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CA Final · Indirect Tax Laws · Types of Duty

Kaveri Engineering imports a machine set comprising Machine M (ad valorem duty 15%) and Tool Kit T (ad valorem duty 5%), all in one consignment. The invoice shows separate values: M ₹8,00,000 and T ₹2,00,000, and the importer produces this evidence to the proper officer's satisfaction. Ignoring any other levy, what is the customs duty payable on the consignment under section 19?

The duty is ₹1,30,000. Because the importer produced evidence of each article's value, the proviso to section 19 lets each be charged at its own rate: 15% on ₹8,00,000 gives ₹1,20,000 and 5% on ₹2,00,000 gives ₹10,000.

  1. A₹1,30,000Correct
  2. B₹1,50,000
  3. C₹1,00,000
  4. D₹1,20,000

Explanation

By the proviso (b) to section 19, where the importer produces evidence of the value of articles liable to different rates, each is charged separately at its own rate. M: 15% of 8,00,000 = 1,20,000; T: 5% of 2,00,000 = 10,000; total 1,30,000. The ₹1,50,000 option wrongly applies the highest rate of 15% to the entire value.

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