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CA Final · Indirect Tax Laws · Foreign Trade Policy

Meghdoot Traders imported goods in a manner contravening the Foreign Trade Policy. The goods are valued at Rs 8,00,000. Under Section 11(2) of the FT(D&R) Act, 1992, what is the maximum monetary floor-and-ceiling logic for the penalty?

Section 11(2) imposes a penalty of not less than ten thousand rupees and not more than five times the value of the goods, whichever is more. For goods worth Rs 8,00,000 the upper limit is Rs 40,00,000; it is a range, not a fixed sum.

  1. ANot less than Rs 10,000 and not more than five times the value of goods, whichever is more, i.e. up to Rs 40,00,000 hereCorrect
  2. BFixed penalty of Rs 10,000 only
  3. CNot less than Rs 10,000 and not more than twice the value of goods, i.e. Rs 16,00,000
  4. DExactly five times the value of goods, i.e. Rs 40,00,000

Explanation

Section 11(2) provides a penalty of not less than Rs 10,000 and not more than five times the value of the goods, whichever is more. Five times Rs 8,00,000 is Rs 40,00,000, so the ceiling is Rs 40,00,000. The penalty is a range, not a fixed amount.

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