CMA Final · Indirect Tax Laws and Practice

Remission of Duties under the Customs Act for CMA Final

Remission of duties means relief from customs duty on imported goods that are lost, destroyed, damaged, abandoned or wrongly charged. To solve questions, identify the stage of the goods (before or after clearance), check the condition in the section, then apply the rule or the proportionate-duty formula.

What this chapter covers

This chapter covers the relief the Customs Act, 1962 gives an importer when things go wrong with imported goods. Goods may be lost or destroyed before clearance, damaged on the way, or defective after clearance. The importer may also choose to give up the goods. Each situation has its own section and its own conditions.

The chapter also covers the other side: Section 28AAA, which lets the department recover duty when an instrument such as a licence or scrip was obtained by collusion, wilful mis-statement or suppression of facts. Section 28A, which allows the Central Government to stop recovery of duty not levied or short-levied because of a general practice, belongs here too.

It links to valuation, assessment, clearance and refunds in the rest of Paper 19. You need the value of goods and the duty chargeable before you can apply the proportion in Section 22. You need the time limits and refund ideas from Section 27 to follow Sections 26A and 28A. Questions often mix these, so study this chapter alongside those.

This chapter suits both Section A and the written questions. The rules are short, and each has clear conditions, so MCQs test the exact trigger: before clearance, not due to pilferage, within thirty days, offence not suspected. Written questions ask for a small calculation of reduced duty and a clear conclusion. If you know the conditions precisely, you can score full marks on a compact chapter with little ambiguity.

Remission of Duties: topics in the order to study them

1Remission of Duty on Goods Lost, Destroyed or DamagedIt is the core of the chapter. Sections 23 and 22 set the basic ideas of before clearance, and the proportion formula for damaged goods.
2Abandonment of Goods and Relinquishment of TitleIt builds on Section 23(2), and then adds Section 26A, where goods can also be exported or destroyed for a refund.
3Recovery of Duties in Certain Cases (Section 28AAA)It is a different type of rule, about recovering duty on misused instruments. Learn it after the relief provisions so you can contrast relief with recovery.
4Procedure, Conditions and Case Law on RemissionIt pulls together time limits, officers, applications and Section 28A. Do it last, once you know each rule it applies to.

How to prepare Remission of Duties

Treat this as a chapter of conditions. Marks come from stating the trigger, the officer, the time limit and the result correctly.

Make a one-page table with one row per section (22, 23, 26A, 28A, 28AAA). Add columns for trigger, who decides, time limit and result.
For Section 23, memorise two parts: remission for goods lost (not by pilferage) or destroyed before clearance, and relinquishment of title before an order under section 47 or 60. Note that relinquishment is not allowed where an offence appears to have been committed.
For Section 22, learn the conditions first. The officer must be satisfied that the goods were damaged or deteriorated before or during unloading. Or, after unloading, the goods must have been damaged before examination under section 17 (non-warehoused goods) or before clearance for home consumption (warehoused goods), by an accident not due to wilful act, negligence or default of the importer or owner, his employee or agent. Then practise the formula: duty on damaged goods = duty before damage × (value of damaged goods ÷ value before damage). Do five numerical problems, including one where the owner chooses auction to fix the value.
For Section 26A, list the conditions: defective or non-conforming goods, easily identified and identified to the officer's satisfaction, not worked or used (except to discover defects), no drawback claimed, and then exported, abandoned to customs (title relinquished), or destroyed or made commercially valueless in the presence of the proper officer. This must happen within thirty days from the order for clearance for home consumption under section 47. The Principal Commissioner or Commissioner of Customs may extend this by up to three months on sufficient cause shown. The refund goes to the person who paid the duty or on whose behalf it was paid. Note the six-month refund application from the relevant date and the exclusions for perishable goods.
For Section 28AAA, learn the sequence: instrument obtained by collusion, wilful mis-statement or suppression; utilised by another person; duty recovered from the person to whom it was issued; show cause notice with thirty days to respond; interest from the date of utilisation.
Finish with mixed MCQs and one written case that asks which section applies. Give your answer as: section, condition met or not, result.

Common mistakes in Remission of Duties

Allowing remission for goods lost by pilferage under Section 23.
Fix: Write 'lost (otherwise than as a result of pilferage) or destroyed, before clearance' as one phrase and recall it whenever you see Section 23.
Applying the Section 22 proportion in reverse or on the wrong value.
Fix: Compute: duty before damage × (damaged value ÷ original value). The result is the duty payable, not the abatement.
Treating relinquishment as available at any time.
Fix: Check the stage first. If clearance or warehousing has been ordered, Section 23(2) is closed; consider Section 26A instead.
Mixing up Section 23 relief with the Section 26A refund.
Fix: Remember that Section 23 applies before clearance, with no refund. Section 26A applies after duty is paid on clearance, with a refund for defective goods.
Recovering duty under Section 28AAA from the user of the instrument.
Fix: The Act says recovery is from the person to whom the instrument was issued. Action against the importer under section 28 is separate.
Forgetting time limits such as thirty days and six months.
Fix: Keep them in your revision table: 30 days to export, abandon or destroy under 26A, 6 months for the refund application, 30 days to respond to a 28AAA notice.

Last-day revision: Remission of Duties

Section 23(1): duty is remitted on imported goods lost (not by pilferage) or destroyed before clearance for home consumption.
Section 23(2): the owner may relinquish title before an order under section 47 or 60, and then owes no duty.
Relinquishment is not allowed for goods where an offence appears to have been committed.
Section 22: if the officer is satisfied the conditions are met, damaged or deteriorated goods are charged duty in the proportion of damaged value to value before damage.
Section 22 value can be set by the proper officer or by sale at public auction or tender, at the owner's option.
Section 22 covers damage or deterioration before or during unloading. It also covers damage after unloading but before examination under section 17 (before clearance for warehoused goods), through an accident not due to wilful act, negligence or default of the importer or owner, his employee or agent.
Section 26A refund needs defective or non-conforming goods, identification, no drawback claim, and export, abandonment of title, or destruction in the presence of the proper officer within thirty days.
Section 26A: the thirty days run from the section 47 order for clearance for home consumption. The Principal Commissioner or Commissioner may extend them by up to three months on sufficient cause shown. The refund application is due within six months of the relevant date.
No Section 26A refund for perishable goods or goods past their shelf life.
Section 28A: the Central Government may, by notification, stop recovery of duty not levied or short-levied due to a general practice.
Section 28AAA: duty on a fraudulently obtained instrument is recovered from the person to whom it was issued, with interest from the date of utilisation.
Section 28AAA: no recovery order if an order determining the duty has already been passed under section 28.

Remission of Duties practice questions

Remission of Duties: frequently asked questions

Is Remission of Duties a big chapter in CMA Final Paper 19?

It is compact, with a few sections that have precise conditions. That makes it easy to revise well. Expect MCQs on conditions and a short calculation or case application.

How do I calculate duty on damaged imported goods?

Use Section 22(2). Duty payable = duty chargeable before damage × (value of damaged goods ÷ value before damage). The value of the damaged goods is fixed by the proper officer, or by auction or tender sale, at the owner's option.

What is the difference between Section 23 and Section 26A?

Section 23 deals with goods before clearance for home consumption: loss or destruction gives remission, and the owner can relinquish title. Section 26A refunds duty already paid on cleared goods that are defective or non-conforming, if they are exported, abandoned or destroyed in time.

When can duty be recovered under Section 28AAA?

When an instrument was obtained by collusion, wilful mis-statement or suppression of facts and another person uses it. The duty is deemed never to have been exempted and is recovered from the person to whom it was issued, with interest, after a show cause notice.