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CA Final · Indirect Tax Laws · Types of Duty

Meera Exports imported machinery and the proper officer directed provisional assessment under section 18. Rs 4,00,000 duty was paid on 12 June on provisional basis. Final assessment on 20 September fixed duty at Rs 4,60,000. Which statement follows from section 18?

The importer pays the Rs 60,000 shortfall with interest running from 1 June, the first day of the month of provisional assessment, until payment. Section 18(2)(a) requires payment of the deficiency, and section 18(3) fixes the interest start date.

  1. AThe importer must pay the Rs 60,000 deficiency, with interest from the first day of the month of provisional assessment (1 June) until paymentCorrect
  2. BNo interest arises because the assessment was provisional
  3. CInterest runs only from the date of the final assessment order
  4. DThe deficiency is adjusted against future imports without payment

Explanation

Section 18(2)(a) requires the importer to pay the deficiency. Section 18(3) charges interest on the amount payable from the first day of the month in which duty was provisionally assessed till payment. So the interest period starts 1 June, not the order date.

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