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CA Final · Indirect Tax Laws · Types of Duty

Sunrise Traders Pvt Ltd of Pune imports a consignment consisting of a set of articles: Article X (liable to duty with reference to value at 10%) and Article Y (liable to duty with reference to value at 20%). The importer has produced no evidence of the separate value of either article and the goods are treated as a set. At what rate will the goods be chargeable to duty under section 19 of the Customs Act, 1962?

The set is chargeable at 20%, the highest of the rates. Section 19(b) says articles liable to duty by value at different rates attract the highest rate. Separate rates are available only if the importer produces evidence of the value of the articles, which has not happened here.

  1. A10%, the lower of the two rates
  2. B15%, the average of the two rates
  3. C20%, the highest of the ratesCorrect
  4. DEach article at its own rate, automatically

Explanation

Under section 19(b), where articles liable to duty with reference to value are liable at different rates, the set is chargeable at the highest of such rates, i.e. 20%. Separate rates apply only if the importer produces evidence of value (proviso (b)), which was not done here. The 10% and averaging options have no basis in the section.

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