section 35EE of the Central Excise Act 1944, enlist the cases in which the Central Government can exercise the power of revising the order passed by the appellate authorities.
(5 marks)

   (b) Briefly explain the provisions of Section 37E of the Central Excise Act, 1944 as introduced by the Taxation Laws (Amendment) Act, 2006?	     					         (5 marks)

(c) LMP Ltd. uses cement in constructing foundation for machinery and as a building material. LMP Ltd. wants to avail CENVAT credit of duty on such cement. Discuss with the help of decided case law whether LMP Ltd. can avail such credit.						         (5 marks)

5.(a)  What are the clearances whose values are excluded for the purpose of calculating the Small Scale Exemption Limit (SSI) while calculating the turnover of Rs. 150/400 lakhs ?                     (4 Marks)
(b)   Write a brief note on effect of amendments etc. of rules, notifications or orders under section 38A of the Central Excise Act, 1944.							         (2 marks)

 (c)  On 15.05.2008 goods were removed from the factory at Ludhiana for sale from the depot at New Delhi. On that date (at Ludhiana factory) assessable value = 20,000 and tariff rate = 8%. These goods were sold ex New Delhi depot = on 13.06.2008. On that assessable value at New Delhi depot = 21,000 and depot tariff rate = 14%. The manufacturer has paid duty @ 8% on Rs. 20,000, but the department claim duty @ 14 % on Rs. 21,000. Discuss the correct approach to be adopted in the case. 					 					         (4 marks)

(d) 	With reference to Rule 12CC of the CER, 2002, explain the provisions relating to imposition of restrictions on a manufacturer, first stage and second stage dealer or an exporter. 	         (5 marks)

PART—B
6.(a) 	Alpha Ltd. imported laptops containing preloaded Hard Disc Drives (HDD). The said drives were preloaded with software. The assistant commissioner of Customs claimed the said laptop along with the operating software was classifiable as a machine under the Heading 84.71. However, the assessee contended that the software loaded hard disc should be classified separately from the laptop under Heading 85.24. The assessee classified the software separately and claimed exemption from duty payable on the software vide an exemption notification. 
	           (4 marks)
(b)  Explain briefly with reference to the Customs Act, 1962 any two of the following: (2 x 2 = 4 marks)
(i)	Goods
(ii)	Foreign Going vessel
(iii)	CVD u/s 3(5) of Custom Tariff Act 

  (c)  Write short notes on Education cess on customs duty.		 	                                   (2 marks)
 
 (d)  An importer imported a shampoo. Maximum retail price (MRP) of a shampoo under Customs Tariff Sub Heading No. 3305 10 is Rs. 800. However, its assessable value as per Section 14(1) of the Customs Act, 1962 is Rs. 500. Shampoo is assessable under central excise on the basis of maximum retail price after allowing an abatement of 40%. Basic excise duty rate is 14% plus education cess of 2% and secondary and higher education cess of 1%. Basic customs duty rate is 10%.
Calculate the total duty payable under the Custom Tariff Act, 1975 on the shampoo.        (5 marks)

 (e) Define “stores” under the Customs Act, 1962? State briefly provisions relating to warehousing, transit & consumption of stores without payment of duty under the Act.                            (5 Marks)

7.(a) XYZ Ltd. entered into technical collaboration with ABC Ltd. of Netherlands and imported drawings and designs in paper form through professional courier and post parcels. XYZ ltd. declared the value of these drawings and designs at a very nominal value. However commissioner valued these drawings and designs at a high value and levied duty on them.  XYZ ltd. contended that customs duty cannot be levied on drawings and designs as they do not fall in the definition of goods under the Customs Act.  Do you feel that the stand taken by the XYZ ltd. is tenable in law?  Support your answer with a decided case law, if any.      		         (8 marks)	

(b) Briefly explain the owner’s right to deal with the warehoused goods as provided under section 64 of the Customs Act, 1962.							                     (3 Marks)

