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CA Final · Indirect Tax Laws · Types of Duty

Sunrise Traders Pvt Ltd of Pune imports a hospitality set from Germany consisting of 10 articles. Four articles are liable to duty at 10% ad valorem, three at 20% ad valorem, and three are not liable to any duty. The importer has not produced any evidence of the separate value of the articles. Under the Customs Act, 1962, at what rate will the set be chargeable?

The whole set is chargeable at 20%. Where a set contains articles liable by value at different rates, the highest rate applies, and articles not liable to duty take the same rate. Separate rates would apply only if the importer produced evidence of each article's value, which has not happened.

  1. A10% on the whole set, being the lowest rate
  2. B20% on the whole set, being the highest rate among articles liable by valueCorrect
  3. C15% on the whole set, being the average of the two rates
  4. D10% on four articles, 20% on three articles, and nil on the rest

Explanation

Where goods consist of a set of articles liable to duty by value at different rates, the set is chargeable at the highest of those rates, which is 20%. Articles not liable to duty are charged at the rate applicable under the value-based clause, so they also bear 20%. Separate rates apply only if the importer produces evidence of value of the articles, which was not done here. The 10% option wrongly uses the lowest rate.

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