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CA Final · Indirect Tax Laws · Importation and Exportation of Goods

Anand Electronics imported duty-paid equipment on 1 June 2023, paying duty of Rs 8,00,000. It used the equipment for some months and now wishes to re-export it. Which statement correctly states how the drawback rate is determined under section 74 of the Customs Act, 1962?

For goods used after importation, the drawback rate is fixed by the Central Government by notification in the Official Gazette, having regard to duration of use, depreciation in value and other relevant circumstances, rather than the flat 98 per cent applicable to unused goods.

  1. AThe rate is 98% of duty, as for unused goods
  2. BThe rate is fixed by the Central Government by notification, having regard to duration of use, depreciation in value and other relevant circumstancesCorrect
  3. CNo drawback is allowed for used goods
  4. DThe rate is fixed by the proper officer on inspection of the goods at the port

Explanation

Section 74(2) overrides the 98% rule for goods used after importation. The Central Government fixes the rate by notification considering duration of use, depreciation and other circumstances. It is not denied altogether, nor set by the proper officer.

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