M/s Falcon Ltd. imported capital goods worth 3 crore after payment of customs duty of 30 lakh on 10 th September, 2024 and the duty concession of 15…
CA Final · Indirect Tax Laws · PYQS · May 2025
M/s Falcon Ltd. imported capital goods worth 3 crore after payment of customs duty of 30 lakh on 10 th September, 2024 and the duty concession of 15 lakh was availed under Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022. Imported capital goods started being used for the specified purpose as per the exemption notification with effect from 3 rd January 2025. M/s X Ltd. cleared the above said imported capital goods after having been used for the specified purpose on 15 th April 2025. You are required to calculate the differential duty payable being difference between the duty leviable on such goods on clearance for which the exemption was availed at the time of importation and that already paid, along with interest payable at the rate fixed by the notification issued under section 28AA of the Customs Act, 1962. Differential duty has been paid on 30 th April, 2025. Step by step working should be part of your answer. The applicable rate of customs duty is @ 15% (ignore any other cess or duty).
Suggested Answer and Working Notes:
In the given case, differential duty payable by M/s Falcon Ltd. will be computed as follows: (I) Duty leviable on goods on clearance for which exemption was availed will be computed on depreciated value allowed in straight line method, inter alia, @ 4% for every quarter in the first year (part of quarter taken as full quarter). Depreciation % will be = 4% x 2 quarters = 8% Depreciation value will be: 8% of 3crore = 24 lakh Depreciated value of imported capital goods is 3 crore -24 lakh = 276 lakh = 276 lakh x 15% = 41,40,000 (II) Duty already paid = 30 lakh 5 Differential duty payable = (I) – (II) = 11,40,000, payable alongwith interest under section 28AA of the Customs Act, 1962. 5 It is also possible to alternatively interpret that 'Duty already paid' is to be computed on the depreciated value of imported capital goods.
Topics: Customs: Importation and Exportation of Goods
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