Cn Tug GN CS sccm pry ‘C) a PU hg LIMITED EDITION OPEN PDF in the benefit of Students.. Stay Home.. Stay Safe.. Let’s Beat COVID-19.. Together ree All credit goes to creator & person noted on this image for such a sensible creativity. aIndex Sr.No lerreni ey CPE Ge Constitutional Provision & Levy of Customs Duty 1 e Importation & Exportation procedure & transit & Transaction of goods “ @ | date for Determination Rate & Tariff value & Assessment co] 6 7 39 Customs Tariff Act, 1975 - Types of Duty under Customs e Valuation 51 @ | concessions under Customs or Exception to Sec 12 89 Sec 13 - Pilfered Goods Sec 22 - Abatement of Duty on Damaged or Deteriorated Goods Benefits See 23 - Remission of Duty Under Sec 24 - Denaturing & Mutilation Customs sec 20 - Re-Importation of Goods @ | Goods imported & Exported by Post or Courier 99 e Stores 101 6 Drawback 105 @ Pessase 121 ed Custom Tariff Act, 1975 131 @ | uae 145 @®| Rutuna 149Seco. Page No. 2(2) | Assessment 35, 2(3) | Baggage 5 2(9)_| Conveyance 3 2(10) | Customs Airport 13 2(11) | Customs Area 13 2(12) | Customs Port 13 2(13) | Customs Station 13 2(14) | Dutiable Goods 3 2(16) | Entry 14 2(18) | Export 9 2(19) | Export Goods 9 2(20} | Exporter 9 2(20A) | Foreign Post Office 13 2(21) | Foreign going Vessels or Aircraft 403 2(22) | Goods 4 2(23) | Import 7 2(25) | Imported Goods 8 2(26) | Importer 8 2(27) | India 7 2(28) | Indian Customs Water 8 228A) Intemational Courier terminal 8 2(29) | Land Customs Station 3 2(31) | Person In charge 14 2(33) | Prohibited Goods 14 2(38) | Stores 4 2(41) | Concept of value 52 2(42) | Vehicle 3 ‘8. | Power to approve landing places and specify limits of customs area B 10__| Appointment of boarding stations. B 12_ | Charging Section 4 13 | Duty on pilfered goods ot 14 _| Valuation of goods 33 14(1) | Transaction Value 53 14(2) | Tariff Value 54 14(3) | Rate of Exchange 54 15 _| Date for determination of rate of duty and tariff valuation of imported goods 33 16 _| Date for determination of rate of duty and taf valuation of export goods 33 17_| Assessment of duty 35, 18_| Provisional assessment of duty 8 19 | Determination of duty where goods consist of articles liable to different rates of duty 37 20 | Re-importation of goods 95 21_| Goods derelict, wreck, etc. 94 22_| Abatement of duty on damaged or deteriorated goods 3 23 | Remission of duty on lost, destroyed or abandoned goods 92 23(2) | Abandonment of Rights on goods. 92 24 | Power to make rules for denaturing or mutilation of goods 94 25. | Exemption from Custom Duty 97 25A | Exemption from custom Duty on imported goods used for inward processing of goods 7 258 | Exemption from custom Duty on Re-imported goods used for Outward processing of goods 98 26 | Refund of export duty in certain cases 154 26A | Refund of import duty in certain cases(tund of uty for detective goods) 118CTS urea ed [Seco ‘Section Name Page No. 27_| Procedure to claim refund 150 27(2) | Claim for refund of duty 150 Z7A_| Belated disbursement of refund by c.g. 18 288 | Duties collected from the buyer to be deposited with the Central Government Discussed BBA | Provisional atlachment fo protect revenue in certain cases with GST 8C_| Price of goods to indicate the amount of duty paid thereon 26D _| Presumption that incidence of duty has been passed on to the buyer Module 23 _| Arrival of vessels and aircrafts in India 15 30_| Delivery of arrival manifest or import manifest or import report 15 308 8 Crew manifest (import, 16 31 _| Imported goods not to be unloaded from vessel unl entry inwards granted 7 '32_| Imported goods not to be unloaded unless mentioned in impor manifest or import report 7 '33_| Unioading and loading of goods at approved places only 7 34_| Goods not to be unloaded or loaded except under supervision of customs officer 7 '35_| Restrictions on goods being water-borne 18 '36_| Restrictions on unloading and loading of goods on holidays, et 26 '37_| Power to board conveyances 26 38_| Power to require production of documents and ask questions 26 39_| Export goods not to be loaded on vessel until entry-outwards granted 25 40_| Export goods not to be loaded unless duly passed by proper officer 25 ‘44_| Delivery of export manifest or export report 25 414 | Special Passenger & Crew manifest (Import) 26 42_| No conveyance to leave without wien order 26 45 _| Restrictions on custody and removal ofimported goods 18 46 _| Entry of goods on importation 19 47_| Clearance of goods for home consumption 0 48_| Procedure in case of goods not cleared, warehoused, or transshipped within thity days after unloading] 24 48 _| Storage of imported goods in warehouse pending clearance 2 '50_| Entry of goods for exportation 24 51_| Clearance of goods for exportation 24 5iA_| Payment of Duty, Interest, Penalties. tc 24 51B | Ledger for duty Credit 25 '53_| Transit of certain goods without payment of duty 27 '54_| Transhipment of certain goods without payment of duty 27 '5_| Liability of duty on goods transited under section 53 or transhipped under section 54 28 56__| Transport of certain lasses of goods subject to prescribed conditions| 28 74_| Drawback allowable on re-expor of duty-paid goods 107 75_| Drawback on imported materials used in the manufacture of goods which are exported 110 758 | Interest on drawback 17 76_| Prohibition and regulation of drawback in certain cases 117 71_| Declaration by owner of baggage 123 78_| Determination of rate of duty and taf valuation in respect of baggage 123 73_| Bonafide baggage exempted from duty 123 80_| Temporary detention of baggage 124 82_| Labeler declaration accompanying goods lo be-Heated-ac-onity OMITTED '83_| Rate of duty and tarif valuation in respect of goods imported or exported by post 100 ‘84_| Regulations regarding goods imported orto be exported by post 100 {85 _| Stores may be allowed tobe warehoused without assessment to duly 103 86 _| Transit and transhipment of stores 103 87_| Imported stores may be consumed on board a foreign-going vessel or aircraft 103 88_| Application of section 69 and Chapter X to stores ‘04 a9_| Stores tobe fee of export duty 104 90 | Concessions in respect of imported stores forthe Navy 104Ce Tu ea CC mL [Sec.No. Section Name Page No. 99 Audit 146 ‘998 Verification of identity and compliance therof 148 [Sec.No ‘Section Name Page No. 1 _| Short tite and commencement 39 2 | Duties specified in the schedules to be levied 39 3_| Additional customs duty a2 3(1)_| Additonal customs duty equivalent to excise duty 42 3(8)_| Countervall effect of Excise Duty on Raw Material a 3(8)_[ Addl. Customs duty to counter-balance sales tax ee. 43 3(7) | countervail levy of GST (Important) 4 '3(8A) | ACD on warehouse sale before clearance a 3(9)_| countervaillevy of GST Compensation Ces 6 '3(10A)| ACD on warehouse sale before clearance 6 4 | Preferencial rate 135 5 _| Lower rate of duty under trade agreement 135, 6 _[ Protective Duty 136 7_| Protective Duty 136 88_| Safeguard Duty 136 8C_| Specific Safeguard Duty 136 9 | Counterveiting Duty on subsidized articles 136 ‘9A | Anti-Dumpting Duty 136 98 No levy under Section 9 & 9A in certain cases 142 9C Appeal 142 2(1)(@) Identical Goods 66. 2(1)()_ Similar Goods 66 2(2) Related 67 3 Determination of the method of valuation - Transaction Value 62 4 Transaction value of identical goods 66 Transaction value of similar goods 66 6 Determination of value where value cannot be determined under rules 3,4 and 5 68 7 Deductive Value 69 8 Computed Value 70 9 Residual Method 1 10 Cost and services - Adjustment in Transaction Value 57 11 Declaration by the importer 1 12 Betton of declared value 2 2(1)(a)__Goods of lke kind and quailty 3 2(2) Related 73 3__ Determination of method of valuation 3 4 Determination of export value by comparison 73 5 Computed value method 73. 