CA Final · Indirect Tax Laws · Refund
Under section 26A of the Customs Act, 1962, Ganga Traders imported 500 units of a machine and paid duty on clearance for home consumption. The goods did not conform to the agreed specifications. Which of the following would disentitle Ganga Traders from refund of import duty?
Refund under section 26A is denied where the imported goods were worked, repaired or used after importation, unless the use was indispensable to discover the defect. Export, abandonment to customs, or destruction before the proper officer are valid routes, so repair and commercial use disentitles the importer.
- AThe importer abandons the goods to customs by relinquishing title within thirty days of the clearance order
- BThe importer exports the goods after they were identified to the satisfaction of the Deputy Commissioner of Customs
- CThe goods were repaired and used commercially after importation, where the use was not indispensable to discover the defectsCorrect
- DThe goods are destroyed in the presence of the proper officer within the permitted period
Explanation
Section 26A(1)(a) proviso requires that goods have not been worked, repaired or used after importation, except where use was indispensable to discover defects. Repair and commercial use not indispensable to discovering defects defeats the refund. The other three are permitted routes: export, relinquishment/abandonment, or destruction in the presence of the proper officer, within the time limit.
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