FINAL COURSE

Practice Manual
PAPER

Indirect Tax Laws

As amended by the Finance Act, 2015
[Relevant for May, 2016 and November, 2016 Examinations]

BOARD OF STUDIES
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA

The Institute of Chartered Accountants of India

This Practice Manual has been prepared by the faculty of the Board of Studies. The objective of
the Practice Manual is to provide teaching material to the students to enable them to obtain
knowledge and skills in the subject. In case students need any clarifications or have any
suggestions to make for further improvement of the material contained herein, they may write to
the Director of Studies.
All care has been taken to provide interpretations and discussions in a manner useful for the
students. However, the Practice Manual has not been specifically discussed by the Council of the
Institute or any of its Committees and the views expressed herein may not be taken to necessarily
represent the views of the Council or any of its Committees.
Permission of the Institute is essential for reproduction of any portion of this material.

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA

All rights reserved. No part of this book may be reproduced, stored in retrieval system, or
transmitted, in any form, or by any means, electronic, mechanical, photocopying, recording, or
otherwise, without prior permission in writing from the publisher.
Revised Edition

December, 2015

Website

www.icai.org

E-mail

bosnoida@icai.in

Committee /
Department

Board of Studies

ISBN No.

978-81-8441-412-7

Price

` 200/-

Published by

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Accountants of India, ICAI Bhawan, Post Box No. 7100, Indraprastha
Marg, New Delhi 110 002

Printed by

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December/2015/P1869 (Revised )
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The Institute of Chartered Accountants of India

SYLLABUS
PAPER 8 : INDIRECT TAX LAWS
(One paper Three hours 100 marks)
Level of Knowledge: Advanced knowledge
Objectives:
(a)

To gain advanced knowledge of the principles of the laws relating to central

excise, service tax and customs

(b)

To acquire the ability to apply the knowledge of the provisions of the above mentioned laws to various situations in actual practice

Contents:
Section A: Central Excise (25 marks)
Central Excise Act, 1944 and the Central Excise Tariff Act, 1985
Section B: Service Tax (50 marks)
Law relating to service tax as contained in the Finance Act, 1994 as amended from
time to time
Section C: Customs and Foreign Trade Policy (25 marks)
Customs Act, 1962, Customs Tariff Act, 1975 and Foreign Trade Policy to the extent
relevant to the Customs Law
Note If new legislations are enacted in place of the existing legislations relating to
central excise, customs and service tax, the syllabus will accordingly include such new
legislations in place of the existing legislations with effect from the date to be notified
by the Institute.
.

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The Institute of Chartered Accountants of India

A WORD ABOUT PRACTICE MANUAL

The distinctive characteristic of the Chartered Accountancy Course i.e., distance learning,
emphasizes the need for bridging the gap between the students and the Institute and for this
purpose, the Board of Studies provides a variety of educational inputs to the students. The
subject-wise Practice Manuals is one of such inputs provided by the Board of Studies.
The Practice Manuals are highly useful to the students preparing for the examinations, since
they get answers to all significant questions relating to a subject at one place and that too,
grouped chapter-wise. It covers a wide range of questions including practical questions and
questions based on case laws. The Practice Manual includes questions from past
examinations at Final level as well as other important questions, which would facilitate in
thorough understanding of the provisions contained in the Chapters of the Study Material.
The Practice Manual on Indirect Tax Laws is divided into three sections in line with the Study
Material namely, Section A : Central Excise, Section B : Service Tax and Section C : Customs
and Foreign Trade Policy. The questions included in this Practice Manual have been
adapted and answered on the basis of the indirect tax laws as existing on June 1, 2015.
For May, 2016 examination, the provisions of indirect tax laws as amended by the Finance Act,
2015 including notifications and circulars issued up to 31st October, 2015 are applicable. For
November, 2016 examination, the provisions of indirect tax laws as amended by the Finance Act,
2015 including notifications and circulars issued up to 30th April, 2016 would be applicable. It is
important to note that with effect from 15 th November, 2015, a Swachh Bharat Cess @ 0.5%
has been imposed on taxable services thereby making the effective rate of service tax as
14.5%. Thus, while for May, 2016 examination service tax rate will be 14%, for November,
2016 examination the effective rate of service tax will be 14.5%. In this Practice Manual, the
questions on service tax have been solved by taking service tax rate as 14%, which is the
relevant rate for May, 2016 examination. Students appearing in November, 2016 examination
should, however, consider the service tax rate as 14.5% while solving the said questions.
The Practice Manual will serve as a useful and handy reference guide while preparing for Final
Examination. Further, it will enhance the understanding about the pattern of questions set at
the examination and the manner of answering such questions. It will enable solving the
problems in the best possible manner and guide the students to improve their performance in
the examinations. It will also help them to work upon their grey areas and plan a strategy to
tackle theoretical as well as practical problems. For further clarifications/guidance, students
may send their queries at swati.bos@icai.in.
Happy Reading and Best Wishes!
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The Institute of Chartered Accountants of India

