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

Imported materials are used under Section 65 to manufacture goods in a warehouse. The duty rate on the materials is 20% and on the manufactured goods it is 12%. Under Section 66, the Central Government may exempt the materials from:

The Central Government may, by notification, exempt the materials from the whole or part of the excess duty rate, here 8 percentage points, if satisfied that it is necessary in the interests of establishing or developing a domestic industry. Section 66 does not extend to the base 12%.

  1. AThe whole or part of the excess rate of 8%, by notification, if satisfied it is necessary in the interests of establishing or developing a domestic industryCorrect
  2. BThe entire 20% duty, by order of the Assistant Commissioner
  3. COnly the 12% duty, by notification
  4. DThe excess duty, at the discretion of the warehouse keeper

Explanation

Section 66 applies where the rate on the materials exceeds the rate on the goods (20% - 12% = 8%). The Central Government may by notification exempt the whole or part of this excess if satisfied it is necessary for a domestic industry's establishment or development.

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