  (c)  An exporter obtained inputs on payment of customs duty and has availed CENVAT credit. Advise whether he could also avail duty drawback under Section 75 of the Customs Act, 1962, if the imported inputs are used in the manufacture of goods which are then exported.	         (4 marks)

8. (a) Write short notes on:								         (3 x 2 = 6 marks)
(i)     Coastal goods 		 
(ii)   Import General Manifest
(iii)  Boat note	     						                           

(b) X an importer (other than 100% EOU) imported some goods and deposited them in the warehouse on 12.04.2006. These goods were re-exported on 15.08.2006 without payment of duty. With reference the Customs Act, 1962, discuss whether any interest is payable by 'X'?    (4 marks)

(c) What allowances are given to an Indian passenger who was engaged in his profession abroad on his return to India, on articles contained in his bonafide baggage?       	                     (5 Marks)

PART --- C

9.(a) With reference to Notification No. 6/2005 ST dated 01.03.2005, answer the following questions
(5 x 2 = 10 marks)
i)	What is the threshold limit of service tax exemption for small service providers?
ii)	Is the exemption mandatory to service provider in all cases?
iii)	Whether credit on the capital goods received during the period of exemption limit can be availed after crossing the exemption limit?
iv)	On opting for exemption in the beginning of the financial year, whether the credit of the duty paid on inputs lying in stock has to be reversed?
v)	If balance in CENVAT credit is available after the above said reversal, whether the same can be carried forward.

(b) How is the value of taxable service, the consideration of which is not wholly or partly consisting of money, determined under the Service Tax (Determination of Value) Rules, 2006?	         (2 marks)

(c) 	Briefly discuss provisions of the Finance Act, 1994 as amended relating to service tax with respect to any one of the following taxable services:                         	                      		         (3 marks)
	     (i) 	Intellectual Property Rights.	
	     (ii) 	Opinion Poll. 

Answers

1. (a) (i) Excise duty is attracted don the excisable goods manufactured in Jammu & Kashmir since Central Excise Act, 1944 extends to the whole of India.
(ii)	Goods manufactured in Special Economic Zone are not exigible to excise duty as they are excluded from the scope of charging provisions of Section 3 of Central Excise Act, 1944.
(iii)	Excise duty on goods manufactured in 10% EOU will be attracted only when they are brought to any other place in India.

(b) (i)	True, As per Rule 6(3) of Cenvat Credit Rules, 2004.
The provider of output service, opting not to maintain separate accounts shall follow either 
pay an amount   	   =	8% of value of exempted service 
			or
pay an amount equivalent to CENVAT credit attributable to input and input services used in or in relation to manufacture of exempted good or provision of exempted service subject to conditions and procedures specified in (3A).

(ii) False, Rule 21 has been amended so as to increase the power of remission given to various officers of central excise. The Deputy/ Assistant Commissioner of Central Excise is now empowered to remit the duty payable between Rs. 10,000 to Rs. 1,00,000. Earlier this range was Rs. 1,000 to Rs. 2,500.

(iii) True, An explanation has been inserted after rule 8(4) to provide that for the purposes of payment of duty, the expressions ‘duty’ or ‘duty of excise’ shall also include the ‘amount’ payable in terms of the CENVAT Credit Rules, 2004. Therefore, all ‘amounts’ payable (like payment under rule 6(3) of the CENVAT Credit Rules, 2004 etc.) should be paid along with duty payable by 5th or 15th of the next month.

(iv)  False, As per Rule 3(5) of Cenvat Credit Rules, 2004, payments shall not be required to be made where any inputs or capital goods are removed outside the premises of provider of output service for providing output service

  (c)	No, department’s view is not correct. Assessee can avail the benefit of said exemption notification 
Very recently in the case of BHALLA ENTERPRISES supreme court has held that assessee will be debarred only if it uses on goods in question, the brand name with intention of indicating a connection with the assessee’s goods and such other person or uses the name in such manner that it would indicate such connection.  If assessee is able to satisfy the assessing authorities that there was no such intention it would be entitled to benefit of exemption.
In the given case M/s XYZ did not affix the said hexagonal artistic design with an intention to indicate a connection with ‘Super Sales’.
The Supreme Court also gave a similar judgment in the case of nirlex Spares Pvt. Ltd. where it was held that the printing of hexagonal design on packing of the goods of assessee, where such design was not owned by the marketing company would not disentitle the assess from the benefit of small scale exemption.