 The Institute of Chartered Accountants of India

6

3 6(a)(i) to
(vi)

7 Bonds

6 Export Procedures

5 General Procedures
under Central Excise

6(a)(i)

4
2
3
3

2(a)(i)
2(a)(ii)
5(a)(i)
7(a)(i)

2(a)(iii) 2
3(a) 6

4 CENVAT credit

5
5

1(a)
1(b)

5
3

3
3

3 Valuation of Excisable 1(a)

Goods
5(a)(ii)

6
3

3(a)(i)
5(a)(ii)

4(a)
5(a)(i)

Nov-12

May-12

2 Classification of
Excisable Goods

SECTION A-CENTRAL
EXCISE
1 Basic concepts

Chapter

2(a)(i)
5(a)(iii)

3(a)
5(a)(i),
(ii)
6(a)(i)
1(a)
4(a)
6(a)
2(a)(ii)
2(a)(iii)

May-13

2
3

5
6
6
2
2

6
3
4

3
3
6
3

2(a)(i)
5(a)(iii)
6(a)
6(a)(i)

5
3

5
3

1(b)
6(a)(ii)

1(a)
5(a)(i),
(ii)

3(a)

Nov-13

7(a)(i)

1(b)

5(a)(i)(ii)

3(a)(i)

May-14

3(b)(i)
4(a)
4(b)(ii)
5(a)

2(a)
3(a)
7(a)

4
4
4
4

4
4
4

Nov-14

2(a)
5(a)
6(a)(i)
6(a)(ii)
7(a)

1(a)

3(a)

May-15

4
4
2
2
4

14

32

69

59

10

18

Total
Marks

Statement showing topic-wise distribution of Examination Questions along with Marks

Paper 8: Indirect Tax Laws

0.86

4.6

9.9

8.4

1.4

2.6

Avg.
Marks

 The Institute of Chartered Accountants of India

3
5

7(a)(i)
1(b)

6(a)

7(a)(ii) 3

11 Remission of Duty
and Destruction of
Goods
12 Warehousing

13 Exemption Based on
Value of Clearances
(SSI)
14 Notifications,
Departmental
Clarifications and
Trade notices
15 Advance Ruling

16 Organisation
Structure of the
Excise department
17 Excise Audit

18 Settlement
Commission

6(a)(ii) 3

2
2

10 Appeals

9 Refund

8 Demand, Adjudication 2(a)(i)

and Offences
2(a)(ii)

7(a)(ii)

4(a)
3(a)(ii)

6(a)

1(b)

7(a)(i)

6(a)(ii)
7(a)(ii)

2
2

vi

4(a)

7(a)(ii)

7(a)(i)

2(a)(ii)

6(a)

5(a)(iii)

6(a)(i)

5
3

4
6

1(a)
3(a)(ii)

2(a)(i)
4(a)

2(a)(ii)

1(a)
6(a)

6(a)
5
4

4(a)
6(a)

4
4

12

33

10

19

14

19

1.29

0.43

1.71

0.43

4.71

1.43

0.57

2.71

2.71

 The Institute of Chartered Accountants of India

7 Demand, Adjudication
and Offences

6 Service Tax
Procedures

5 Exemptions and
Abatements

4 Valuation of Taxable
Services

3 Point of Taxation

2 Place of Provision of
Service

SECTION B-SERVICE
TAX
1 Basic Concepts of
Service Tax

2(b)(iii) 2
6(b)(i) 3
7(b)(i) 3

5(b)(i)

