Mr. Jatin, an importer, had made provisional payment of customs duty of 2,00,000 under section 18 of the Customs Act, 1962 on 17th July, 2024, along…
CA Final · Indirect Tax Laws · MTP · January 2026
Mr. Jatin, an importer, had made provisional payment of customs duty of 2,00,000 under section 18 of the Customs Act, 1962 on 17th July, 2024, along with a security of 1,00,000 towards provisional release of goods. Final assessment was completed on 15th October, 2024 with a duty assessed as 50,000. The refund order of 50,000 and the order of release of security of 1,00,000 was issued on the same day (15th October, 2024). Mr. Jatin had filed a refund application on 20th October, 2024 alongwith necessary documents. On perusal of the refund application, proper officer had found some deficiencies which were communicated to Mr. Jatin. Mr. Jatin had submitted the required additional documents and proper officer had issued an acknowledgement on 5th November, 2024. Refund was paid to him on 25th March, 2025. You are required to compute interest receivable by Mr. Jatin under section 18 of the Customs Act, 1962 on amount of duty and on amount of security if any. Calculation should be nearest to one rupee and assume 366 days in the year. (4 Marks)
Suggested Answer and Working Notes:
In case of provisional assessment of duty, if any amount refundable upon finalization of assessment to the importer is not refunded within 3 months from the date of final assessment of duty, interest @ 6% per annum shall be paid on such unrefunded amount till the date of refund of such amount. No interest is payable on security deposits for provisional release of goods, etc. Thus, in the given case, the amount of interest receivable by Mr. Jatin is as under:- 16 th January, 2025 to 25th March, 2025 (Both inclusive) Period of delay = 70 days Thus, interest = 50,000×6% × 70/366 = 574 (rounded off)
Topics: Customs: Refund
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