6 __ Residual Method 7B 7__ Declaration by the exporter 73 ‘8 __ Rejection of declared value 74,STV OTS ees LEVY OF CUSTOMS DUTY ee OT CE Macy LSI ALS Friends, 1 personelly feel, before starting discussion on various law under Indirect Taxes, we must have knowledge of constitutional authority of such laws. Constitution of India contains the authority to make various legislations for the levy and collection of any tax in India which are given below: So friends, let's have detailed discussion on each article, Article 265: Taxes not to be imposed save by authority of law “No tax shall be levied or collected except under authority of Law” Sir What? If you read article 265 carefully, then it said for levy of any tox ‘Authority of law’ is needed. Sir, who can make the laws in India? Good question..Authority to make laws in India is given under Article 245 as below Article 245: Extent of laws made by Parliament and by the Legislatures of States It empowers the parliament to make Law for whole or any part of the territory of India, and the legislature of a state may make the Laws for the whole or any part of the state India is federal, not a unitary state, Laws are enacted by the union parliament as well as state legislature, The allocation of subject between the union & state is spelt out by Article 246 of the constitution through the schedule VI The allocation of subject between the union & state is spelt out by Article 246 of the constitution of India, Article 246: Subject-matter of laws made by Parliament and by the Legislatures of States Schedule VII divides the legislative powers into following three categories. st! [referred as Union ist): ‘This ist enumerates the mates in respect of which the parliament has an exclusive rght to make Laws List referred as State List): This it enumerates tha mato in respect of which the egsature of any state has an exclusive righ to make Laws. List il referred as the Concurrent List]: ‘This It erumeraes the mates in respect of which both the patlament& legislature of any sale have power fo make Laws. [Ent |No. Items 3 Customs duty including export dutyTAX HIERARCHY re See) any e ele le) CET oui teale)Table of Content | Sections) Descriptions) 2(2) Assessment 218) | Export 2(38) Stores 23) Baggage 2(19) | Export Goods 2(42) Vehicle 2(3A)_| Beneficial Owner 2(20) Exporter 12 Charging Section 2(7) Coastal Goods 2(27) India 2(9) Conveyance 2(28) | Indian Customs Water 2(14) _Dutiable Goods LEVY OF CUSTOMS DUTY All taxes are imposed in three stages uy mm) ASSESSMENT => couecrion Important Definitions Sec 2(9) “CONVEYANCE” includes a vessel, an aircraft and a vehicle; Sec 2(42) VEHICLE Means conveyance of any kind used on land and includes a railway vehicle Sec 2(14) “DUTIABLE GOODS” means any goods which are chargeable to duty and on which duty has not been paid;PointofCustoms levy ATOR cue sare Tex, (1) Except as otherwise provided inthis Act, or any other law forthe time being in force, duties of customs shall be a= levied at such rates as may be specified under the Customs Tarif Act, 1975, or any other law for the time being in force, on goods importedinto, or exported from, India (2) The provisions of sub-section (1) shall apply in respect of al goods belonging to Government as they apply in respect. ‘of goods not belonging to Government. Note : Governmentalso liable to pay customs duty similaras the goodsimported by other person Lets understand in simple words Thus following are the conditions for levy of customs duty i A) © There must be goods © The goods are imported into india or © They are exported from india ‘© Customs duty shall be levied at such rates as may be specified under the customs tariff act, 1975, or any other law forthe time being in force ‘© Importation of goods by government treated at par with other imported goods. © Levy under this section is subject to other sections inthis act. The first Basic condition for levy of customs duty is that there must be a goods Then, question arose in mind “What is ‘goods’ under Customs Act 1962"? Aros sare Toa), ‘goods’ includes a) Vessels, Aircraft and Vehicles b)_ Stores c) Baggage ) Currency and Negotiable Instruments e) Any other kind of movable property. ‘As we have seen above, goods include; VESSELS AIRCRAFT & VEHICLE Ships or aircraft brought for use in Incia or for carrying cargo for ports out of India, would be dutiabl. BPE eacoe 2-72) Means — goods for use in a Vessels or Aircraft & Includes - fue! and spare parts and other article of equipment, whether or not for immediate iting. Pe Ce EL) Tutorial Notes @ , Stores principally cover up radio ystems, Goods intonded fr consumption by the passengers and crew on Goods necessary for the operation and maintenance of boardoficalaircraftwith ornotsold vessels orAireraft food, drink other need ofpassengers andrew > Dieselol furace ol, petrol, aviation turbine fuel > certzinessentalmedicalitems ikefirstaidbox, oxygenete > spare parts for the maintenance and repairs of the > ifesavingthings, lie quotes Bete conveyance > Entertainment equipment lke musical instument, video!Goods for utility purpose of passengers or crew members used in vessels or aircrat Fuel or spare parts used in vessels or aircraft EEO =) (custom tariff 9803) includes unaccompanied baggage but does not include motor vehicles. (custom Eek) tarif'8702) since motor vehicles are subjectto higher rate of duty. BAGGAGE OC Ale Reenter) | —_— / The most peculiar aspect of Customs Law is in treatment ofthe currency & cheque, demand drafts as goods. This compels passengers to declare the cash /currency on hand also. ‘Paper money" free of duty - Customs tariff entry 9912.00) if any passenger fails to declare the value of currency and other negotiable instruments, the same can be confiscated and he willbe penalized apart from other action taken against him, There is no duty abilty on the paper money. But to ensure check over the flow of money in and out ofthe country, limit has beensetatRs. 10,000/- CURRENCY & NEGOTIABLE INSTUMENTSINDIA Contiguous Zone « TerTitorial Zone Territorial Water il of Entry for Bill of Entry for Home consumption from warehouse CA Vishal Bhattad © 09850850800 \wuwysmartacademy.com 6 V'Smart AcademySer LPN x = India includes the territorial water of India. - Tutorial Notes Territorial water of India extends to 12 nautical mils into the sea from appropriate base line, Goods are deemed to have been imported ifthe vessels enter the imaginary line onthe sea a the 12th nautical mile. the vessel enters the territorial water of India India includes not only the surface of sain the territorial water butalso the air space above and the ground atthe bottom ofthe sea Forthe purpose of extraction and production of mineral oils including petroleum and natural gases Indiais extended tothe continental shelf of indiaand exclusive economiczone of India SSM eie its) ‘The term with its grammatical variation and cognate expression is defined to mean bringing into India from a place outside India Tutorial Notes Goods are deemed to have been imported the vessels enter the Imaginary line on the sea atthe 12th nautical mile. ithe vessel enters ‘he teitarial wate of India ‘Thus twas thought that mportis complete as soon as goods entertertor'al water and thisis the root cause of following problem, > Innocent entry ofa vessels (vessels using Indian Teritoial water as passage to goto another country without touching any port of India) nto the territorial water of ndia wouldresultintoimport of goods & > Itwas almostimpossibe to determine when exacly the vessels crossed the ertrial waters limit Whether import shall be treated as complete with entry of goods in India(i.e. in territorial water) or when : the goods are cleared from Customs Port ? ISSUE 4. Garden Silk] The Supreme Court observed in the Garden silk mills Ltd. Mills Ltd vis UO! | Case that import of goods will commence when they cross territorial water but continues and is completed 1999 (113) ELT | whenthey become part of the mass of goods within the country, 358 (sc) + The taxable event being reached at the time when the goods reach the Customs Barrier and Bill of Entry for Home Consumptionisfiled. Q: Whatis bill of entry? Q: Whatis home consumption? /Ans.: It is an application for clearance of goods from customs area to be | Ans.: It means clearance of goods in India for intended submitted by mporterto customs office purpose Warehousing means keeping the goods at one place in the custody of Customs without duty, whether in a public warehouse or a private warehouse. UOI vis Apar Ind, Ltd [1999] 122 ELT 3 (SC) Date of presentation ofbill of entry for home consumption for clearance from warehouse is applicable, Thus In case of warehousing Taxable event arise when ex-bond ill of entry is presented. Clearance for home consumption: -Itimplies that, the Customs duty on import ofthe goods has been discharged and the goods are therefore cleared for utiization or consumption, Clearance for warehousing: -Importer may, atany given point of ime may require certain quantity. Either supplier may notagreeto sell that much quantity othe freight may not be economical. In such case goods may instead of being cleared for home consumption, be deposited in warehouse and cleared ata later time. When the goods are deposited in the warehouse the collection of Customs Duty will be deferred tillsuch goods are cleared for Home Consumption. The revenue for the Govt. is safeguarded by the importer executing a bond binds himself in a sum equal to thrice the amount of duty assessed on the goods atthe time of import. The importer is also liable to pay interest, for storage of goods in warehouse,SEC 2(25)_IMPORTED GOODS — Means But does not includes Any goods brought into India from Goods which have been a place outside India but