3(b)

1(c)
2(b)(ii),
(iii)
3(b)(i)
4(b)
6(b)(i)
7(b)(i)
3(b)(ii)

2(b)(i)

5(b)(i)

7(b)(i)

3(b)

1(c)
4(b)
5(b)(i)
2(b)
6(b)(i)

5
4
3
3
3

5
6
3
6
3

vii

4(b)

6(b)(i)

1(c)

5(b)(i)

7(b)(i)

6
6

2(b)
3(b)

4(b)
6(b)(i)

6
3

1(c)

2(b)

6
3

7(b)(i)

3(b)
5(b)(i)

2(c)

2(b)
4(b)(i)
5(b)(i)
6(b)(i)
5(b)(ii)

1(b)
1(c)

7(b)(ii)

7(b)(i)

4
4
4
4
4

5
5

6(b)
6(c)

7(b)(ii)
3(b)(ii)

4(b)(i)
4(c)(ii)
7(b)(i)
4(c)(i)
5(b)(ii)
1(c)
2(b)
4(b)(ii)
1(b)

3(b)(i)
5(b)(i)

4
4

4
4

2
2
4
2
4
5
8
2
5

4
4

36

44

32

30

18

24

57

5.14

6.29

4.57

4.29

2.57

3.43

8.14

 The Institute of Chartered Accountants of India

3
3

6(c)
5(c)

9 Demand and Appeals

1(e)

2(c)

7(c )

7 Importation,
Exportation and
Transportation of
Goods
8 Warehousing

1(d)

6(c)

5(c)

4 Classification of
Goods
5 Valuation under the
Customs Act, 1962

6 Administrative
Aspects of Customs
Act, 1962

7(c)

4(c)

3 Types of Duty

2 Levy of and
Exemptions from
Customs duty

Section C-Customs and

Foreign Trade Policy
1 Basic Concepts

8 Other Provisions

6(c)

7(c)

1(e)
2(c)
4(c)

3(c)

5
3
3

viii

2(c)
3(c)

1(e)

5(c)

4(c)

3
3

4(c )

1(e)

2(c )(i),(ii)
6(c)
7(c)

2
3
3

4(c)

1(d)

5(c)

3(b)(ii)
6(b)(ii)

4
4

1(d)
4(d)(i)
5(c)

4(d)(ii)

5
2
4

11

21

37

11

11

10

1.29

1.57

5.29

0.43

1.57

1.57

1.43

1.14

 The Institute of Chartered Accountants of India

3(c)

2(c )

4(c)

3(c)

5(c)

7(c)

6(c)
3

3
5(c)

2(c )(iii)
3(c )
3

1
3

6(c)(ii)
7(c)

6(c)(i)

3(c)

2(d)

2
4

6(d)
7(c)

3(c)

2(c)

4
4

14

23

11

0.29

0.43

0.43

1.57

ix

Note: Q represents question numbers as they appeared in the question paper of respective examination. M represents the marks
which each question carried in that examination. The question papers of all the past attempts of Final Examination can be accessed
from the BOS Knowledge Portal on the Institute website www.icai.org.

15 Miscellaneous
Provisions
16 Foreign Trade Policy

12 Provisions Relating to
Illegal Import, Illegal
Export, Confiscation,
Penalty and Allied
Provisions
13 Settlement
Commission
14 Advance Ruling

