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

Kaveri Engineering Ltd imported a consignment of components and paid duty on 10 March 2024. It entered the identifiable goods for export on 20 May 2026 without having obtained any extension. The goods are otherwise unused and identified. Which statement is correct about drawback on re-export?

Drawback is not available under the 98% rule because the goods were entered for export more than two years after payment of duty. The Board may extend the period on sufficient cause, but no extension was obtained, so the time condition is unmet.

  1. ADrawback under the 98% rule is not available because entry for export is beyond two years from payment of duty, unless the Board extends the period on sufficient causeCorrect
  2. BDrawback of 98% is available because identification is the only condition
  3. CDrawback is available at 50% of duty for any delay up to five years
  4. DDrawback is available only if the Commissioner of Appeals permits it

Explanation

Section 74(1)(b) requires goods to be entered for export within two years from payment of duty. Here it is about 2 years 2 months. The proviso lets the Board extend the period on sufficient cause. Identification alone is not enough.

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