cleared for home consumption. SEC 2(26) IMPORTER Importer in relation to any goods at any time between their importation and the time when they are cleared for home consumption includes any owner, beneficial owner orany person holding himself out to be the importer. Sec 2(3A) Means any person on whose behalf the goods are being imported or exported or who exercises Beneficial Owner | effective control over the goods being imported or exported ca © ‘fanyperson files the Bill of Entry under section 46 and pays the duty, then he willbe treated as importer. In case of high sea sale the original importer wil ransfr the te of the goods to another person, before entering the customs frontiers, ‘hen the transferee will become te importer, ‘© the exporter appoints an agentin India for sein the goods and that agent clears the goods by fin Bill ofEntry and pays the duty, then the agent wil become the importer ‘© Buta clearing agent who files billofenty on behalfof the importer with importer’ Import Export Code wllot become the importer. ‘8s soon goods entre in teritoral alert llgetacharacer of irgored sae soos Romain as such dearace HIGH SEA, Irpoter aug the ‘re ay oat raat parson Rong hse : ‘IMPORTED Gop SEC 2(28) INDIAN CUSTOMS WATERS <—_——_ ~ + Means Includes ‘The waters extending into the sea up to the limit of exclusive economic: ‘Any bay, gulf, harbour, zone under section 7 ofthe Territorial Waters, Continental Shelf, creek or tidal river; Exclusive Economic Zone and other Maritime Zone Act, 1976 DoS Cas coupon 4 cogs re A oO V'Smart Academy wwwysmartacademy.com GAVishal Bhattad (09850850800‘TAXABLE EVENT IN CASE OF EXPORT Taxable event for export The term with its grammatical variation and cognate expression is defined to Territorial Water mean taking out of india to a place outside India. oN Any goods which are to be taken out of 1 Tertoral Water Serta . India to a place outside India : B Tutorial Notes u ‘ ramsey & The tem “eh ae to taken” means . + etd goods ready fr export but not exported . = (i. goods lying in custom area or in conveyance but yat to crossed Seed if teritorial water finda) In relation to any goods MEANS At any time between their entry for export and the time when they are exported, INCLUDES Any owner, ‘or any person holding himself out to be the exporter Rajendra Dying & Printing Mills Ltd 1 Territorial Water \huther vated as a expen? 1 ‘Ane. No ent ' ae " ras * ‘Vessels si bfore crossing tari ater ee ‘SUN EXPORTS [SC] Itwas held that export is complete once goods passes the teritorial water of India and property passes to purchaser. The delivery of export goods at the destination is notessential. Rajindra Dyeing & Printing Mills Ltd,—2005-S,C, Rajindra Dyeing & Printing Mills Ld, Were manufacturers of readymade garments, They exported certain goods and fled shipping bill The goods were examined by the customs authorities and loaded onto the ship. While it was within the territorial water, the ship sank. The cargo of assesse was destroyed, Issue : The assesse fled their claim for duty drawback in relation tothe goods which were destroyed. Whether their claimis valid Court Decision : Their claim was rejected on the grounds that the goods had not crossed the territorial waters and hence no exporthas taken place, V'Smart Academy wwysmartacademy.com GAVishal Bhattad © 09850850800 0VCO) EXPORTATION PROCEDURE Courier Terminal, foreign post || 29 Arrival of Conveyance in India || 50 Entry of goods for Exportation aay oe wea 30 Import Manifest / Report 51 Clearance of goods for Exporiaon 242) "| catems Port 308 Passenger Manifest 51A amet ‘of Duty, Interest, Penalty: 2(13) | Customs Staion 31 aa 54 | Ledger for Duty Credit 2(16) | Entry 32 ante Reot mentoring "39 Entry Outward ert «, ‘Custom Clearance by proper 2(28) Land Custom Staton 33 [Lang at appioved pas ao user 5 rope 288) Protea Coos lesions 34 | Supervision of Customs Officer | 41 | Export Manifest or Export Report a i MA Passenger Manifest 4 Aoptinirent ct Ofer of Customs 25__ Goad being water bore “42. Departure Order 5 | Powers of offcer of Gustome _|| 45__| Custody of goods after unloading 6 __Entrustmentof functions of Board 46 Blof Entry 3g. Rsliton on ating unloading 7 | Appointment of customs pors, |__47 | Order of Clearance for H.C on holidays airors ete 48 Clearance within 0 days 37 Power to board to conveyance 8 Power to approve landing places Storage of Goods in warehouse) |g | Power fo requite production of and speciylmis of customs area, 49 pending clearance documents and ask gato Power to declare places to be 8 warehousing stations 53 _| Transit without Duty 10 Appointment ofboardng stations | 54 Tranship without Duly 55 | Duy bly for Tans and Tansip 56 Transport of goods lo foreign lertory ©ESE ENTE ER IOSECUAN ENTE] PTET) ‘ASNOHSUVM —_aSNOHFUVM. LWA ongnd SNOILVLS) SWOLSND Nv] jday ae spoo6 payodxa 10 payodui asaym saae|qImportation and Exportation Procedure Sec 2(11)"customs area” |Means the area of a customs station and Includes any area in which imported goods or export goods are ordinarily kept before clearance by Customs Authorities ‘Sec 2(13) “customs station”|Means any customs port, customs airport or land customs station. ‘Sec 2(12) “customs port” |Means any port appointed under clause (a) of section 7(appointed by CBIC) to be a ‘customs port and Includes a place appointed under clause (aa) ofthat section to be an inland container depot: ‘Sec 2(10) “customs airport, [Means any airport appointed under clause (a) of 7(appointed by CBIC) to be a customs international courier terminal, airport, foreign post office” Includes a place appointed under Clause (aa) of that section to be an air freight station Sec 2(29) land customs [Means any place appointed under clause (b) of section 7(appointed by CBIC) to bea station land customs station, Sec 2(20A) “Foreign Post [Means any post office appointed under clause (e) of sub-section(1) of sec, 7 to be a Office” foreign post office ‘Sec 2(28A) “international [Means any place appointed under clause (f of sub-section (1) of section 7 to be an courier terminal” international courier terminal exported Question: Discuss the distinction between the functioning of Inland Container Depots (\CD) and Container Freight Stations (CFS) ‘Answer: ‘Inland Container Depot: a) Itis a Customs Station duly appointed by the Central Board of Excise & Customs by a notification in the Official Gazette uls7(aa), b) Ithas an independent existence on par with any other Customs Station } They are created for the purpose of Loading/Unioading of Export Goods/Imported Goods. d) Movement from ICD to a Land Customs Station or Atport is akin to Trans-shipment from one customs station to another Customs. Station. €) Facilities for Processing of Import Manifest, Export Manifest, Billof Entry eto, are made available atthe ICD itself 2 Contalar Fright Station: 3) ttisan extension ofthe primary Por. | They are set up with the main objective of decongesting the Ports, where only apart ofthe Customs process mainly with examination cof goodsis carried outby the Customs. ) Processing of import Manifest, Export Manifest, Bill of Entry etc.ae not carried outat CFS (these functions are carried at Main Port) 3.AirFreight Station: 48) AFSis an off airport common user facilly equipped with fixed installations of minimum requirements and ofering services for handling and temporary storage of impor and export cargo. b) As per the new policy guidelines all export and import cargo clearance including customs related actviies like assessment, «examination, payment of duties etc, would be provided atthe AFS, asis done n any other custom station, ©) AFS avoid Congestion at main Airport besides expediting clearance of imported goods and minimising handling operations at the Airport. approve : Proper places in any customs port or customs airport or coastal port for the unloading and loading of goods or for any class of goods; {b) specify: The limits ofany customs area Landing Space:- ‘Wet goods upload fay art & Berthing Place:- ‘Wet vessels WIE Sat & for unloadingAPPOINTMENT OF BOARDING STATIONS The Principal Commissioner or Commissioner of Customs may, by notification in the Official Gazette, appoint, in or near any customs port, a boarding station for the purpose of boarding of, or disembarkation from, vesselsby officers Place where goods ‘a ofa checking arelosded or unloaded fre are? BBOAROING STATION LOADING OR UNLOADING STATION In relation to goods Means an entry made in a > bil of entry, (or imported goods) > bil of exportior export goods by vehicle) > shipping bil (for export goods by vessels/airrafjor ENTRY) [ Application of Clearance] IMPORT [8 documents % importer sm goods wt weit details fat & ] BILL OF ENTRY Baggage Fi EXPORT ; PERSON-IN-CHARGE enue Master of the Vessel qt The Commander or pilot- The conductor, quard or other person The driver or other person in charge of the aircraft having the chief direction or the train. -in- charge of the conveyance PROHIBITED GOODS Means any goods the import or export of which is subjectto any | | But does not include any such goods in respect of which the prohibition under this Actor any other law forthe time being in | | conditions subject to which the goods are permitted to be imported force or exported have been complied with [Example: cbscene materials, Maps and Itrature where Indian extemal boundaries have been shown incarecty, Narcotic Drugs and Psychotropic Substances, Counterfeit goods and goods violating any ofthe legally enforceable intelectual property right, Chemicals mentioned in birds and animals, Wild animals, their parts and products, Exotic & birds excepta few specie ones, Beof tallow, ftfoilofanimal origin, Specified Sea-shells, Human skeleton, ae @® v'smart Academy wwwvsmartacademy.com CAVishal Bhattad @ 09850850800IMPORTATION & EXPORTATION There are following four different situation in which goods are imported or exported 4 ,Goods imported by sea/airand 2,Goods imported by post. 3,Goods imported by passenger as their baggage. 