(d)	As per Section 5B of the Central Excise Act, 1944
•	Where an assessee pays excise duty on final product
•	And has taken the credit of inputs, capital goods and input services
•	But subsequently the process of making the final product does not amount to manufacture 
•	CG, may by notification, order for non-reversal of credit subject to conditions as may be prescribed.
Provided that the order for non reversal of credit shall not apply where an assessee has preferred a claim for refund of excise duty paid by him
Provided further that the Central Government may also specify non-reversal of credit, if any, taken by the buyer of the said final product.

2. (a)	No, all the cases can not be disputed before settlement commission.  In the following cases application can not be made to settlement commission:- 
(i)	Where the applicant has not filed returns showing production, clearance and duty paid
(ii)	Where the applicant has not received a show cause notice
(iii)	Where the case is pending before the tribunal or court.
(iv)	Where the dispute relates to interpretation of classification of excisable goods.
(v)	Where the additional amount of duty accepted in the application does not exceed Rs. 3,00,000.

(b)	As per Rule 10A of Excise Valuation Rules, 2000
Where the excisable goods are produced or manufactured by a job-worker, on behalf of a person (hereinafter referred to as principal manufacturer), then-
•	in a case where the goods are sold by the principal manufacturer for delivery at the time of removal goods from the factory of job-worker, 
•	where the principal manufacturer and the buyer of the goods are not related and the price is the sole consideration for the sale, 
•	the value of the excisable goods shall be the transaction value of the said goods sold by the principal manufacturer.
Therefore, Assessable Value shall be calculated on the basis of selling price of Pretty Prints which is Rs. 18,000. This price shall be treated as inclusive of excise duty of 16%, education cess of 2% and secondary and higher education cess of 1% of excise duty. 
Hence, AV shall be 18,000 x 100/116.48 = Rs. 15,453.30

(c)	Rule 3	is applicable if the goods can be classified under two or more headings.  In such situation the provides that classification shall be done as follows 
(a)  Specific heading 
Specific heading shall be preferred than general heading
However, if all the headings refer only to part of the finished goods, then all those headings shall be regarded to be equally specific. 
(b) Characteristic Test
	If goods consisting of different material cannot be classified under (a) above, then it shall be classified as per material, which gives the goods their essential character.
(c) Later the better
The goods shall be classified under the heading which occurs last in the numerical order among the headings having equal merit, if the goods can not be classified under (a), (b) above.

3. (a)  As per Explanation to Section 35F of the Central Excise Act, 1994 – For the purpose of this section ‘duty demanded’ shall include amount
i.	demanded u/s 11D
ii.	of CENVAT erroneously taken
iii.	payable under Rule 6 of CCR, 2004
iv.	of interest payable in this act and the rules made thereunder.

     (b) 	No, The show cause notice issued on M/s ITC Ltd. is not valid.
Section 11A (1) provides the time limit within which SCN must be served.
	Time for issue of SCN
If any excise duty has not been levied or paid or short paid or erroneously refunded 
•	Central Excise Officer may serve a Show Cause Notice 
•	within one year  (5 years in cases of fraud)
•	from the relevant date 
•	to show cause that why he should not pay the duty.
If Department fails to serve the SCN within the aforesaid time limit, then demand becomes time-barred by limitation and no duty can be recovered in pursuance of such SCN.
Section 11A also provides the relevant date in case where the duty is assessed provisionally, is the date of adjustment after final assessment. 
Therefore, a proceeding u/s 11A cannot be initiated without completing the assessment proceedings. 
A similar view was taken by the Apex Court in the case of I.T.C ltd. where it was held that show cause notice issued before finalization of provisional assessment is not valid under law. 

