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CA Final · Indirect Tax Laws · Types of Duty

Aarav Exports Ltd imported goods under provisional assessment and paid Rs 5,00,000 duty. Final assessment fixed duty at Rs 4,10,000 on 20 August, so Rs 90,000 became refundable. The refund was not paid within three months of the final assessment. Aarav had not passed the duty incidence to any customer. Which statement is correct under the Customs Act, 1962?

Aarav is entitled to the Rs 90,000 refund, and since it was not refunded within three months of final assessment, interest runs on the unrefunded amount at the Central Government's rate. It is paid to Aarav, not credited to the Fund, because the incidence was not passed on.

  1. AThe Rs 90,000 is refundable with interest on the unrefunded amount, at the rate fixed by the Central Government, after the three-month period, and is paid to Aarav rather than credited to the Fund because incidence was not passed onCorrect
  2. BThe refund is credited to the Consumer Welfare Fund regardless of incidence
  3. CNo interest is payable on delayed refunds in provisional assessments
  4. DThe refund lapses if not paid within three months

Explanation

On final assessment the excess is refundable. If it is not refunded within three months of the final assessment, interest is payable on the unrefunded amount at the Central Government rate until refund. Because the importer did not pass on incidence, the refund is paid to him instead of being credited to the Fund. The Fund option is wrong since the incidence-not-passed condition is met.

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