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CA Final · Indirect Tax Laws · Types of Duty

Zenith Imports Ltd imports a consignment consisting of a set of articles. Article A is liable to duty with reference to value at 10%, Article B is liable to duty with reference to value at 20%, and Article C is not liable to any duty. Zenith has produced no evidence of the separate value of any article, and no exception applies. At what rate will Article C be chargeable under section 19 of the Customs Act, 1962?

Article C is chargeable at 20%. Section 19 treats articles not liable to duty at the rate applicable to value-based articles, and where those articles bear different rates, the highest rate applies. Since no separate value evidence is produced, the exception does not apply.

  1. ANil, as it is not liable to duty
  2. B10%, the lower of the rates
  3. C20%, the highest rate applicable to articles liable with reference to valueCorrect
  4. D15%, the average of the two rates

Explanation

Under section 19(c), articles not liable to duty are charged at the rate applicable under clause (b) to articles liable with reference to value. Clause (b) says that where such articles are liable at different rates, the highest rate applies, which is 20%. Treating Article C as nil ignores clause (c).

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