Skip to content

CA Final · Integrated Business Solutions (Multidisciplinary Case Study with Strategic Management) · Indirect Tax Laws

Case: Kaveri Precision Tools Ltd imports raw material under an exemption notification that grants nil duty to goods used in manufacturing export products, subject to a condition. Kaveri fails to meet the condition after clearance and uses the goods for domestic sale. What is the correct customs position?

Duty becomes recoverable because the exemption was conditional and the condition was not fulfilled. Conditional exemptions are available only while their conditions are met, so breach after clearance takes away the benefit and the foregone duty is demanded with interest.

  1. AThe exemption benefit is lost for non-fulfilment of the condition and duty is recoverableCorrect
  2. BExemption continues because it was available at the time of import
  3. COnly a penalty applies, with no duty recovery
  4. DDuty is recoverable only if the goods are re-exported

Explanation

An exemption conditional on end-use or export obligation is available only if the condition is met. On breach, the importer loses the benefit and the duty foregone is recoverable with applicable interest and consequences. Therefore the other options are wrong.

Did you get it right without looking?

One question tells you little. A timed set on Indirect Tax Laws shows your real accuracy, how long you take and where you lose marks.

Practise Indirect Tax LawsFree diagnostic mock

More Indirect Tax Laws questions