- 04/25/2019 at 1:58 pm #617016EduGorillaKeymasterSelect Question Language :
Directions: The question consists of two statements, one labelled as Principle(s) and the other as Facts. You are to examine the principle(s) and apply it/them to the given facts carefully and select the best option.
1. Manufacture implies a change but every change is not manufacture, yet every change of an article is the result of treatment, labour and manipulation.
2. Manufacturer is liable to pay excise duty on the manufactured product. If he fails to do so, then penalty can be levied against him or judicial proceeding can be initiated.
Facts: M/s Rama and Co. is a manufacturer of electronic transformers, semi-conductor devices and other electrical and electronics equipment. With a view to saving foreign exchange during the manufacturing process, the company also manufactured machinery in the nature of testing equipment to test the final products of the company, costing Rs. 31,27,405. They did not pay the excise duty on testing equipment. A show cause notice was issued to the appellant, directing them to show cause as to why central excise duty should not be levied on it along with interest and penalty.
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- The company is liable to pay excise duty because such equipment was saleable and marketable. Hence, the excise duty was payable on such testing equipment.
- The company is not liable to pay since the testing equipment was developed in the factory to avoid importing of such equipment with a view to save foreign exchange.
- A company is not liable to pay because testing equipment does not amount to the manufacturing of a new product.
- The company is not liable to pay excise duty because the company already spends a lot on the manufacturing of testing equipment.
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