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

Ganga Spices Pvt Ltd entered goods for export, and the proper officer found they were not prohibited goods. The Central Government has notified a class of exporters, including Ganga, as permitted deferred payment of export duty. Ganga did not pay the export duty by the due date specified in rules. Which statement is correct under section 51 of the Customs Act, 1962?

Ganga must pay interest on the unpaid or short-paid export duty until payment, at a rate fixed by the Central Government by notification, not below five per cent and not exceeding thirty-six per cent per annum. Deferral permission does not excuse default after the due date.

  1. AGanga must pay interest on the unpaid duty at a rate fixed by notification, not below 5% and not exceeding 36% per annum, till paymentCorrect
  2. BGanga must pay a fixed interest of 18% per annum
  3. CThe clearance order stands cancelled automatically and goods are confiscated
  4. DNo interest is payable because deferred payment was permitted

Explanation

Section 51(2) applies where the exporter fails to pay export duty under the deferred payment proviso by the due date. Interest runs on the unpaid or short-paid duty till payment at a rate fixed by notification, between 5% and 36% per annum. A fixed 18% is not stated, and permission for deferral does not waive interest after the due date.

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