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

Meera Exports imported a duty-paid machine, used it for some months in India, and now proposes to re-export it. Under section 74 of the Customs Act, 1962, how is the rate of drawback determined for such used goods?

The rate is fixed by the Central Government by notification in the Official Gazette. Section 74(2) directs that, for goods used after importation, it considers the duration of use, depreciation in value and other relevant circumstances, instead of the flat ninety-eight per cent.

  1. ANinety-eight per cent of duty paid, as for unused goods
  2. BFixed by the Central Government by notification, having regard to duration of use, depreciation in value and other relevant circumstancesCorrect
  3. CFixed by the proper officer at the port of export on the basis of the invoice
  4. DNo drawback is allowed on used goods under any circumstances

Explanation

Section 74(2) says that for goods used after importation, the rate of drawback is such as the Central Government fixes by notification, considering duration of use, depreciation and other circumstances. The 98% rate applies under sub-section (1) and is overridden by sub-section (2) for used goods. Drawback is not barred outright.

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