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CA Final · Indirect Tax Laws · Types of Duty

Arjun Imports Ltd had its consignment assessed provisionally on 12 June on furnishing security, paying duty of ₹4,00,000. On finalisation, the duty was fixed at ₹4,60,000. Which statement correctly reflects the Customs Act, 1962?

The importer must pay the ₹60,000 deficiency, with interest from the first day of the month in which duty was provisionally assessed, here 1 June, until payment. Section 18 adjusts the amount paid against the finally assessed duty and charges interest from that month's start.

  1. AThe importer must pay the deficiency of ₹60,000 and interest is payable from the first day of the month in which duty was provisionally assessed till the date of paymentCorrect
  2. BThe importer must pay ₹60,000 and interest runs from the date of the final assessment order
  3. CThe importer need pay nothing further as the security covers the deficiency automatically without payment
  4. DThe importer must pay ₹60,000 and interest runs from the date of the bill of entry of the next month

Explanation

Section 18(2)(a) requires the deficiency between the amount paid and the final duty to be paid. Section 18(3) charges interest from the first day of the month in which duty was provisionally assessed (1 June) till payment. Interest from the final order date is therefore wrong.

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