CMA Final · Indirect Tax Laws and Practice · Duty Drawback
Kapoor Industries imported a generator, used it for some time in India, and now wishes to re-export it claiming drawback. Which statement follows from Section 74?
For goods used after importation, the drawback rate is whatever the Central Government fixes by notification in the Official Gazette, having regard to duration of use, depreciation in value and other relevant circumstances. The flat ninety-eight per cent rule applies to unused goods, and used goods are not barred.
- ADrawback is 98 per cent of duty paid, as for unused goods
- BDrawback is not allowed for any used goods
- CThe rate is fixed by the Central Government by notification, having regard to duration of use, depreciation in value and other relevant circumstancesCorrect
- DThe rate is fixed by the proper officer at the port of export
Explanation
Section 74(2) says that notwithstanding sub-section (1), for goods used after importation the rate of drawback is such as the Central Government fixes by notification, considering duration of use, depreciation and other circumstances. It is neither the flat 98% nor a bar nor an officer's discretion.
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