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

Kaveri Traders imported an easily identifiable generator and paid customs duty on 10 March 2023. It used the generator in its factory for some months and now proposes to export it. Which statement correctly describes how the drawback is determined under section 74?

For used goods, drawback is at the rate the Central Government fixes by notification, considering duration of use, depreciation in value and other relevant circumstances. Section 74(2) overrides the general ninety-eight per cent rule, and used goods are not excluded from drawback.

  1. ANinety-eight per cent of the duty paid is repaid regardless of use
  2. BDrawback is not available at all because the goods have been used
  3. CDrawback is at the rate fixed by the Central Government by notification, having regard to duration of use, depreciation in value and other relevant circumstancesCorrect
  4. DDrawback equals the depreciated book value of the generator as certified by the importer

Explanation

Section 74(2) says that for goods used after importation, the drawback rate is what the Central Government fixes by notification, considering duration of use, depreciation and other circumstances. The 98% rule in 74(1) is stated to be subject to this. Denying drawback entirely is wrong since used goods are expressly covered.

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