  (c)  (i) Sub-rule (3) of rule 9 which prescribed the above-mentioned treatment has been omitted. With the deletion of the above said rule, it implies that, now, the person availing CENVAT credit is not responsible to ensure that duty paid to manufacturer of inputs or capital goods has been deposited by such manufacturer.
(ii)	A new sub-rule (2) has been inserted in rule 26 to provide for penal action against the person who issues:
(a) excise duty invoice without delivery of goods mentioned therein or abets in making such invoice; or
(b) any other document or abets in making such document, on the basis of which the user of said invoice or document is likely to take or has taken any ineligible benefits like CENVAT credit or refund.
Such person shall be liable to a penalty not exceeding the amount of such benefit or Rs. 5,000 whichever is greater.
(iii)	This statement is not true. SSI units whose turnover is equal to or more than Rs. 90 lakhs per annum have to give a declaration in the prescribed form.
(iv)	False, Indian Ordnance Factories, Department of Defence Production, Ministry of Defence have been exempted from filing annual information financial statement.
 
(d) 	Form CT-1 is prescribed by notification no. 42/2001 issued under rule 19 of Central Excise Rules, 2002 
•	CT-1 certificate is a certificate issued by authorized officer.  On the basis of such certificate merchant exporter can procure excisable goods without payment of duty for export.
•	He shall send CT-1 Form to the manufacturer from whom goods are to be procured for export and shall specify the estimated amount of duty liability in the said certificate. 
•	On the basis of this CT-1 Certificate the manufacturer of such goods shall clear goods for export without payment of duty and make suitable entries in the CT-1 certificate.

4.  (a) 	In respect of the following orders passed by the Commissioner (Appeals), the Central Government can exercise the power of revision granted under Section 35EE of the Central Excise Act, 1944:
(i)	Loss of transit from a factory to warehouse or to another factory or from one warehouse to another warehouse;
(ii)	Rebate of duty of excise on goods exported or rebate of duty on excisable materials used in the manufacture of the goods which are exported;
(iii)	Goods exported outside India (except Nepal and Bhutan) without payment of duty;
(iv)	Processing loss;
(v)	Cenvat credit.

(b)	As per Section 37E of the Central Excise Act, 1944 
(1) The Central Government can, in public interest, publish names of a person and other particulars relating to any proceedings or prosecution under the Act.
(2) Publication relating to penalty imposed shall be made only if the time for filing appeal with the Commissioner (Appeals) or the Tribunal has expired or appeal presented has been disposed of.
Explanation. – In the case of firm, company or other association of persons, name of directors, Partners or managers or members of association may also be published, if circumstances justify.

 (c) No, LMP Ltd. cannot claim credit of duty paid on cement used in constructing foundation for machinery.
As per Rule 2 of CCR, 2004 Inputs mean
all goods
•	used in or in relation to the manufacture of final products 
•	whether directly or indirectly and
•	whether contained in the final product or not.
Cement used as building material for laying foundation could not be directly or indirectly said to be an integral part in connection with the manufacture of final product.
Further, foundation made of cement would not fall under the category of capital goods also.
A similar judgment was given by the Rajasthan High Court in the case of Hindustan Zinc Ltd. where it was held that LMP Ltd. cannot avail Cenvat credit of the duty paid on cement used in constructing foundation for the machinery and used as a building material.

