CMA Final · Indirect Tax Laws and Practice · Manufacture in Bond
Under section 66 of the Customs Act, 1962, when may the Central Government exempt imported materials used in manufacture in a warehouse from part of the duty?
The Central Government may exempt the imported materials from the whole or part of the excess duty by notification. This applies where the duty rate on the materials exceeds that on the goods manufactured and it is satisfied that exemption is needed for a domestic industry.
- AWhenever the rate of duty on the imported materials is lower than that on the finished goods
- BWhen the rate of duty on the imported materials exceeds that on the goods manufactured, and the Government is satisfied that exemption is needed for establishing or developing a domestic industryCorrect
- CWhen the manufacturer requests it, irrespective of the duty rates
- DOnly when the finished goods are exported
Explanation
Section 66 applies to materials used under section 65 for manufacture where the duty rate on the materials exceeds that on the goods. The Government must be satisfied it is necessary in the interests of establishing or developing a domestic industry, and acts by notification. It can exempt the whole or part of the excess rate; export is not a condition.
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