4.Ship stores which are considered to be imported and charged to customs duty. SECTION 29: ARRIVAL OF VESSELS AND AIRCRAFT IN INDIA et's understand the concept with diagram a vat of ship ter =f we woe ISLAND Legal Provision:: ‘)The person-in-charge of a vessel or an aircraft entering India from any place outside India shall not cause or permit the vessel of aircraft to call or land - alfor the frst time after arrival in India; or bjat any time while itis carrying passengers or cargo brought in that vessel or aircraft; At any place other than a customs port or a customs airport, as the case may be unless permitted by the Board > Tutorial Notes J Inter words, vessels or acrafs entering india from outsde india can only call or land a a customs port or a customs airport. However, the central board of excise and customs can permit calinglanding of vessels and aircrafts at anyplace other than customs por or customs airpo. Exception : Provided that it may call or land at any other place only if compelled by accident, bad weather or due to some genuine unavoidable reason. However, the person in charge of the vessel has the following obligation cast on him: a) He must report to the nearest police station or custom officer of such emergency arrival b) He shall not without the consent of any such officer permit > Any goods carried in the vessel or the aircraft to be unloaded from, or > Any of the crew or passengers to depart from the vicinity of, the vessel or the aircraft. However, the passengers, crew and goods can keep away from the conveyance for the reason of health, safety or preservation of life or property. He shall comply with any directions given by any such officer with respect to any such goods, and no passenger or member of the crew shall, without the consent of any such officer, leave the immediate vicinity ofthe vessel or the aircraft. SECTION 30: DELIVERY OF ARRIVAL MANIFEST OR IMPORT MANIFEST OR IMPORT REPORT Let's understand the concept with diagram — me Boren tag So, RN weareat ore Be ae ‘Hit Goods at deta eek: Nanos ter ced fica v‘Smart Academy wnuvsmartacademycom CAVishal Bhattad © o9gsosso8o0 (5)41. Meaning: Import manifest or import report is a detailed information to customs about goods in the vesselslair crafts which have been brought in at any porarport for unloading at that particular port/international airport as also that which would be carried further for other ports/airports. 2.Who will submit: The person-in-charge of - > Avessel; or D An aircraft; or > Avehicle, Carrying imported goods or export goods or any other person as (Customs brokeriAgent) may be specified by the Central Government, by notification in the Official Gazette, in this behalf shall submit import Manifest. 3. Time limit for delivery Manifest ‘Where the imported goods are brought in a vessel = = Any time prior to the arrival of the vessel Electronic Inport Manet ral Where the imported goods are broughtin an aircraft ypueet ‘Any time prior tothe arrival ofthe aireraft Electronic fling” [Where the imported goods are brought ina vehicle. |mport Report ‘Within twelve hours after its arivalin the [customs station Manual fing Ifitis not submitted within aforesaid time and proper officer satisfied that there was no sufficient cause for such delay then person in charge shallbe liable toa penalty not more than Rs. 50000 4, Belated filing : Import manifestReport filed belatedly may also be accepted by the proper oficer on valid justified grounds. 5. Amendment = Ifthe proper officer is satisfied thatthe Arrival manifest! import manifest or impor reports in any way incorrect or incomplete and there is no fraudulent intention, he may permititto be amended or supplemented. (Section 30(3)] 6. Content (The manifestireport should be delivered in duplicate and should cover all the goods carried in the aircraftivesselivehicle. {i)The manifestimport report has to be in four parts as under- 4. alist of private property in the +,General declaration. 2.Cargodeclaralion. 3. Vessels stores lis. possession of the master, officers and orew, 5, Passenger manifest in case of aircrafts. (ii/The cargo list is categorized in the manifestrepor into the following categories and shall be delivered in separate sheets. (1) cargo to be landed; (2) unaccompanied baggage; (3) goods to be transshipped; (4) same bottom or retention cargo (iv) the cargo declaration, there should be separate mention about (ijarms (i) ammunition (i) explosives (iv)narcotics _(v) dangerous drugs (vi) gold and(vi)siver. Sec. 30A - Special Passenger and Crew Manifest (1) The person-in-charge of a conveyance that enters india from any place outside India or any other person as may be specified by the Central Govemment by notification in the Official Gazette, shall delverto the proper officer (i) The passengerand crew arrival manifest before arivalin he case ofan aircraft ora vessel and upon arivalin the case of a vehicle; and (i) The passenger name record information of arriving passengers, in such form, containing such particulars, in such manner and within such time, as may be prescribed. (2) Where the passenger and crew arrival manifest or the passenger name record information or any part thereofis not delivered to the proper oficer within the prescribed time and ithe proper officer is satisfied that there was no sufficient cause for such delay, the person-in-charge or the other person referred toi sub-section (1) shall be lable to such penalty, not exceeding fy thousand rupees, as may be prescribed.Pee ecg eae ae erie (1) The master ofa vessel shall not permit the unloading of any imported goods until an order has been given by the proper officer granting entry inwards to such vessel. (2). Nothing inthis section shall apply tothe unloading of baggage accompanying a passenger or a member ofthe crew, mal bags, animals, perishable goods and hazardous goods. No imported goods required to be mentioned in an import manifest or impor report shall, except wih the permission of the proper officer, be unloaded at any customs station unless they are specified in such manifest or repor for being unloaded at that customs staton, Unloading and Supervision of Officer Pease cks t with di ‘Goods Unloatng Custom Ofcer Supervision ® et wit Approved Place Except with the permission of the proper officer, no imported goods shall be unloaded, and no export goods shall be loaded, at any place other than a place approved under clause (a) of section 8 for the unloading or loading of such goods. Imported goods shall notbe unloaded from, and export goods shall notbe loaded on, any conveyance except under the supervision of the proper officer Provided that the Board may, by notification in the Official Gazette, give general permission and the proper officer may in any particular case give special permission, for any goods or class of goods to be unloaded or loaded without the supervision of the proper officer. v‘Smart Academy wanuvsmartacademycom CAVishal Bhattad © o9gsossoso0 @) the interests of revenue are not prejudicially affected and for home consumption for a bill of entry for > that there was no fraudulent intention, warehousing or vice versa, Tutorial Note: In other words, ithe rate of duty is high and the importer expects the government to reduce the duty, he can cleverly apply for conversion and seek permission to substitute the bill ofentry for home consumption by abillofenry of warehousing so thathe would decide to Temave the goodsas and when the rate of duty i reduced. But officer wil notalow such conversion because til affect