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CMA Final · Indirect Tax Laws and Practice · Remission of Duties

Imported machinery worth Rs 40 lakh was destroyed in a fire at the port warehouse before an order for clearance for home consumption was made. Under the Customs Act, 1962, what is the position regarding the duty on the destroyed goods?

The duty is remitted. Under section 23(1), when imported goods are destroyed before clearance for home consumption and the Assistant or Deputy Commissioner is satisfied, the officer shall remit the duty. No government notification is needed, and loss by pilferage is the case excluded.

  1. AThe Deputy Commissioner or Assistant Commissioner of Customs shall remit the duty if satisfied that the goods were destroyed before clearance for home consumptionCorrect
  2. BDuty must be paid in full because the goods had already been imported into India
  3. CDuty is remitted only if the Central Government issues a notification for the importer
  4. DDuty is remitted only if the goods were lost by pilferage and not by fire

Explanation

Section 23(1) provides that where goods are lost (otherwise than by pilferage) or destroyed before clearance for home consumption, and this is shown to the satisfaction of the Assistant or Deputy Commissioner, the duty shall be remitted. No Central Government notification is required. Pilferage is specifically excluded from remission, so the last option is wrong.

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