Skip to content

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

Bharat Gems Ltd imported a used generator on 5 April 2025, paying duty of Rs 4,00,000, used it for some months and now wishes to re-export it. How is the rate of drawback determined under section 74?

For goods used after importation, drawback is at the rate the Central Government fixes by notification, considering duration of use, depreciation in value and other relevant circumstances. The flat 98% rate in section 74(1) does not apply, and used goods are not excluded.

  1. AFixed at 98% of duty because the goods are identifiable
  2. BFixed at 50% of duty by the proper officer at the time of export
  3. CNil, as used goods are not eligible for drawback
  4. DSuch rate as the Central Government fixes by notification, having regard to duration of use, depreciation in value and other relevant circumstancesCorrect

Explanation

Section 74(2) overrides sub-section (1) for goods used after importation: the rate is what the Central Government fixes by notification considering duration of use, depreciation and other circumstances. The 98% rate applies to unused goods under sub-section (1). Used goods are not barred.

Did you get it right without looking?

One question tells you little. A timed set on Importation and Exportation of Goods shows your real accuracy, how long you take and where you lose marks.

Practise Importation and Exportation of GoodsFree diagnostic mock

More Importation and Exportation of Goods questions