5. (a)	For determining turnover of Rs. 150/400 Lakhs for the purpose of calculating small scale exemption limit the value of following clearances shall not be taken in to account :-
(i)	For 150 lakhs the goods which are wholly exempt or on which no excise duty is payable for any other reason.
For computing the limit of Rs. 400 lakhs Clearances of excisable goods without payment of duty to SEZ, EHTP, STP, 100%EOU, UNO and under NN 214/86, 83,84/94
(ii) 	All clearances of the specified intermediate goods which are used for further manufacture of any specified final product within the factory
(iii)	The goods bearing the brand name or trade name of other person
whether registered or not except where factory is located in rural area or when goods are bearing brand name of KVIC, NSIC, SSIDC, SSIC or accounts books, registers, writing pad and file folders falling under First schedule or goods are component to be used in any machinery etc.
(iv)	The board has clarified that removal of inputs or capital goods as such shall also not be included in the limits.
  (b)	Where any rule, notification or order made or issued under the Central Excise Act or any notification or order issued under such rule, is amended, repealed, superseded or rescinded, then, unless a different intention appears, such amendment, repeal, suppression or rescinding shall not:
(i) 	revive anything not in force or existing at the time at which the amendment, repeal, suppression or rescinding takes effect; or
(ii) 	affect the previous operation of any rule, notification or order so amended, repealed, superseded or rescinded or anything duly done or suffered thereunder; or 
(iii) 	affect any right, privilege, obligation or liability acquired, accrued or incurred under any rule, notification or order so amended, repealed, superseded or rescinded; or 
(iv) 	affect any penalty, forfeiture or punishment incurred in respect of any offence committed under or in violation of any rule, notification or order so amended, repealed, superseded or rescinded; or
(v) 	affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such penalty, forfeiture or punishment may be imposed as if the rule, notification or order, as the case may be, had not been amended, repealed, superseded or rescinded.  

(c)	The duty shall be charged @ 8%.
Rule 5 of Central Excise Rules, 2002, the rate of duty and tariff valuation shall be of the date on which goods are removed from the factory or warehouse.
Rule 7 of Central Excise Valuation Rules, 2000 provides that in case of sale through depot, the assessable value is equal to the ex-depot normal transaction value of the goods at the depot at or about the same time on which such goods are removed from the factory.
In the given case, through Rs. 20,000 represents the assessable value on 15.05.2008 (date of removal from the factory) but it is not the value prevalent on the depot. Similarly, though Rs. 21,000 represents depot price, but then it is not the price prevalent on 15.05.2008 (date of removal from the factory).
The correct value to be adopted in this case is the depot price of such goods (normal transaction value) on 15.05.2008. This information has to be ascertained and adopted as the assessable value.
	
(d)	Rule 12CC provides for power to impose restrictions in certain types of cases. It empowers the Central Government to provide for certain measures including restrictions on a manufacturer, first stage and second stage dealer or an exporter. The Central Government can exercise such powers where having regard to the extent of evasion of duty, nature and type of offences or any other relevant factors, it is of the opinion that in order to prevent evasion and default in payment of excise duty, it is necessary in the public interest to impose restrictions. The nature of restrictions, (e.g. suspension of registration in case of a dealer) types of facilities to be withdrawn and procedure for issue of such order by an officer authorized by the Board may be specified by a notification in the Official Gazette. The provisions of this rule shall not be subject to anything contained in the Central Excise Rules, 2002.

6. (a) 	Yes, the stand taken by the department is tenable in law.
The pre-loaded operating system recorded ink Hard disc in the laptop forms an integral part of the laptop as the laptop cannot work without the operating system. The computer cannot even open without the operating system. A laptop without an operating system is like an empty building.
Hence, laptop should be treated as one single unit classifiable under Heading 84.71. However, if the operating system is imported as packaged software like an accessory, then it would be classifiable under Heading 85.24.
A similar view was taken by the Apex Court in the case of Hewlett Packard India Sales (P) Ltd. where it was held that when a laptop is imported with in-built pre-loaded operating system recorded on HDD, the said item forms a part of laptop.
Thus, view taken by the Assistant Commissioner of Custom is absolutely justified.

(b)   (i)  Goods : As per Section 2 (22) of the Customs Act, 1962 Goods includes-
A.	Vessels, aircrafts and vehicles;
B.	Stores;
C.	Baggage;
D.	Currency and negotiable instruments and
E.	Any other kind of movable property.

