MITTAL COMMERCE CLASSES
IPCC – MOCK TEST
BATCH : LI - 22
DATE: 04.11.2015
MAXIMUM MARKS: 70
TIMING: 3:00 PM to 5:00 PM
TAX
Answer: 1 (5 Marks)
The amount of provisional credit reversible under Rule 6(3A) shall be as follows (amount in
Rs.)
(a) CENVAT credit attributable to inputs used in or in relation to manufacture of
74,160
exempted goods (Inputs used in exempted goods = 10,000x2 = 20,000
units, Credit attributable to exempted goods = 20,000 x Rs. 30 per unit x
12.36 %)
(b) CENVAT credit attributable to inputs used for provision of exempted services
= Value of exempted services during preceding financial year x (Cenvat
Credit taken on inputs – Cenvat Credit attributable to inputs used in
exempted goods) + (Value of dutiable goods during preceding financial year
+ Value of taxable & exempted services during preceding financial year) =
Rs. 250 Lakh x (Rs. 2,96,640 – Rs. 74,160) + (Rs. 400 lakh + Rs. 250 lakh
+ Rs. 500 lakh)
(c) CENVAT credit attributable to inputs used in or in relation to manufacture of
exempted goods or provision of exempted services = Value of exempted
goods & services during preceding financial year x Cenvat Credit taken on
input services+ Total value of all goods & services (exempted or
dutiable/taxable) during the preceding financial year = Rs. 835 lakh x Rs.
2,24,720 + Rs. 1,735 lakh
Provisional Cenvat Credit reversible under Rule 6 (3A) for the month
48,365
1,08,151
2,30,676
Answer: 2 (5 Marks)
Since M/s XYZ Ltd. has opted for value-based payment on exempted goods & services,
therefore it shall pay 6% of the value of exempted goods & services computed as follows(a)
Duty payable on dutiable excisable goods (Rs. 100 lakhs x 12.36%)
(b)&(c)
(i) Duty payable on excisable goods falling under Notification No. 1//2011 –
CE, dated 1-3-2011 and 12/2012- CE (these goods are “exempted
goods” under Rule 2(d) {Rs. 5 lakh x 2.06% + Rs. 5 lakhs x 1.03%}
(ii) Since these goods are deemed to be exempted goods, therefore, 6% of
the value thereof is payable under Rule 6(3). However the duty paid on
such exempted goodsunder Notification No. 1/2011-CE and 121/2012CE, shall be allowed as deduction.
[6% of Rs. 10 lakh – Duty paid in (b)(i) above
(d) 6% of the value of exempted excisable goods under Rule 6(3) i.e, 6% of Rs.
100 lakhs
(e) Clearances of excisable goods to SEZ without payment of duty – No
payment under Rule 6(3) is required , in view of specific provisions of Rule
6(6)
(f) Service tax on taxable services [Rs. 50 lakhs x 12.36%]
12,36,000
15,450
44,550
6,00,000
Nil
6,18,000
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MITTAL COMMERCE CLASSES
IPCC – MOCK TEST
(g)
(i) Service Tax payable on taxable value(net of abatement)[(Rs. 50 lakh –
30%)x 12.36%]
(ii) 6% of the value for which abatement claimed( Service for which
abatement in value is availed are covered under ‘ exempted services’
under Rule 2(e). The amount of 6% of the value of exempted services is
payable on abatement availed) [Rs. 50 lakhs x 30% x 6%]
(h) 6% of the value of non taxable services [ Services not taxable u/s 66 b of
Finance Act, 1994 are also ‘exempted services’ under Rule 2(e), hence
payment under Rule 6(3) required to be made in respect thereof] [Rs. 30
lakh x 6%]
(i)
6% of the value of trading of goods [Trading is also ‘ exempted
services’ under Rule 2(e)]
Total of (a) to (i) above
Less : CENVAT credit of common inputs and input services
Net sum payable in cash
4,32,600
90,000
1,80,000
1,20,000
33,36,600
25,00,000
8,36,600
Answer: 3 (5 Marks)
Proviso to section 3(1) of the Central Excise Act of 1944 provides that Excise Duty leviable
on DTA sales by 100% EOU would be equal to aggregate of customs duties leviable on like
goods imported into India.
The custom duties leviable on like goods imported into India will be computed as follows
Assessable Value
2,00,000
Add: Basic customs duty @ 5% (after 50% exemption)
(1) 10,000
Total for levy of section 3 (1) duty
2,10,000
Add: Additional duty of customs u/s 3 (1) equal to excise duty @ 12%
(2) 25,200
(No EC & SHEC included in excise duty in view of expemtion in this regard)
Add: Education cess and SHEC on imported goods (Exempt by virtue of exemption
notification CE – 18/2014 dated 11-7-2014)
(3)
Exempt
Total for levy of additional duty of customs u/s 3(5)
2,35,200
Additional duty of customs u/s 3 (5) @ 4% (since goods are not liable to VAT in
India, therefore this duty will not be exempt)
(4)
Total duties of Custom
Add ; Education cess of Excise
(5)
Add : Seconday & higher Education cess of Excise
(6)
9,408
2,44,608
4,892
2,446
Excise duty under proviso to section 3(1) (1+2+3+4+5+6)
51,946.24
Answer: 4 (3 Marks)
As per rule 3(5A) of the CENVAT Credit Rules, 2004 if the capital goods, on which CENVAT
credit has been taken, are removed after being used, whether as capital goods or as scrap
or waste, the manufacturer or provider of output services shall pay an amount equal to the
CENVAT Credit taken on the said capital goods reduced by the percentage points calculated
by straight line method as specified below for each quarter of a year or part thereof from
the date of taking the CENVAT Credit, namely :
S .No. Type of Capital Goods
Percentage points calculated by
straight line method
1.
