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CA Final · Indirect Tax Laws · Types of Duty

Delta Traders Pvt Ltd imports a set consisting of Article P (liable to duty ad valorem at 10%), Article Q (liable ad valorem at 20%) and Article R (not liable to duty). The importer has not produced any evidence of the separate value of the articles, and nothing else in law overrides the rule on sets. At what rate will Article R be chargeable to customs duty under the Customs Act, 1962?

Article R is chargeable at 20%. Where a set contains articles liable by value at different rates, the highest rate applies, and an article not otherwise liable to duty is charged at that same rate under section 19, unless the importer produces separate value evidence.

  1. ANil, because it is not liable to duty
  2. B10%, the lowest rate applicable to articles in the set
  3. C20%, the highest rate among articles liable with reference to valueCorrect
  4. D15%, the average of the rates of P and Q

Explanation

Under section 19, articles liable to duty by value at different rates are charged at the highest of those rates (20%). Articles not liable to duty are charged at the rate applicable to value-based articles under clause (b), so R bears 20%. The nil option ignores clause (c); the lowest and average rates are not recognised by the section.

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