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CMA Final · Indirect Tax Laws and Practice · Manufacture in Bond

Imported material used in manufacture in a warehouse under section 65 attracts a higher rate of duty than the finished goods. Which statement correctly reflects section 66?

The Central Government may, by notification, exempt the imported materials from the whole or part of the excess rate of duty. Section 66 allows this only if it is satisfied that the exemption is necessary for the establishment or development of a domestic industry.

  1. AThe Central Government may by notification exempt the imported materials from the whole or part of the excess rate of duty, if satisfied it is necessary in the interests of establishing or developing a domestic industryCorrect
  2. BThe proper officer may exempt the materials from the excess duty on the importer's request
  3. CThe Central Government must exempt the whole excess duty in every such case
  4. DThe Central Government may exempt the finished goods from duty entirely to benefit exporters

Explanation

Section 66 applies when the rate on imported materials exceeds the rate on the goods manufactured. The Central Government, if satisfied that it is necessary for establishing or developing a domestic industry, may exempt by notification the materials from the whole or part of the excess. It is discretionary, not mandatory, and is not exercised by the proper officer.

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