CMA Final · Indirect Tax Laws and Practice · Duty Drawback
Mehra Enterprises imported a printing machine, paid duty, used it in India for some time, and then re-exported it. Which statement correctly describes how the drawback rate is determined under section 74?
For goods used after importation, section 74(2) lets the Central Government fix the drawback rate by notification in the Official Gazette, considering the duration of use, depreciation in value and other relevant circumstances. The flat ninety-eight per cent rule does not apply to such used goods.
- ANinety-eight per cent of the duty paid is always repaid, irrespective of use
- BThe rate is fixed by the Central Government by notification, having regard to duration of use, depreciation in value and other relevant circumstancesCorrect
- CThe rate is decided by the Deputy Commissioner on the basis of the invoice value of the machine
- DNo drawback is allowed once the goods have been used after importation
Explanation
Section 74(2) overrides the 98% rule for goods used after importation. The rate is such as the Central Government may fix by notification, considering duration of use, depreciation and other circumstances. Drawback is therefore not denied, and the 98% rule does not apply automatically.
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