CA Final · Indirect Tax Laws · Types of Duty
Lotus Exports Ltd imports a set of articles liable to duty by value: Article A, value ₹4,00,000, at 10%, and Article B, value ₹6,00,000, at 25%. The importer produces evidence satisfactory to the proper officer of the separate values of A and B. Ignoring any other levy, what is the duty payable under section 19?
Duty is ₹1,90,000. Because the importer produced evidence of separate values, the proviso to section 19 lets each article be charged at its own rate: ₹40,000 on A at 10% plus ₹1,50,000 on B at 25%. Charging the highest rate on everything would wrongly give ₹2,50,000.
- A₹1,90,000Correct
- B₹2,50,000
- C₹1,50,000
- D₹1,00,000
Explanation
Under proviso (b) to section 19, since evidence of value is produced, each article is charged at its own rate. A: 4,00,000 x 10% = 40,000. B: 6,00,000 x 25% = 1,50,000. Total = 1,90,000. Charging the whole at the highest rate gives 10,00,000 x 25% = 2,50,000, which is the wrong option.
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