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CA Final · Indirect Tax Laws · Types of Duty

Lotus Exports Pvt Ltd imports a set containing Article X (value ₹6,00,000, duty 20%) and Article Y (value ₹4,00,000, duty 10%). Both are liable with reference to value. The importer produces satisfactory evidence of the value of each article to the proper officer. Ignoring any other levy, what is the customs duty payable?

Duty payable is ₹1,60,000. Because the importer produced satisfactory value evidence, proviso (b) to section 19 lets each article be charged at its own rate: 20% on ₹6,00,000 gives ₹1,20,000 and 10% on ₹4,00,000 gives ₹40,000. The highest-rate rule does not apply.

  1. A₹1,60,000, applying 20% to the full ₹10,00,000 at the highest rate
  2. B₹1,00,000, applying 10% to ₹10,00,000
  3. C₹1,60,000, being ₹1,20,000 on X and ₹40,000 on YCorrect
  4. D₹1,20,000, being duty on X only

Explanation

Under proviso (b) to section 19, with satisfactory value evidence each article is chargeable separately at its own rate. X: 20% of 6,00,000 = 1,20,000. Y: 10% of 4,00,000 = 40,000. Total 1,60,000. Applying 20% to the whole would give 2,00,000, which is the wrong highest-rate method.

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