(ii) Foreign going vessel or aircraft (Section 2)
It means any vessel or aircraft for the time being engaged in the carriage of goods or passengers between any port inside India and any port outside India whether touching any intermediate port in India or not and INCLUDES –
a)	Any Naval vessel of a foreign Government taking part in Naval exercises.
b)	Any vessel ENGAGED IN FISHING or any other operations OUTSIDE THE TERRITORIAL WATER OF INDIA.
c)	Any vessel or aircraft proceeding to a place outside India for any purposes whatsoever.
Although a vessel fishing outside the territorial waters of India is not calling at any port outside India, but as it has been specifically covered by the inclusive part of the definition of Foreign going vessel or aircraft, there is no doubt about it that such vessel shall be treated as Foreign going vessel or aircraft.

(iii) CVD u/s 3(5)
•	Central Government may levy additional duty on any notified article, to counter-balance the sales tax, value added tax, local tax or any other charges for the time being leviable on a like article on its sale, purchase or transportation in India,
•	Such duty can be imposed whether on such article duty is leviable under sub-section (1)
•	The rate shall be notified by CG which can not exceed 4%.
	For calculating the additional duty u/s 3(5), the value shall be the aggregate of — 
(i)	  the value of the imported article determined u/s 14 of Customs Act and
(ii)	custom duty u/s 12 Customs Act and any sum chargeable on that article under any law for the time being in force as an addition to, and in the same manner as, custom duty 
	but does not include:
(a)	the safeguard duty referred to in sections 8B and 8C;
(b)	the countervailing duty referred to in section 9; 
(c)	the anti-dumping duty referred to in section 9A; 

(c)	Education cess on Custom duty shall be levied under sec. 94 of Finance Act, 2004 w.e.f. 10.9.2004
•	On goods specified in the First schedule to the Customs Tariff Act, 1975, being goods imported into India, 
•	at the rate of 2%, calculated on aggregate of duties of customs 
•	levied under section 12 of Customs Act, 1962, and under any other law
•	but not including-
(a)	the safeguard duty referred to in section 8B and 8C of the Customs Tariff Act, 1975;
(b)	the countervailing duty referred to in section 9 of the Customs Tariff Act, 1975;
(c)	the anti-dumping duty referred to in section 9A of the Customs Tariff Act, 1975;
(d)	CVD u/s 3(5).
The Education cess shall be in addition to any other duties of customs. The provision of Customs Act and rules, including those relating to refunds and exemptions and penalty shall also apply in relation to Education cess on imported goods. 
In addition to the education cess, there will also be levied Secondary and Higher Education cess @ 1%. 

    (d)				Computation of total customs duty payable
	Particulars										Amount (Rs.)
Basic Customs Duty payable @ 10% of Rs. 500 [see note (1)]					  50.00
Add: Additional customs duty payable u/s 3(1) of the 
Customs Tariff Act, 1975 [see note (2)]							  69.21
Add: Education cess @ 2% of 119.21 (Rs. 50 + Rs. 69.21)					    2.38
Add: Secondary and Higher Education Cess @ 1% on Rs. 119.21				    1.19
Total Customs Duty Payable									122.78
Total Customs Duty Payable (rounded off)							123.00

Notes:
1)	Basic customs is payable on the assessable value computed under section 14(1) of the Customs Tariff Act, 1962.
2)	Since the product is covered under MRP provisions, additional duty of customs is payable on the basis of MRP. The MRP is Rs. 800 and abatement is 40%. Hence, assessable value under Section 4A of the Central Excise Act, 1944 is Rs. 480 (60% of Rs. 800). The additional duty of customs will be 14% of Rs. 480, i.e. Rs. 67.20 plus education cess of Rs. 1.34 (2% of Rs. 67.20) plus secondary and higher education cess of Rs. 0.67 (1% of Rs. 67.20).

(e) 	Stores (Section 2)
	Stores means goods for use in a vessel or aircraft such as coolants, consumables etc. and 
	include fuel and spare parts and other articles of equipment, whether or not for immediate fitting.
	The concept of stores is relevant because stores consumed on a foreign going vessel or aircraft are exempt from duty.