therevenu. ‘SECTION 47; CLEARANCE OF GOODS FOR HOME CONSUMPTION Where the properofficeris satisfied that > anygoods entered forhome consumption are not prohibited goods and > theimporterhas paid the import duty ifany, assessed thereon and any charges payable under his Actin respect of he same, the proper oficer may make an order permiting clearance ofthe goods for home consumption Provided that such order may also be made electronically through the customs automated system on the basis of risk evaluation through appropriate selection criteria. “Provided further that the Central Government may, by notification in the Official Gazette, permit certain class of importers to make deferred payment of said duty or any charges in such manner as may be provided by rule. The importer shall pay the import duty— {a} onthe date of presentation of the bill ofentry in the case of selfassessment; or {(b) within one day (excluding holidays) from the date on which the bill of entry is returned to him by the proper officer for payment of duty in the case of assessment, reassessment or provisional assessment; or ()in the case of deferred payment under the proviso to sub-section (1), from such due date as may be specified by rules made in this behalf, and ifhe fails to pay the duty within the time so specified, he shall pay interest @ 15% on the duty notpaid or short-paid tillthe date of its payment. eta ede ea Information about intent to avail benefit of notification: An eligible importer intending to avail the benefit of deferred payment shall intimate tothe Principal Commissioner/Commissioner of Customs, having jurisdiction over the port of clearance, hisintention toavail the said benefitwho on being satisfied with the eligibility of the importer allow him to pay the duty by due dates. Due dates for deferred payment ofimport duty— gr. No] 60048 corresponding to Bill of Entry returned for Due date of payment of duty.inclusive of the period No payment from (excluding holidays) as mentioned in section 47(2) 1. | 1 stday to 15th day of any month ‘6th day of that month 2._ | 16th day til the last day of any month other than March | 4st day of the following month 3. | 6th day til the 343t day of March 3ist March Electronic payment of duty: The eligible importer shall pay the duty electronically, However, the Assistant/Deputy Commissioner cof Customs may for reasons tobe recorded in writing, allow payment of duty by any mode other than electronic payment. Deferred payment not to apply in certain cases: If there is default in payment of duty by due date more than once in three consecutive months, this facilty of deferred payment wllnotbe allowed unless the duty with interest has been paid in ull The benefit of deferred payment of duty wil not be available in respect of the goods which have not been assessed or not declared by the importerin the entry. Tutorial Notes Groen channel of impor: this is a special scheme allowed in cortain cases for speedy clearance of imports. Under such schemes the appraisement s done as per normal procedure except that there would be no physical examination of the goods unless there is any specific ‘doubt, Some ofthe situations where this scheme has been made applicable ae public sector undertakings, government departments, 100 % ‘exportoriented units approved by tne collector and other importers which aprovenidentty and clean trackrecordSee et Rec cacao Ren RU LO aL adh) EAA VAY GLE eer eS if any imported goods are not cleared for home consumption or warehoused or transhipped within thirty days from the date of the unloading thereof or within such further time as the proper officer may allow, such goods may, after notice to the importer and with the permission of the proper oficerbe sold by custodian thereof ‘Aer the successful bidder has been informed aboutthe result of the auction, a consolidated bill of entry, buyer-wise willbe filed with the Customs in the prescribed formatby the concemed custodian for clearance ofthe goods as persection 46 {a) The proper officer of Customs shall assess the goods to dutyin accordance wth he extant aw within 15 days offing of Bll of Entry and afierassessmentinform the amount of duty payable to the concemed custodian. {b) The auctioned goods shall be handed over tothe successful bidder after assessment and out-of charge orders given by the proper officer, on paymentofdues, Provided that - a) Animals, perishable goods and hazardous goods, may, with the permission ofthe proper officer, be sold atany time; ) Arms and ammunition may be soldat such time andplace andin such manner asthe Central Government may Ee A GAC SIA CLL au taeeTINS Where (2). inthe case of any imported goods, whether dutiable or not, entered for home consumption, the Assistant Commissioner of Customs or Deputy Commissioner of Customs is satisfied on the application ofthe importer that the goods cannot be cleared within a reasonable time. (b)_ inthe case of any imported dutiable goods, entered for warehousing, the Assistant Commissioner of Custom of Customs is satisfied on the application of the importer that the goods cannot be removed for deposit reasonable ime, f Deputy Commissioner in a warehouse within a the goods may pending clearance or removal, as the case may be, be permitted tobe stored in a public warehouse fora period not exceeding thinty days: Provided thatthe provisions of Warehousing shall not apply to goods permitted to be stored ina public warehouse under this section, Provided further thatthe Principal Commissioner of Customs or Commissioner of Customs may extend the period of storage fora further period not exceeding thirty days atatime.eae Bill of Entry for Home [== _ consumption or warehousing (into-bond) Import Report Time limites. Bill of Entry of Home ‘consumption or warehousing (Int-bond) —s Importer eel Home Consumption ( Entry inward not applicable to AircraftLEARANCE OF EXPORT GOODS ee ueietaronerat esate cy EXPORTATION BY VESSEL & AIRCRAFT Customs Office After Departure order Shipping Bill e 4 EGM Exporter Person inCharge s ) © > Order of Loading & Exportation i.e, Let export order Entry outward ie, Permission of Loading of cargo EXPORTATION BY VEHICLE Land Customs Office After Departure order Bill of Export oO. EXPORTER @ > Vehicle Let Export Order Person In Charge (18)] _withits grammatical variations and cognate expressions, means taking out of India to a place outside India. (Export goods ec 2(19)] means any goods, which are to be taken out of India to a place outside India. in elationto any goods atany time between theirentry for exportand the time when they are exported, includes any owner, beneficial owner or any person holding himself outto be the exporter. v‘Smart Academy wanuvsmartacademycom CAVishal Bhattad © o9gsossoso0 2)Peano ee Meaning: Itis an application by exporter to customs Office for clearance of goods for exportation. Presentation: The exporter of any goods shall make entry thereof by presenting electronically on the custom automated system tothe proper officer In the case of goods to be exported ina vessel or aircraft - a shipping bill and Provided that the Principle Commissioner of Custom or Commissioner of Customs may, in cases where it is not feasible to make entry by presenting electronically, on the custom automated system allow an entry to be presented in any other manner. Time Limit: Normally a Shipping Bilis fled only after an entry outward but under special circumstances the Commissioner of Customs may permitadvance Shipping Billo beled, Declaration: The exporter of any goods, while presenting a shipping bil or bill of export, shall make and subscribe to a declaration astothe truth ofits Contents. The exporter who presents a shipping bill or bill of export under this section shall ensure the followingnamely- {2)the accuracy and completeness ofthe information given therein (b)the authenticity and validity ofany document supporting, and {c) compliance with the estrction or prohibition, if any, relating to the goods under this Actor under any other law forthe ime being inforce Se ELHR Tse SRS GeO Ue (1) Where the proper officer is satisfied that i) Any goods entered for export are not prohibited goods and il) The exporter has paid the duty if any, assessed thereon and any charges payable under this Actin respect of the same. The proper oficer may make an order permiting clearance and loading of the goods for exportation. This is known as “Let Export” orders, Provided that such order may also be made electronically through the customs automated system on the basis of risk evaluation through appropriate selection criteria. Provided further that the Central Government may, by notification in the Official Gazette, permit certain class of exporters tomake deferred payment of said duty or any charges