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CMA Final · Indirect Tax Laws and Practice · Duty Drawback

Under Section 74(2) of the Customs Act, 1962, how is the rate of drawback determined for imported goods that have been used after importation before being exported?

For used goods, the rate of drawback is fixed by the Central Government by notification in the Official Gazette, considering the duration of use, depreciation in value and other relevant circumstances. The flat 98% of Section 74(1) does not apply automatically.

  1. AIt is 98% of the duty paid, with no change for use
  2. BIt is fixed by the Central Government by notification, having regard to duration of use, depreciation in value and other relevant circumstancesCorrect
  3. CIt is fixed by the Assistant Commissioner in each case based on the invoice value
  4. DIt is fixed by the exporter's declaration under the baggage rules

Explanation

Section 74(2) overrides sub-section (1) for used goods. The rate is such as the Central Government fixes by notification in the Official Gazette, considering duration of use, depreciation and other circumstances. The flat 98% applies to the unused-goods case under sub-section (1).

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