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CMA Final · Indirect Tax Laws and Practice · Export Promotion Schemes under Foreign Trade Policy

Kaveri Traders failed to pay a penalty of Rs 3,00,000 imposed under the FT(D&R) Act, 1992. Which combination of consequences is supported by Section 11?

Unpaid penalty may be recovered by deduction from money owing, or by customs officers detaining and selling goods as if due under the Customs Act, 1962, with land-revenue recovery as a fallback. The Adjudicating Authority may also suspend the IEC until the penalty is paid.

  1. ARecovery only as arrears of land revenue; IEC cannot be affected
  2. BThe Adjudicating Authority may suspend the IEC until the penalty is paid or recovered, and the Director General may have customs officers deduct the amount from money owing to her or detain and sell her goods as if payable under the Customs Act, 1962Correct
  3. CThe IEC is automatically cancelled permanently and the goods are confiscated
  4. DRecovery is possible only after a court decree, with no deduction from money owing

Explanation

Section 11(5) lists deduction from money owing, recovery via customs officers by deduction or detaining and selling goods as if payable under the Customs Act, and then the land revenue route if these fail. Section 11(7) allows suspension of the IEC till payment. Permanent automatic cancellation is not provided.

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