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CMA Final · Indirect Tax Laws and Practice · Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017

Spares and repair implements are imported along with machinery liable to duty at 12% ad valorem. The spares would otherwise attract 20%. Which statement is correct under the proviso to Section 19 of the Customs Act, 1962?

Spares and maintenance or repairing implements that satisfy the conditions specified in the rules are chargeable at the same rate of duty as the main article, here 12%. The proviso to Section 19 overrides the higher rate that would otherwise apply to them.

  1. ASpares are always chargeable at 20% as they are separately classified
  2. BSpares are chargeable at the same rate as the machinery, 12%, if they satisfy the conditions specified in the rules made in this behalfCorrect
  3. CSpares are chargeable at the average of 12% and 20%
  4. DSpares are exempt from duty altogether

Explanation

Proviso (a) to Section 19 says accessories, spare parts and maintenance and repairing implements which satisfy the conditions in the rules are chargeable at the same rate of duty as the article. Thus 12% applies if conditions are met. The 20% option ignores the proviso, and averaging or exemption is not provided.

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