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CMA Final · Indirect Tax Laws and Practice · Remission of Duties

A Gujarat exporter obtained a duty credit scrip by wilful mis-statement. The scrip was utilised by Shree Imports, another person, to pay duty of Rs 8,00,000 on an import. Under section 28AAA, from whom is the duty recoverable, and what is the position on interest?

The duty is recovered from the person to whom the instrument was issued, here the exporter, not the utiliser. Interest at the rate fixed under section 28AA is payable from the date the instrument was utilised until the date of recovery.

  1. AFrom Shree Imports only, with no interest
  2. BFrom the exporter, to whom the instrument was issued, with interest from the date of utilisation of the instrument till recoveryCorrect
  3. CFrom the exporter, with interest from the date the instrument was issued
  4. DFrom both the exporter and Shree Imports for the same amount, with no interest

Explanation

Section 28AAA(1) treats the duty relatable to utilisation as never exempted or debited, and recovers it from the person to whom the instrument was issued. Under sub-section (2), interest runs from the date of utilisation till recovery. Interest from the date of issue is wrong because the period starts on utilisation.

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