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CA Final · Indirect Tax Laws · Types of Duty

Meridian Pharma Ltd obtained provisional assessment of an import consignment because a chemical test was needed. It paid Rs 8,00,000 duty provisionally on 12 June and furnished security. The final assessment fixed duty at Rs 9,20,000. Which statement correctly describes the consequence under the Customs Act, 1962?

Meridian must pay the shortfall of Rs 1,20,000 because the amount paid is adjusted against the finally assessed duty. Interest is payable on that sum from the first day of the month in which provisional assessment occurred, namely 1 June, until the date of payment.

  1. AThe importer must pay the deficiency of Rs 1,20,000, with interest from the first day of the month in which duty was provisionally assessed until paymentCorrect
  2. BThe importer need pay nothing as the provisional payment is final
  3. CThe deficiency of Rs 1,20,000 carries interest only from the date of the final order
  4. DThe importer must pay Rs 9,20,000 afresh, with the earlier Rs 8,00,000 refunded later

Explanation

On final assessment, the amount paid is adjusted against the final duty and the shortfall of Rs 9,20,000 - Rs 8,00,000 = Rs 1,20,000 is payable. Interest on the amount payable runs from the first day of the month of provisional assessment, here 1 June, until payment. The option counting interest from the final order date is wrong. Fresh payment is not required as the earlier amount is adjusted.

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