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

Kiran Metals attempted an export in contravention of the foreign trade policy. The goods are valued at Rs 3,00,000 in the export contract and have a market value of Rs 3,50,000. Which statement follows from section 11 of the FT(D&R) Act, 1992?

The goods are liable to confiscation even though the export was only attempted, and may be released on payment of redemption charges equal to their market value. Here the market value is Rs 3,50,000, not the contract value of Rs 3,00,000.

  1. AThe goods are liable to confiscation, and may be released on payment of redemption charges equal to their market value of Rs 3,50,000Correct
  2. BThe goods are liable to confiscation, and may be released on payment of redemption charges of Rs 3,00,000
  3. CThe goods cannot be confiscated because the export did not take place
  4. DThe goods may be released free of charge on admission of the contravention

Explanation

Section 11(8) makes goods liable to confiscation where contravention is attempted, so completion of the export is not needed. Under section 11(9) release is on payment of redemption charges equivalent to the market value, which is Rs 3,50,000. Using the contract value of Rs 3,00,000 uses the wrong base.

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