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

Arvind Ltd paid customs duty on an imported precision instrument on 15 June 2023. The instrument is easily identifiable and unused. Arvind enters it for export on 20 August 2025 and has no Board extension. Which conclusion follows from section 74?

Drawback under section 74(1) is not available. The goods must be entered for export within two years from the date of payment of duty, which expired in June 2025, and no extension was granted by the Board on sufficient cause. Identity alone does not satisfy the conditions.

  1. ADrawback is available because the two-year limit runs from the date of the bill of entry, not from payment of duty
  2. BDrawback under section 74(1) is not available because the goods were not entered for export within two years from the date of payment of dutyCorrect
  3. CDrawback is available at 98% because identity is established, and the time limit applies only to used goods
  4. DDrawback is available only at the rate notified by the Central Government

Explanation

Section 74(1)(b) requires entry for export within two years from the date of payment of duty. Two years from 15 June 2023 ended on 14 June 2025, and 20 August 2025 is later. The Board may extend the period on sufficient cause, but no extension exists here. The option ignoring the time limit is wrong.

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