11 Duty Drawback

10 Refund

The Institute of Chartered Accountants of India

CONTENTS
SECTION A CENTRAL EXCISE
CHAPTER 1

BASIC CONCEPTS ................................................................. 1.1 1.16

CHAPTER 2

CLASSIFICATION OF EXCISABLE GOODS ............................. 2.1 2.7

CHAPTER 3

VALUATION OF EXCISABLE GOODS .................................... 3.1 3.31

CHAPTER 4

CENVAT CREDIT ................................................................... 4.1 4.37

CHAPTER 5

GENERAL PROCEDURES UNDER CENTRAL EXCISE ........... 5.1 5.18

CHAPTER 6

EXPORT PROCEDURES .......................................................... 6.1 6.5

CHAPTER 7

BONDS..................................................................................... 7.1 7.3

CHAPTER 8

DEMAND, ADJUDICATION AND OFFENCES ........................... 8.1 8.6

CHAPTER 9

REFUND ................................................................................... 9.1 9.7

CHAPTER 10 APPEALS ............................................................................. 10.1 10.8

CHAPTER 11 REMISSION OF DUTY AND DESTRUCTION OF GOODS .......... 11.1 11.2
CHAPTER 12 WAREHOUSING ................................................................... 12.1 12.4
CHAPTER 13 EXEMPTION BASED ON VALUE OF CLEARANCES (SSI) ...... 13.1 13.24
CHAPTER 14 NOTIFICATIONS, DEPARTMENTAL CLARIFICATIONS
AND TRADE NOTICES ......................................................... 14.1 14.4
CHAPTER 15 ADVANCE RULING ............................................................. 15.1 15.3
CHAPTER 16 ORGANINSATION STRUCTURE OF THE EXCISE
DEPARTMENT .................................................................... 16.1 16.3
CHAPTER 17 EXCISE AUDIT ..................................................................... 17.1 17.4
CHAPTER 18 SETTLEMENT COMMISSION ............................................... 18.1 18.4

SECTION B SERVICE TAX

CHAPTER 1

BASIC CONCEPTS OF SERVICE TAX.................................... 1.1 1.11

CHAPTER 2

PLACE OF PROVISION OF SERVICE....................................... 2.1 2.8

CHAPTER 3

POINT OF TAXATION ............................................................ 3.1 3.11

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The Institute of Chartered Accountants of India

CHAPTER 4

VALUATION OF TAXABLE SERVICES ................................... 4.1 4.16

CHAPTER 5

EXEMPTIONS AND ABATEMENTS ........................................ 5.1 5.12

CHAPTER 6

SERVICE TAX PROCEDURES .................................................. 6.1 6.8

CHAPTER 7

DEMAND, ADJUDICATION AND OFFENCES ........................... 7.1 7.9

CHAPTER 8

OTHER PROVISIONS ............................................................... 8.1 8.6

SECTION C CUSTOMS AND FOREIGN TRADE POLICY

CHAPTER 1

BASIC CONCEPTS .................................................................. 1.1 1.7

CHAPTER 2

LEVY OF AND EXEMPTIONS FROM CUSTOMS DUTY .......... 2.1 2.13

CHAPTER 3

TYPES OF DUTY ...................................................................... 3.1 3.7

CHAPTER 4

CLASSIFICATION OF GOODS ................................................. 4.1 4.7

CHAPTER 5

VALUATION UNDER THE CUSTOMS ACT, 1962 ................... 5.1 5.24

CHAPTER 6

ADMINISTRATIVE ASPECTS OF CUSTOMS ACT, 1962 .......... 6.1 6.2

CHAPTER 7

IMPORTATION, EXPORTATION AND TRANSPORTATION

OF GOODS ............................................................................ 7.1 7.12

CHAPTER 8

WAREHOUSING ..................................................................... 8.1 8.11

CHAPTER 9

DEMAND AND APPEALS ....................................................... 9.1 9.10

CHAPTER 10 REFUND ............................................................................... 10.1 10.6

CHAPTER 11 DUTY DRAWBACK .............................................................. 11.1 11.8
CHAPTER 12 PROVISIONS RELATING TO ILLEGAL IMPORT, ILLEGAL EXPORT,
CONFISCATION, PENALTY & ALLIED PROVISIONS ........... 12.1 -12.14
CHAPTER 13 SETTLEMENT COMMISSION ............................................... 13.1 13.3
CHAPTER 14 ADVANCE RULING .............................................................. 14.1 14.3
CHAPTER 15 MISCELLANEOUS PROVISIONS .......................................... 15.1 15.4
CHAPTER 16 FOREIGN TRADE POLICY ................................................. 16.1 16.12

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The Institute of Chartered Accountants of India