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CA Final · Indirect Tax Laws · Types of Duty

Under section 18 of the Customs Act, 1962, Orion Ltd's goods were provisionally assessed and duty of ₹5,00,000 was paid. On final assessment the duty is determined at ₹5,80,000. Which statement is correct regarding the deficiency of ₹80,000?

Orion must pay the ₹80,000 deficiency along with interest. Section 18(3) charges interest from the first day of the month in which duty was provisionally assessed until the date of payment, at the rate fixed under section 28AA.

  1. AOrion must pay the deficiency, with interest from the date of the final assessment order
  2. BOrion must pay the deficiency, with interest from the first day of the month in which duty was provisionally assessed until paymentCorrect
  3. COrion must pay the deficiency without any interest
  4. DThe deficiency is waived if security was furnished

Explanation

Section 18(2)(a) requires the importer to pay the deficiency. Section 18(3) charges interest at the rate fixed under section 28AA from the first day of the month in which duty is provisionally assessed until payment. Interest is not limited to the period after the final order.

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