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CA Final · Indirect Tax Laws · Classification of Imported and Export Goods

Kaveri Engineering Ltd paid import duty on a machine on 15 June 2022. The machine is easily identifiable and unused. The company enters it for export on 20 August 2024 and has no extension from the Board. Under section 74 of the Customs Act, 1962, what is the position?

Drawback under section 74(1) is not available. The goods must be entered for export within two years from the date of payment of duty on importation. Here the period expired on 15 June 2024, the entry was made later, and the Board granted no extension for sufficient cause.

  1. ADrawback of 98% is allowed because identification is satisfied
  2. BDrawback under section 74(1) is not available because entry for export is beyond two years from payment of dutyCorrect
  3. CDrawback is allowed at 98% only if the Central Government notifies a rate
  4. DDrawback is allowed because the period of two years runs from the date of export order

Explanation

Section 74(1)(b) requires entry for export within two years from the date of payment of duty. Two years from 15 June 2022 ended on 15 June 2024, and 20 August 2024 is later, with no Board extension. Identification alone is not enough, so the first option is wrong.

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