UNIT-II

THE CENTRAL EXCISE ACT, 1944

EXERCISE

 A: Objective type questions:

1. State whether the following statements are 'True' or 'False':

(i) Excise duty is levied on the production/manufacture of excisable goods in India. 

(ii) Excise duty is payable even if the marketable goods are consumed within the factory.

(iii) Making exercise books out of paper is treated as manufacture. 

(iv) Excise duty is also levied on the basis of Maximum Retail Price of the goods. 

(v) Excise duties on alcoholic liquors, opium and narcotics are levied and collected by the state governments. As and when the goods are sold , excise duty is levied.

 ( vii ) Normally , the excise duty is levied and collected on the basis of a value which , in central excise , called transaction value.

 [Ans. (i) True; (ii) True; (iii) True; (iv) True; (v) True; (vi) False; (vii) True.]

 2. Fill in the blanks with appropriate word/words:

 (i) Central Excise duty is levied and collected by

(ii) As per Section 4 (3) (b) of Central Excise Act, persons shall be deemed to be 'related' if they are undertakings. 

( iii ) Basic Excise Duty is also known as Central Excise Act.

( iv ) For excise duty purpose, an article must be ....And.... to be treated as goods.

(v) Excise duty which is determined with reference to the value of the excisable goods is called duty. 

(vi) The liability to pay central excise duty vests on the goods. 

(vii) Assessable value is the value on which duty is payable as a

(viii) Excise duty is levied on the assessable value under the central Excise Act 1985.  

 [Ans.  (i) Central Government;  (ii) inter connected;  (iii) cenvat;  (iv) Movable, Marketable;  (v) Ad valorem;  (vi) manufacturer;  (vii) percentage;  (viii) Tariff.]

B: Very short answer type questions: 

1. Write short notes on (a) Excisable goods, and (b) Manufacturer under the Central Excise Act.  

2. Write short notes on: 

(i) Value of excisable goods,

(ii) Place of removal, of the

(iii) Unit specific rate;

 (iv) Ad valorem rate.  

3. Mention the two requirements to be satisfied for an article to be treated as 'goods' for excise duty purpose.

 4. Mention four activities which are treated as manufacture. 

 5. Is cash discount allowed to customers for prompt payment on the due date deductible from the assessable value?  Explain briefly.

6. Explain whether the following elements are worth/excluding in the assessable value:

 (a) cost of packing,         (b) after-sales services.  

7. Write short notes on: (i) related person, and (ii) normal price. 

8. State and analyze the provisions of the under the Central Excise Act 1994 relating to inclusion / exclusion of (i) cost of packing, (ii) transportation charges in the valuation of excisable goods. 

9. Write short note on MRP based Excise Levy, 

10. State the rule for valuation of excisable goods used for captive consumption. 

11. State the rule for valuation of excisable goods sold to related persons ... 

12. Mention four activities which are not treated as manufacture. 

13. Explain the term 'manufacture' as per section 2 (f) of the Central Excise Act. 

14. Give the meaning of excisable goods as per the Central Excise Act.

C: Short answer type questions: 

1. Mention the persons who are liable to pay excise duty. 

2. Mention the procedure for collection of Central Excixe Duty

1 . Explain the Specific duties and ad valorem duties under the Central Excises Act, 1944. 

2. Explain whether the following elements are includible/excludible in the assessable value under the Excise Act : 

(i) After-sale service charges, (ii) and (iii) Interest on receivables. 

3. How will you deal with any four of the following in computation of the assessable value of excisable goods: 

(i) trade discount, (ii) cost of packing material used for safety of the goods in transportation, (iii) interest on receivables, (iv) outward handling charges , (v) interest on inventories , and (vi) insurance charges relating to the goods. (vii) cash discount to customer. 

4. State briefly the deductions permissible in arriving at ad valorem assessable value under Section 4 of the Central Excises Act, 1944.

5. Discuss the importance of the concept of related person in valuation of excisable goods under the Central Excise Act.

 6. State and examine the definition of the expression ' manufacture ' as set out in the Central Excise Act , 1944 . 1

 7. Explain the meaning of 'Transaction value' in connection with the valuation of excisable goods . 

8. Examine the validity of the following propositions under the CEA, 1944:

 (i) Person who manufactures goods exempt from duty is also exempt from registration ; (ii) Labelling or branding of goods does not amount to manufacture; and (iii) Duty is not chargeable on' intermediaries 'used in the manufacture of a final product.

9. How are the following treated in determination of "Assessable value"?

(a) Trade discount; (b) Cost of packing, (c) Taxes. 

10. Discuss whether the following expenses will form part of assessable value under the Central Excise Act, 1944 and why?

(i) Advertisement expenses incurred by the buyer/dealer. 

(ii) Depot expenses. 

(iii) After-sale service during warranty period. 

(iv) Interest on security deposit/advances. 

11. What are the 'Specific duties 'and' Ad-valorem duties 'under the Central Excise Act, 1944? 

12. Give the definitions of 'sale' and 'purchase' under the Central Excise Act, 1944.

 13. Mention the documents to be furnished while applying for registration. 

D: Long answer type questions: 

1. Explain the law relating to valuation of excisable goods for the purpose of charging excise duties.

2. What is assessable value? How is it computed? 

3.Outline the levy of Excise duty on the basis of MRP under sec. 4A of the Central Excise Act, 1944. Who is a 'related person' under section 4 of the Central Excise Act 1944?

4. How is the value determined when sales are generally through a related person in respect of non-tariff items?  

5. Write short notes on the Central Excise ( Valuation ) Rules , 2000. 

6.State the rule for valuation of excisable goods sold to related persons. 

7. What are the different types of excise duties and duties of excise levied under Central Excise Act and other different Acts? Explain.

8. Explain the procedure of registration under the Central Excise Act. 

9. Narrate the procedure for electronic registration under the Central Excise Act, 1944. 

10. State the power of the government to grant exemption from Excise Duty. 

11. Explain the different manner of granting exemption from central excise duty.

12. Explain the need for granting exemption from central excise duty. 

13. Who are the persons requiring registration under the Central Excise Act? What are the exemptions granted under this Act. 

E: Practical Problems 

1. Sale Price of a product manufactured by Aman Arora inclusive of excise duty and sales tax is Rs . 18,096 . Sales tax rate being 4 % and excise duty rate 16 %. Find out ' Assessable Value." 

[Ans . Rs. 15,000]

 2. Suman sells certain goods to Jhuman who is a related person for Rs. 12,000 . The buyer does not sell the goods but use it himself. The cost of production of such goods to Suman is Rs. 9,500. What is 'Assessable Value' of such goods? 

3. The selling price of a product inclusive of excise duty @ 12 % is Rs. 17,920 per article . If 300 articles are produced and sold, compute the: 

(i) assessable value ; and 

(ii) the total excise duty payable.

 [Ans . Rs . 48,00,000 , Rs . 5,76,000] 

4. How would you arrive at the assessable value for the purposes of levy of excise duty from the following particulars : 

Cum-duty selling price exclusive of sales tax        Rs. 20,000

 Rate of excise duty applicable to the product         16 %

Trade discount allowed]                                          Rs. 2,400 

Freight                                                                      Rs. 1,360

[Ans. Rs . 14,000]  

Type-Bharat Kalita  



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