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CA Final · Indirect Tax Laws · Types of Duty

Sharma Traders imports a set consisting of Article P (liable to duty on value at 10%), Article Q (liable to duty on value at 20%) and Article R (not liable to duty). The importer produces no evidence of the separate values of the articles. Under section 19 of the Customs Act, 1962, at what rate is Article R chargeable?

Article R is chargeable at 20%. Section 19(c) charges articles not liable to duty at the rate fixed under clause (b), and clause (b) takes the highest rate among ad valorem articles at different rates. No evidence of separate values was produced, so no separate rate applies.

  1. ANil, because it is not liable to duty
  2. B10%, the lower of the ad valorem rates
  3. C20%, the highest rate applicable to articles liable with reference to valueCorrect
  4. D15%, the average of the two rates

Explanation

Under section 19(c), articles not liable to duty are charged at the rate applicable under clause (b) to articles liable with reference to value. Since P and Q are at different rates, the highest (20%) applies. Nil is wrong because clause (c) overrides the nil position, and no averaging is provided.

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