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

Kapoor Traders imported an easily identifiable printing machine and paid customs duty of Rs 8,00,000 on 15 June 2024. The machine was used in India for some time and is then entered for export. Under section 74, what governs the rate of drawback?

For used goods, the drawback rate is the one fixed by the Central Government through notification in the Official Gazette, having regard to duration of use, depreciation in value and other relevant circumstances, rather than the general 98% of duty under section 74(1).

  1. A98% of the duty paid, as the machine is identifiable
  2. BThe rate fixed by the Central Government by notification, having regard to duration of use, depreciation in value and other relevant circumstancesCorrect
  3. CThe rate fixed by the proper officer on the date of export
  4. DNil, because used goods are never eligible for drawback

Explanation

Section 74(2) provides that for goods used after importation, the rate of drawback is the rate the Central Government fixes by notification, considering duration of use, depreciation and other circumstances. The 98% rate applies to the general case under sub-section (1). The officer does not fix the rate, and used goods are not excluded.

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