Warehousing of stores (Section 85)
As per Section 85 – Warehousing without assessment of duty:
(i)	If imported material is entered for warehousing and  
(ii)	the importer makes a declaration that the goods are to be supplied as stores to vessels or aircraft without payment of  import  duty,
(iii)	the proper officer may permit the goods to be warehoused without assessment of duty.

Transit of Goods to be used as stores - As per Section 86 
Any stores imported in a vessel or aircraft may, without payment of duty, remain on board while in India.
Consumption of Stores
1.	Imported stores may be consumed without payment of duty during the period of stay of the vessel or aircraft in India [Sec 87].
2.	Imported stores may, without payment of duty be consumed on Board a ship of the Indian Navy [Sec.  90].

7. (a)	No,  the stand taken by XYZ Ltd. is not tenable in law.
This is because in Associated Cement Companies Ltd. (SC) the Apex Court held that 
Technical advice or information technology, though an intangible asset, but the moment the information or advice was put on a media, whether paper or cassettes or diskettes or any other thing, that what is supplied becomes movable property and is goods and hence drawings, designs, manuals and technical material are goods liable to customs duty.
Hence duty shall be levied on the total value and not on the nominal value of paper only

  (b)	As per the provisions of customs Act, all warehoused goods shall be subject to control of the custom officer.
However owner of such goods has right to deal with warehoused goods for the purposes specified under Section 64 of customs Act.  
It provides that,
Conditions
•	With the sanction of proper officer and 
•	on payment of prescribed fees, 
•	the owner of any goods may either before or after warehousing the same
Authorised operations
(a)	inspect the goods, or
(b)	separate damaged or deteriorated goods from the rest, or
(c)	sort the goods or change their containers for the purpose of preservation, sale, export or disposal of the goods, or
(d)	show the goods for sale, or 
(e)	take sample of goods without entry for home consumption and if the proper officer so permits, without payment of duty on such samples..

   (c)	Yes, he can avail duty drawback under Section 75 of Customs Act, even if he has availed Cenvat credit. Cenvat credit can be availed only in respect of excise duty and additional duty of customs (CVD) leviable under Section 3 of Customs Tariff Act, paid on imported inputs.
Duty Drawback of customs portion, i.e. customs duties other than CVD is allowed even after availing Cenvat credit on inputs used in the manufacture of goods that are exported.

8. (a) 	(i) As per section 2(7) of Customs Act Coastal goods means 
•	goods, other than imported goods, 
•	transported in a vessel from one port to another.
Although no import or export is involved in case of coastal goods, but provisions have been made for preventing export of coastal goods or substitution of imported goods as coastal goods.

	(ii) Import General Manifest (IGM)  Section 30 of customs Act,
The person-in-charge of vessel or aircraft carrying imported goods shall deliver to proper officer an import manifest containing particulars of the cargo in vessel or aircraft.
Contents and Form of IGM
(i)	It should be delivered in duplicate.
(ii)	It should cover all goods carried by the conveyance.
(iii)	The goods should be categorized in the following categories:
(a)	Cargo to be landed
(b)	Unaccompanied  baggage
(c)	Goods to be transshipped
(d)	Retention cargo (i.e. Goods kept for transit)
(iv)	It has to be  in four parts -
(a)	A general declaration - It should contain particulars about name of vessel, last port of call, port arrival, date & time of arrival, name, nationality of master etc.
(b)	A cargo declaration - It should separately mention arms, ammunition explosives, gold and silver etc.
(c)	A vessel store list
(d)	A list of private property in possession of crew.
	(iii) Boat Note (Section 35)
- No imported goods 	shall be water borne 	            for being landed from any vessel and
- no export goods 		shall be water borne               for being shipped,
unless the goods are accompanied by a boat note in the prescribed form.
The Boat Note contains the following details: 
Boat Note number, time and date of issue, IGM No. (in case of import goods), the details of the goods, name  of consignor or consignee as the case may be.
(b)	No, As per section 61 (2)(ii) of the Customs Act, 1962, if goods (belonging to importer other than 100% EOU) are kept in the warehouse beyond a period of 90 days, interest shall be payable @15% p.a. on the amount of duty payable at the time of clearance of the goods. The interest shall be payable after the expiry of the said 90 days till the date of payment of duty.
In Pratibha Processors, the Apex Court has held that when goods at the time of removal from warehouse are wholly exempted from payment of duty, the liability to pay interest cannot be saddled on a non-existing duty. Liability to pay interest under section 61(2) of the Customs Act is solely dependant upon the exigibility or actual liability to pay duty. In case the liability to pay duty is nil, then, the interest will also be nil.
	Therefore, since in this case the goods have been re-exported without payment of duty, no interest is payable by 'X'.
(c)	Rule 5 of Baggage rules, 1998 provides that an Indian passenger who was engaged in his profession abroad shall, on his return to India, be allowed clearance free of duty in addition to what he is allowed under rule 3 or rule 4, articles in his bonafide baggage as follows:
	Articles Allowed free of duty	
(a)	Indian passenger returning after at least 3 months.	(i)