Computers and
peripherals
computer
For each quarter in
Percentage
Year 1
10%
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MITTAL COMMERCE CLASSES
2.
Other capital goods
IPCC – MOCK TEST
Year 2
08%
Year 3
05%
Year 4 & 5
01%
2.5% quarter for each year
However, if the amount so calculated is less than the amount equal to the duty leviable on
transaction value, the amount to be paid shall be equal to the duty leviable on transaction
value.
Answer: 5 (3 Marks)
As per rule 2(l) of CENVAT Credit Rules 2004, inward transportation of inputs or capital
goods and outward transportation up to the place of removal are eligible input services for a
manufacturer. Thus, service tax paid on inward freight by the manufacturer under reverse
change can be availed as CENVAT credit since such transportation service has been used for
inward transportation of inputs.
Answer: 6 (3 Marks)
M/s. AJ can take credit of Rs. 1,00,000 i.e., of additional duty of customs leviable under
section 3(1) of the Customs Tariff Act, 1975 (popularly known as CVD). Rule 3(1) of
CENVAT Credit Rules, 2004 allows the credit of additional duty of customs leviable under
section 3(1) of the Customs Tariff Act, 1975. The credit of basic custom duty, education
cess and secondary and higher education cess of customs is not allowed.
It will not make any difference in respect of availment of CENVAT credit of CVD, if M/s AJ is
a service provider as credit of additional duty of customs leviable under section 3(1) of the
Customs Tariff Act, 1975 (CVD) can be availed both by the manufacturers and the service
providers alike.
However, a service provider is not entitled to avail the credit of additional duty of customs
leviable under section 3(5) of the Customs Tariff Act, 1975 (popularly known as special
CVD).
Answer: 7 (3 Marks)
Rule 3(5B) of CENVAT Credit Rules, 2004 requires a manufacturer or service provider to pay
an amount equivalent to the CENVAT credit taken in respect of inputs or capital goods when
the value of such inputs or capital goods is written off fully or partially before being put to
use.
Thus, PQR Ltd. will have to pay an amount equivalent to the CENVAT credit taken on inputs
valuing Rs. 20,000 (inputs written off) which is Rs. 2,472 (12,360/1,00,000 × 20,000) in
June, 2014.
However, proviso to rule 3(5B) provides that if the said inputs or capital goods is
subsequently used in the manufacture of final products or the provision of output service,
the manufacturer or output service provider, shall be entitled to take credit of the amount
equivalent to the CENVAT credit paid earlier subject to the other provisions of CCR, 2004.
Thus, in the present case, by virtue of proviso to rule 3(5B) when in December, 2014, the
company puts to use entire inputs of Rs. 1,00,000; the company will be entitled to take
credit of the amount equivalent to the CENVAT credit paid earlier i.e. Rs. 2,472/-.
Answer: 8 (3 Marks)
As per rule 3(5C) of the CENVAT Credit Rules, 2004, where on any goods manufactured by
an assessee, the payment of duty is ordered to be remitted under rule 21 of the Central
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MITTAL COMMERCE CLASSES
IPCC – MOCK TEST
Excise Rules 2002, the credit taken on input services used in/in relation to manufacture or
production of said goods has to be reversed.
It will not make any difference in respect of availment of CENVAT credit of CVD, if M/s AJ is
a service provider as credit of additional duty of customs leviable under section 3(1) of the
Customs Tariff Act, 1975 (CVD) can be availed both by the manufacturers and the service
providers alike.
However, a service provider is not entitled to avail the credit of additional duty of customs
leviable under section 3(5) of the Customs Tariff Act, 1975 (popularly known as special
CVD).
Answer: 9 (3 Marks)
Rule 3(5B) of CENVAT Credit Rules, 2004 requires a manufacturer or service provider to pay
an amount equivalent to the CENVAT credit taken in respect of inputs or capital goods when
the value of such inputs or capital goods is written off fully or partially before being put to
use.
Thus, PQR Ltd. will have to pay an amount equivalent to the CENVAT credit taken on inputs
valuing Rs. 20,000 (inputs written off) which is Rs. 2,472 (12,360/1,00,000 × 20,000) in
June, 2014.
However, proviso to rule 3(5B) provides that if the said inputs or capital goods is
subsequently used in the manufacture of final products or the provision of output service,
the manufacturer or output service provider, shall be entitled to take credit of the amount
equivalent to the CENVAT credit paid earlier subject to the other provisions of CCR, 2004.
Thus, in the present case, by virtue of proviso to rule 3(5B) when in December, 2014, the
company puts to use entire inputs of Rs. 1,00,000; the company will be entitled to take
credit of the amount equivalent to the CENVAT credit paid earlier i.e. Rs. 2,472/-.
Answer: 10 (2 Marks)
As per rule 3(5C) of the CENVAT Credit Rules, 2004, where on any goods manufactured by
an assessee, the payment of duty is ordered to be remitted under rule 21 of the Central
Excise Rules 2002, the credit taken on input services used in/in relation to manufacture or
production of said goods has to be reversed.
LAW
***
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