in such manner as may be provided by rules. (2) Where the exporter fails to pay the export duty, either in full or in part, under the proviso to sub-section (1) by such due date as may be specified by rules, he shall pay interest on said duty not paid or short-paid till the date ofits payment at @ 15%pa. ‘Aer the shipping bili filed, they are presented for the customs appraisal. Here also there are two parts namely, scrutinising assessment and physical check of assessment. Since the export regulations are not strict and rigid, these procedures are very simple Bee eater SU aL A = ALL (1) Every deposit made towards duty, interest, penalty, fee or any other sum payable by a person under the provisions of this Actor under the Customs Tariff Act, 1975 or under any other law for the time being in force or the rules and regulations made thereunder, using authorised mode of payment shall, subject to such conditions and restrictions, be credited to the electronic. ‘cash ledger ofsuch person, tobe maintained in such manner, as may be prescribed. (2) The amount availabe in the electronic cash ledger may be used for making any payment towards duty interest, penalty, fees or ‘any other sum payable under the provisions of this Act or under the Customs Tariff Act, 1975 or under any otherlaw forthe time beingin force orthe rules and regulations made thereunder in such manner and subjectto such conditions and within such time asmay be prescribed, (3) The balance in the electronic cash ledger, after payment of duty, interest, penalty, fee or any other amount payable may be refundedin such manner as may be prescribed. (4) Notwithstanding anything contained inthis section, ifthe Boards satisfied thatitis necessary or expedient soto do, it may, by notification, exempt the deposits made by such class of persons or with respect to such categories of goods, as may be specitiedin the notification, from ll orany ofthe provision ofthis sectionSe NE Ra eS ee en Ae ea ree 4)The Central Governmentmay, specify the mannerin which issue duty creat a)inlieu of remission of any duty or tax or levy, chargeable on any material used in the manufacture or processing goods or for carrying out any operation on such goods in India that are exported or b)otherfinancial benefit subjectto such conditions and restriction as may be specified therein 2) the duty creditissued shall be maintained in the customs automated system in the form of an electronic duty credit ledger ofthe person whois the recipient of such duty credit 3)the duty credit available in the electronic duty credit ledger may be used > bythe persontowhomitis issued or > the persontowhomitis transferred, towards making payment of duties payable under this actor under the Customs Tariff Act, 1975 in such manner and subject to such conditions and restrictions and within such time as may be prescribed. BEC ann na OM Ae ken hss QL AO LEO Re che=o ‘The master of a vessel shall not permit the loading of any export goods, other than baggage and mail bags, until an order has been given by the proper officer granting entry-outwards to such vessel. Granting of Entry outward means general permission by customs authority to the master of the vessels for allowing him to 0, Provision of this sectionis applicable only in respect of vessels and not for aircraft or vehicle. SECTION 40: EXPORT GOODS NOT TO BE LOADED UNLESS DULY PASSED BY PROPER OFFICER This section applies to al types of conveyances. The goods can be taken on board only if they are accompanied by the following documents: (i) Incase of export goods other than baggage and mail bags - the goods shall be accompanied by Shipping Bill (at seaports/airports) Bill of Export (at Land Customs Station) ~ _Billof Transhipment (for transhipment goods) all duly passed by the proper officer. (i) In case of baggage and mail bags - they should be permitted by Customs for export Een ETA Madd Ye a aS ES ‘The person-in-charge of a conveyance carrying export goods or imported goods or any other person as may be specified by the Central Government, by notification, shall, before departure of the conveyance froma customs station, deliver to the proper oficer ‘D inthe case ofa vessel aircraft, a departure manifest or an export manifest by presenting electronically, and > inthe case ofa vehicle, - an export report, in such form and manner'as may be prescribed ‘such person-in-charge or other person fails to deliver the departure manifest or export manifest or the export report or any part thereof within such time, and the proper officer i satisfied that there is no sufficient cause for such delay, such persortin-charge or ‘other person shall be liable to pay penalty not exceeding fifty thousand rupees Provided that principle Commissioner of Custom or Commissioner of Custom may in cases were itis not feasible to deliver the departure manifest or export manifest or export report by presenting electronically allow the same to be delivered in any other manner. Person delivering the departure manifest or export manifest or export report shall act the foot thereof make and subscribe toa declaration ato the truth ofits contents Content of Export Manifest or Export Report: (3)The cargo list shall give the following detail in separate in all the three regulations the common features are as sheets, follows: (2)Cargo shipped (1)The manifestrepor shallbe delivered in duplicate (&)Cargotransshipped, {2)ltshall consist of (c)Cargo lying in the vessellarcraft, but not landed or (a)Cargo report transshipped (same bottom cargo) (b)Vessel's storelist, (d)Cargoinrespect of which drawbacks claimed (c)Private property istof master, officers and crew (e)in case ofthe vessel, the dutiable goods, including arms (dn case the vessel /aircraft /conveyance carries ‘and ammunition forming part of the ordinary equipment passengers, apassengermanifest ofavessel(4) Specific declaration should be made in respect of the anilreport should be furnished. following cargo, imespective of whether it comprises Amendment: If the proper officer is satisfied that the ‘same bottom cargo, shipment transshipment departure manifest or export manifest or the export report is (\)arms (i ammunition ii) explosives in any way incorrect and there was no fraudulent intention, {iv)nareotics (v) dangerous drugs or he may permit such manifest or report to be amended or (vi) gold the vessel/arcraftdoesnotcarry any such cargo, supplemented. [Section 41(3)] Pra ewan eee kan mee (1) The person-in-charge of a conveyance that departs from India toa place outside India or any other person as may be specified bythe Central Governmentby notification inthe Official Gazette, shall deliver to the proper oficer— (i)the passenger and crew departure manifest; and (ithe passenger name record information of departing passengers, in such form, containing such particulars, in such manner and within such time, as may be prescribed. (2) Where the passenger and crew departure manifest or the passenger name record information or any part thereof is not delivered to the proper officer within the prescribed time and the proper officer is satisfied that there was no sufficient cause for such delay, the personsin-charge or the other person referred to in sub-section (1) shall be liable to such penalty, not exceeding fifty thousand upees, as may be prescribed SECTION 42: NO CONVEYANCE TO LEAVE WITHOUT WRITTEN ORDER The person-in-charge of a conveyance which has brought any imported goods or has loaded any export goods at a customs station shall not cause or permit the conveyance to depart from that customs station untl a written order to that effect has been given by the proper officer. Nosuch order shall be given until 2) The person-in-charge ofthe conveyance has answered the questions putto him under section 38, ) The provisions of section 41 (Export manifest) have been complied with ©). The shipping bills or bills of export, the bills of transhipment, if any, and such other documents as the proper officer may require have been delivered to him; 4) All duties leviable on any stores consumed in such conveyance, and all charges and penallies due in respect of such conveyance or from the person-in-charge thereof have been paid or the payment secured by such guarantee or deposit of such amounts the proper officer may direct. @) Theperson-in-charge ofthe conveyance has satisfied the proper officer that no penaltyis leviable on him under section 116 or the payment of any penalty that may be levied upon him under that section has been secured by such guarantee or deposit of ‘such amountas the proper oficer may direct. 