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CA Final · Indirect Tax Laws · Types of Duty

Meridian Traders Pvt Ltd of Pune imports a set consisting of three articles: Article P liable to duty on value at 10%, Article Q liable to duty on value at 20%, and Article R not liable to any duty. The importer has produced no evidence of the separate value of any article, and no other law provides otherwise. At what rate will duty be charged on Article R under section 19 of the Customs Act, 1962?

Article R is charged at 20%. Under section 19, an article not liable to duty in a set is charged at the rate applying to value-based articles, and where those have different rates the highest applies. With no separate valuation evidence, 20% prevails.

  1. ANil, because Article R is not liable to duty
  2. B10%, being the lowest rate among the articles liable on value
  3. C15%, being the average of the two rates
  4. D20%, being the highest rate among the articles liable on valueCorrect

Explanation

Under section 19, articles not liable to duty are charged at the rate applicable under clause (b) to articles liable with reference to value. Where those articles carry different rates, the highest rate applies. Here the highest is 20%, so Article R is charged at 20%. Nil would be right only if the proviso on separate evidence of value applied.

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