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

Ishaan Exports Ltd has deferred-payment permission from the Central Government for export duty under the second proviso to section 51(1). It fails to pay part of the export duty by the due date specified by rules. Which statement is correct under section 51?

Interest is payable on the unpaid or short-paid export duty until the date of payment, at a rate fixed by the Central Government by notification, not below five per cent and not above thirty-six per cent per annum, as section 51(2) provides.

  1. ANo interest is payable because deferred payment is a permitted facility
  2. BThe clearance order already made is automatically treated as cancelled and goods are deemed prohibited
  3. CInterest is payable on the unpaid or short-paid duty until the date of payment, at a rate not below five per cent and not exceeding thirty-six per cent per annum as fixed by the Central Government by notificationCorrect
  4. DInterest is payable at a fixed rate of twelve per cent per annum prescribed in the section itself

Explanation

Section 51(2) requires interest on duty not paid or short-paid by the due date, until payment, at a rate fixed by notification between five and thirty-six per cent per annum. The section prescribes no single fixed rate, so twelve per cent is wrong. Deferred payment does not excuse default after the due date.

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