4) Inany case where any export goods have been loaded without payment of export duty orin contravention of any provision of this Actor any otherlaw forthe ime beingin force relating to export of goods, ’) Suchgoods have been unloaded, or i) Where the AICis satisfied that itis not practicable to unload such goods, the person-in charge ofthe conveyance has given an undertaking, secured by such guarantee or deposit of such amount as the proper officer may direct, for bringing back the goods to India, Tote SUL RON MU Reda Rey eI Rehr) RON MOLVA No imported goods shall be unloaded from, and no export goods shall be loaded on, any conveyance on any Sunday or on any holiday observed by the Customs Department or on any other day after the working hours, except after giving the prescribed notice and on payment of the prescribed fees, if any. Provided that no fees shall be levied for the unloading and loading of baggage accompanying a passenger or a member of the crew, and mailbags. SECTION 37: POWER TO BOARD CONVEYANCES The proper oficer may, at any time, board any conveyance carrying imported goods or export goods and may remain on such ‘conveyance for such period as he considers necessary. SECTION 38: POWER TO REQUIRE PRODUCTION OF DOCUMENTS AND ASK QUESTIONS For the purposes of carrying out the provisions o this Act, the proper officer may require the persor-in-charge of any conveyance ‘or animal carrying imported goods or export goods to produce any document and to answer any questions and thereupon such person shall produce such documentsand answer such questions.TRANSIT AND TRANSHIPMENT Let’s understand the concept with diagram Goods can be transhiped from one port of India to another port or Foreign portwithout duty. Goods can be. transited from one. portoflndiato foreign ort without duty BAO ca Ra LGC ee a Lk Subjectto the provisions of section 11, where any goods + importedina conveyance and + mentionedin the import manifest orthe import report as the case may be, as fr transitin the same conveyance + toanyplace outside India or + toanycustoms station, the proper officer may allow the goods and the conveyance to transit without payment of duty, subject to such conditions, as may beprescribed SEC 54: TRANSHIPMENT OF CERTAIN GOODS WITHOUT PAYMENT OF DUTY 1. Where any goods imported into a customs station are intended for transhipment, a bill of transshipment shall be presented tothe proper officer in the such form and manner as may be prescribed Provided that if transhipped goods are covered under an interational treaty or bilateral agreement between the Government of India and Government of a foreign country, a declaration for transshipment instead of a bill of transhipment shal be presented to the proper oficerin the such form and manner as may be prescribed. 2, Where any goods imported intoa customs station are mentioned in the import manifest or the importreport, as the case may be, as for transshipment to any place outside India, such goods may be allowed to be so transhipped without paymentof duty 3, Where any goods imported into a customs station are mentioned in the import manifest or the importreport, as the case may be, as for transhipment. a) To any major port as defined in the Indian Ports Act, 1908 or the customs airport at Mumbai, Calcutta, Delhi or ‘Chennai or any other customs port or customs airport which the Board may, by notification in the Official Gazette, specify in this behalf, or b) —Toany other customs station and the proper officer is satisfied that the goods are bona fide intended for transhipment tosuch customs station, The proper officer may allow the goods to be transhipped, without payment of duty, subject to such conditions as may be prescribed for the due arrival of such goods atthe customs station to which transhipmentis allowed v‘Smart Academy wanuvsmartacademycom CAVishal Bhattad © o9ssossoso0 7)Where any goods are > allowed tobe transited under section 53 or > transhipped under sub-section (3) of section 54 to any customs station, They shall, on their arrival at such station, be liable to duty and shall be entered in ike manner as goods are entered on the first importation thereof and the provisions ofthis Act and any rules and regulations shall, so far as may be, apply in relation to such goods Ban ie 1 Incase of Transit of goods the conveyance remains | In case of transshipment, goods first landed in the particular Indian customs same. station and loaded to another conveyance for destination port conveyances changes. 2 Therecords already madein the ships! aircraft's wil | Incase of transshipment goods are to be mentionedin manifest or report, as, continue. The goods will have to be shown in the | for transshipment for any customs station. Record will change as bill of rmanifestas the same bottom cargo. transshipment shall be presented to the proper officer. 3 Incase of transit theres continuity in the record and | In case of Transshipment care or caution have to be exercised to ensure there is no chance of the control over such transi| thatthe goods are not liciy landed and smuggled into Inca, goods being ost AS OAM) est LL ‘Goods can be transported fom one part of India to another tnrough foreign teritory without duty Imported goods may be transported without payment of duty from one land customs station to another, and any goods may be transported from one part of india to another part through any foreign teriory, subject to such conditions as may be prescribed for the due arrival of such goods at the place of destination eo ‘Smart Academy winwvsmartacademycom CAVishal Bhattad (® 09850850800Blank page for Exerciseble of Conten 15 | Date for Determination of Duty Rate & Tariff Value for imported goods 16 | Date for Determination of Duty Rate & Tarif value for Export goods. 17__|SelfAssessment 18 | Provisional Assessment 19 | Articles brought in Set Project import The Provisional Collection Of Taxes Act, 1931 Sec. 3- Power to make declarations under this Act. Where a Billto be introduced in Parliament on behatf of Government provides for the imposition or increase of a duty of customs or excise, the Central Government may cause to be inserted inthe Bill a declaration that it is expedientin the public interest hat any provision ofthe Bil relating to Such imposition or « Increase shall have immediate effect under this Act. Sec.4-Effectof declarations under this Act, and duration thereof, (1) Adeclated provision shall have the force of law immediately on the expiry ofthe day on which the Bill contaningits introduced, (2) Adeclared provision shall cease to have the force of law under the provisions ofthisAct- (2) when it comes into operation as an enactment, with or without amendment, or (b) when the Central Government, in pursuance of a motion passed by Parliament, directs, by notfication in the Official Gazette, that it shal cease tohave the force oflaw,Date - 15/03/20 Daa Ce) Date - 5/03/20 Duty Rate - 20% Territorial Water ep) Date - 5/03/20 Din ee Date - 10/03/20, Duty Rate -20% Deere Dra cea oredr) Prac Ly Date - 15/06/20 + Territorial Water Dicer Date - 5/03/20 Duty Rate - 10% a ‘Smart Academy winwvsmartacademycom CAVishal Bhattad (® 09850850800E FOR DETERMINATION RATE & TARIFF VALUE SECTION 15(1) FOR IMPORTED GOODS 1 if goods entered for home consumption Relevant date for duty rate ¥ After: Ifill of entry is presented & tariff value is date of after entry inward of vessel or arrival of aircraft. payment of duty, Y Relevant date for duty rate and tarif Before entry inward of vessel (Before artval of aircrafl Vehicle Values dale of presentation oil wes + chert Relevant date is date of entry Relevant date is date of arval of inward of vessel aircraft / Vehicle (2) The provisions of this section shall not apply to baggage and goods imported by post. SECTION 16(1) FOR EXPORT GOO! Relevant date for duty rate and tari value is date of Let Export Order Relevant date for duty rate and tariff value is date of (ie, orderforloading for exportation) given by Proper Oficer. payment ofexport duty (2) The provisions of this section shall not apply to baggage and goods exported by post, Cstsasl a} Dat Pras)aoe ‘An Exporter exported goods valuing % 1,00,000 to United States of America (USA) by a vessel, Other details are as follows: Particulars Date of submission Rate of export duty Shipping Bill 18.2019 10% Entry outwards granted to the 58.2019 8% vessel by the proper officer of Customs Let export order received 6.8.2019 8% ‘Ship let for USA from the Indian port 78.2019 18% Ship crossed the temitorial water of india ——8.8.2019 12% You are required to find the customs duty payable for exported goods? Answer:ASSESSMENT Section 2(2) Assessment” means determination of the dutiability of any goods and the amount of duty, tax, cess or any other sum so payable, if any, under this Act or under the Customs Tariff Act, 1975 or under any other law forthe time being in force, with reference to— (@) the tarif classification of