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CA Final · Indirect Tax Laws · Foreign Trade Policy

Kaveri Impex imported goods worth ₹4,00,000 in contravention of the Foreign Trade Policy. The Adjudicating Authority proceeds under Section 11(2) of the FT(D&R) Act, 1992. What is the range of penalty that can be imposed?

Section 11(2) provides a penalty of at least ₹10,000 and up to five times the value of the goods involved, whichever is more. For goods valued at ₹4,00,000, the upper limit is ₹20,00,000.

  1. ANot less than ₹10,000 and not more than ₹4,00,000
  2. BNot less than ₹10,000 and not more than five times the value of goods i.e. ₹20,00,000, whichever is moreCorrect
  3. CNot less than ₹4,00,000 and not more than ₹20,00,000
  4. DNot less than ₹10,000 and not more than ten times the value of goods

Explanation

Section 11(2) prescribes a penalty of not less than ten thousand rupees and not more than five times the value of the goods, whichever is more. Five times ₹4,00,000 is ₹20,00,000. The first option caps at 1 times value and the last at 10 times, both wrong.

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