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CA Final · Indirect Tax Laws · Types of Duty

Vishwa Components Ltd had goods provisionally assessed under section 18, paying duty of ₹4,00,000 on 12 March. On final assessment, duty was fixed at ₹4,60,000. Which statement correctly states the consequence under section 18?

The importer must pay the ₹60,000 deficiency with interest running from 1 March, the first day of the month of provisional assessment, until payment. Section 18(2) requires payment of the shortfall and section 18(3) fixes the interest start date. Security does not waive the deficiency.

  1. AThe importer pays the ₹60,000 deficiency, and interest is payable from the first day of the month of provisional assessment (1 March) till paymentCorrect
  2. BThe importer pays ₹60,000 with interest only from the date of the final assessment order
  3. CThe importer pays ₹60,000 with no interest, as the shortfall arose from provisional assessment
  4. DThe deficiency is waived because the security furnished covers it

Explanation

Section 18(2)(a) requires the importer to pay the deficiency on final assessment. Section 18(3) charges interest from the first day of the month in which duty was provisionally assessed, here March, until payment. Interest from the order date or no interest contradicts this. The security only secures payment and does not waive the deficiency.

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