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CA Final · Indirect Tax Laws · Levy of and Exemptions from Customs Duty

Himalaya Foods Ltd was penalised under section 114A for collusion-based short levy on imported ingredients. The department also proposes to levy a separate penalty on the same duty under section 112. Which position follows from the text of section 114A?

No penalty under section 112 or section 114 can be levied once a penalty has been levied under section 114A. The last proviso of section 114A expressly bars the other penalties, so the department cannot impose a cumulative penalty on the same short levy.

  1. ABoth penalties may be levied together, as they are cumulative
  2. BOnly the penalty under section 112 is allowed, as it is the general provision
  3. CNo penalty under section 112 or section 114 can be levied where a penalty has been levied under section 114ACorrect
  4. DThe section 112 penalty may be levied but is capped at 25% of the duty

Explanation

The last proviso to section 114A states that where any penalty has been levied under this section, no penalty shall be levied under section 112 or section 114. Hence a double penalty on the same short levy is barred. Cumulative penalty is wrong because the proviso expressly excludes it.

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