(ii)	Used Household articles upto on aggregate value of Rs. 12,000/-.
Professional Equipment upto a value of Rs 20,000/-	
(b)	Indian passenger returning after at least 6 months.	(i)

(ii)	Used Household articles upto on aggregate value of Rs. 12,000/-.
Professional Equipment upto a value of Rs 40,000/-	
(c)	Indian passenger returning after a stay of minimum 365 days during the preceding 2 years on termination of his work, and who has not availed this concession in the preceding 3 years.		Used Household articles and personal effects, (which have been in possession and use abroad of the passenger or his family for at least 6 months), and which are not mentioned in Annexure-I or Annexure-II upto an aggregate value of Rs. 75,000/- 	

9. (a)  (i) The annual threshold limit of service tax exemption for small service providers has been increased from Rs. 8 lakhs to Rs. 10 lakhs.
(ii)  No, the above exemption is totally optional to the taxable service provider in as much as he can choose not to claim the exemption and pay service tax on the taxable services provided by him and also claim Cenvat credit on capital goods, inputs and inputs services under the provisions of CCR, 204. However, once the option of not taking the exemption is exercised, the same cannot be withdrawn during the remaining part of the financial year.
(iii)  No, in terms of condition set out in the notification there is a blanket restriction of availment of credit on capital goods received during the period when the exemption is availed.
(iv) Yes, in terms of the notification, the same is required under Rule 11(4) of the CCR, 2004.
(v)	No, the balance of Cenvat credit, if any, lying would lapse in terms of the notification. This is also required in terms of Rule 1(4) of CCR, 2004.

     (b)   As per Rule 3 of Service Tax Valuation Rules, 2006
If the consideration is not wholly of money, 
(a)	the value shall be the gross amount 
•	charged by the service provider 
•	to provide similar service to any other person 
•	in the ordinary course of trade and 
•	the gross amount charged is the sole consideration;
(b)	where the value cannot be determined in clause (a), 
•	the service provider shall determine the equivalent money value of such consideration 
•	which shall, in no case be less than the cost of provision of such taxable service.

     (c)   (i)  Intellectual property services means
•	services provided by holder of Intellectual property right (IPR) in relation to
•	temporarily transferring or permitting the use or enjoyment of 
•	any right to intangible property, namely
•	trade marks,
•	designs,
•	patents, or any other similar intangible property,
•	under any law for the time being in force, 

but does not include
•	Copyright

(ii)  Opinion poll Services 
•	provided by an opinion poll agency 
•	any service designed to secure information 
•	on public opinion 
•	regarding social, economic, political or other issues
•	securing includes 
•	selecting the target group,
•	preparing questionnaires,
•	gathering opinion from such target groups,
•	collating their responses,					        
•	drawing conclusions, and 
•	preparing reports based thereon.