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CA Final · Indirect Tax Laws · Types of Duty

Meridian Ltd's imported goods were provisionally assessed under section 18 of the Customs Act, 1962. On final assessment, a refund of ₹2,00,000 became due, and the final assessment was completed on 10 March. The refund was not paid by 10 June, and was paid on 10 August. Meridian had not passed on the duty incidence to anyone. Which statement is correct?

Interest is payable at the rate fixed under section 27A because the refund was not made within three months of the final assessment. The refund goes to Meridian, not the Fund, since it did not pass on the duty incidence.

  1. AInterest on the unrefunded amount is payable at the rate fixed under section 27A, as the refund was not made within three months of the assessmentCorrect
  2. BNo interest is payable because refunds under section 18 never carry interest
  3. CInterest is payable from 10 March, the date of final assessment
  4. DThe refund is credited to the Fund because the assessment was provisional

Explanation

Section 18(4) provides interest at the rate fixed under section 27A where a refundable amount is not refunded within three months from the date of final assessment. Section 18(5)(a) provides that the refund is paid to the importer, not credited to the Fund, where incidence was not passed on. Interest runs only after the three-month period lapses, not from 10 March.

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