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CA Final · Indirect Tax Laws · Types of Duty

Meridian Traders Pvt Ltd of Pune imports a set of articles in a single consignment. Under section 19 of the Customs Act, 1962, one article is liable to duty with reference to quantity. Two other articles are liable to duty with reference to value, at 10% and 15% respectively. The importer has produced no separate value evidence for any article. How is duty determined on the articles liable with reference to value?

Both value-based articles are charged at 15%, the highest rate. Section 19(b) requires the highest rate where articles in a set carry different value-based rates. Separate rates would apply only if the importer produced evidence of each article's value, which has not happened here.

  1. ABoth are charged at 10%, the lower of the two rates
  2. BBoth are charged at 15%, the highest of the ratesCorrect
  3. CBoth are charged at the simple average rate of 12.5%
  4. DEach is charged at its own rate, 10% and 15%, without any evidence

Explanation

Section 19(b) says articles liable to duty with reference to value at different rates are chargeable at the highest of such rates. The importer has not produced evidence, so the proviso (b) allowing separate rates does not apply. Averaging or taking the lowest rate has no basis in the section.

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