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CA Final · Indirect Tax Laws · Classification of Imported and Export Goods

Patel Chemicals imported a bulk liquid in three separate consignments, stored together in a common tank. It wishes to re-export part of the stock and claim drawback under section 74. Which statement is correct under the section?

The Central Government may make rules on how identity is established for goods imported in different consignments and ordinarily stored together in bulk. Section 74(3)(a) therefore does not automatically deny drawback for bulk stock; identification must satisfy the prescribed manner and the officer.

  1. ADrawback is automatically denied because bulk goods cannot be identified
  2. BThe proper officer alone decides the manner of identity without any rules
  3. CThe Central Government may make rules providing the manner of establishing identity of goods imported in different consignments ordinarily stored together in bulkCorrect
  4. DThe Board must fix a drawback rate at 50% for bulk goods

Explanation

Section 74(3)(a) empowers the Central Government to make rules providing the manner in which identity of goods imported in different consignments ordinarily stored together in bulk may be established. So bulk storage does not automatically bar the claim, and the rules govern identification. Automatic denial is therefore wrong.

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