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CMA Final · Indirect Tax Laws and Practice · Manufacture in Bond

Under Section 66 of the Customs Act, 1962, the Central Government may exempt imported materials used for manufacture in a warehouse from the whole or part of the excess rate of duty when:

Exemption is available when the duty rate on the imported materials exceeds the rate on the goods manufactured, and the Central Government is satisfied it is necessary for the establishment or development of a domestic industry, by notification in the Official Gazette.

  1. AThe rate of duty on the goods manufactured exceeds the rate on the imported materials, and it is needed to curb imports
  2. BThe rate of duty on the imported materials exceeds the rate on the manufactured goods, and it is necessary for establishing or developing a domestic industryCorrect
  3. CThe goods are exported, irrespective of the duty rates
  4. DThe manufactured goods are cleared to a special economic zone

Explanation

Section 66 applies where the duty rate on imported materials exceeds that on the goods made, and the Central Government is satisfied that it is necessary in the interests of establishing or developing a domestic industry. The exemption is by notification in the Official Gazette and covers the excess rate.

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