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CA Final · Indirect Tax Laws · Importation and Exportation of Goods

Rohan Textiles Pvt Ltd of Surat imported a machine, paid customs duty of Rs 5,00,000 on importation, and the machine is easily identifiable. The machine was not used in India. Within 14 months of paying the duty it is entered for export and the proper officer permits clearance and loading for exportation. The goods are identified to the satisfaction of the officer as those which were imported. How much drawback is repayable under the main rule on re-export of duty-paid goods?

Drawback is Rs 4,90,000. For identifiable, unused duty-paid imported goods entered for export within two years of payment of duty, ninety-eight per cent of the duty paid is repaid, and 98% of Rs 5,00,000 equals Rs 4,90,000.

  1. ARs 4,90,000Correct
  2. BRs 5,00,000
  3. CRs 4,75,000
  4. DRs 2,50,000

Explanation

Under section 74(1), 98% of the duty paid on importation is repaid as drawback when the goods are identified and entered for export within two years of payment of duty. 98% of Rs 5,00,000 = Rs 4,90,000. Rs 5,00,000 ignores the 98% limit.

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