such goods as determined in accordance with the provisions ofthe Customs Tarif Act (b) the value of such goods as determined in accordance with the provisions ofthis Actand the Customs Tariff Act (c) exemption or concession of duty, tax, cess or any other sum, consequent upon any notification issued therefor under this Actorunder he Customs TariffAct or under any other law forthe time beingin force (€)the quantity, weight, volume, measurement or other specifics where such duty, tax, cess or any other sum is leviable on the basis ofthe quantity, weight, volume, measurement or other specifics of such goods (¢) the origin of such goods determined in accordance with the provisions of the Customs Tariff Act or the rules made thereunder, ifthe amount of duty, tax, cess orany other sumis affected by the origin of such goods () anyother speciticfactor which affects the duty, tax, cess orany other sum payable on such goods, and includes provisional assessment, self-assessment, re-assessment and any assessment in which the duty assessedis nil a) Duty to be self-assessed by the importerlexporter Animporter entering any imported goods under section 46 (Bill of entry), or an exporter entering any export goods under section 50 (shipping bill), shall, save as otherwise provided in section 85 (i.e. stores allowed to be warehoused without assessment of duty), self-assess the duty, if any, leviable on such goods. The proper officer may verify the entries made under section 46 or section 50 and the self assessment of goods referred to, in sub section 1 and for this purpose, examine or test any imported goods or export goods or such part thereofas may be necessary. Provided that the selection of cases for verification shall primarily be on the basis of risk evaluation through appropriate selection criteria. b)Verification by properofficer The purpose of Verification, the proper officer may require the importer, exporter or any other person to produce any document or information, whereby the duty leviable on the imported goods or export goods, as the case may be, can be ascertained and thereupon, the importer, exporter or such other person shall produce such document or furnish such information. ¢) Reassessment of duty by the proper officer if setf- assessment notdone correctly Where its found on verification, examination or testing of the goods or otherwise that the self-assessment is not done correctly, the proper officer may, without prejudice to any other action which may be taken under this Act, re-assess the duty, leviable on such goods 4) Speaking order for re-assessment to be passed unless the importer agrees with the reassessment Where any re-assessment done under sub section (4) is contrary to the self-assessment done by the importer or exporter Explanation- In cases where an importer has entered any imported goods under section 46 or an exporter has entered ‘any export goods under section 50 before 08.04.2011, such imported goods! export goods shall continue tobe governed by the provisions of erstwhile section 17.41) Notwithstanding anything contained in this Act but without prejudice to the provisions of wea section 46 and Section 50 t J y ¥ 1 b)Where the proper officer c)Where the importer or exporter d)Where necessary documents deems it necessary to has produced all the necessary have not been produced or subject any imported documents and furnished full information has not been goods or export goods to information but the proper officer furnished and the proper officer any chemical orothertest, deems it necessary to make deems it necessary to make further enquiry furtherenquiry The proper officer may direct thatthe duty levable on such goods be assessed provisionally ifthe importer or the exporter, as the case may be, fumishes such security as the proper officer deems fit for the payment ofthe deficiency, if any, between the duty as may be finally assessed or re-assessed as the case may be, and the duly provisionally assessed (1A) Where, pursuant to the provisional assessment under sub-section(1), if any document of information is required by the proper officer for final assessment, the importer or exporter, as the case may be, shall submit such document or information within such time, and the proper officer shal finalise the provisional assessment within such time and in such manner, as may be prescribed. FINAL ASSESSMENT 41) When the duty leviable on such goods is assessed finally or re-assessed by the proper officer in accordance with the provisions of this Act, then Diferenial amount payable to XCeSS amount eile for end with Interest Ir Goverment with interest Refund is availabe subject to Doctrine of Unjust enrichment Liability to Pay Interest: The importer or exporter shall be liable to pay interest, on any amount payable to Central Government, consequent to the final assessment order, a the rate of 15% p.a. from the first day ofthe month in which the duty is provisionally assessed til the date of payment thereof. If Finally Assessed or If Finally Assessed Or reassessed reassessed Duty is more than or Duty is less than the duty ‘equals to duty provisionally paid provisionally paid won ah has imported goods from Germany andis finally e-assessed uls 18(2) of the Customs Act, 1962 isas follows: Date of provisional assessment 12 Dec 2019 Duty demand on consignment 1,80,000 Date of final reassessment 2 Feb 2020 Date of payment of duty demanded 5 Feb 2020, Determine theinterest payable Answer:- ‘As per section 18(3) ofthe Customs Act, 1962, an importers liable to pay interest atthe rate of 15% p.a. on any amount payable consequent tothe re-assessment order from the frst day of the month in which the duty is provisionally assessed til the date of payment Therefore in the given case, Moris Lalis liable to pay following interest 80,000 x 15% x 67/365 = & 4,956 (rounded of) Entitlement of Interest on Refund: If any amount refundable is not refunded within three months from the date of assessment of duty finally or re-assessment of duty, as the case may be there shall be paid an interest on such unrefunded amount at rate of 6% p.a.till the date of refund of such amount. Refundis available subject to doctrine of unjustenrichmentCUSTOM FINALISATION OF PROVISIONAL ASSESSMENT (Regulation, 2018) (Nin 73/2018-Custom Application : These regulation shall apply to the provisional assessments ordered on and afer the enforcement of these regulations. Time Limit and manner for submission of documents or information for the purpose of finalisation of provisional assessment :a) the necessary documents have not been produced or information has been furnished by the importer or the exporter; or b) the proper officer equires the importer or the exporter to produce any additional documents or information, then the necessary document required for final assessment to be submitted within 1 month of order of provisional assessmentor date of such requisition by proper officer. 2) Proper officer shall within 15 days in writing specify the details of theinformation to be furnished. 3) Extend: a) Proper officer - further upto 3 months ) Additional commissioner or Joint Commissioner | extend another by 3 months ‘) Commissioner of Custom ‘extend the time period further as demanded Note:- Bill of entry/shiping bill that has been assessed provisionally shall be treated separate case of provisional assessment 4) Time Limit for finalisation of provisional assessment: within 2 months after receipt of allinformation or carrying chemical or other test orinvestigation. The Commissioner of Customs concemed may allow extension, for reasons to be recorded in writing, a further time period of three months. 5) If duty payable in final assessments more than provisional assessment than deficient amount adjusted against security given with bond. 6) Penalty : If any importer or exporter or his authorised representative or Customs Broker contravenes any provision of these regulations or abets such contravention, or fails to comply with any provision of these regulations, he shall be liable to a penalty which may extend tofity thousand rupees. SEC: 19 DETERMINATIONS OF DUTY WHERE GOODS CONSIST OF ARTICLES LIABLE TO DIFFERENT RATES OF DUTY Except as otherwise provided in any law for time being in force, where goods consist of set of articles, Duty shall be calculated as follows: DUTY WITH REFERENCE TO QUANTITY; Article liable to duty with reference to quantity shall be chargeable to that duty. ie, Duty is payable as follows 8 A:10kg — B: 20Ikg TA0Kg. €20K9. TSKg. TK, C:5ikg —-D:2ikg Duty with reference to value : IF THEY ARE LIABLE TO DUTY AT THE SAME RATE, | Allarticles shall be chargeable to duty at that rate. a a ie. @ 10% 10% 10% 10% 10% IF THEY ARE LIABLE TO DUTY ATDIFFERENT RATE, | Al aricles shall be chargeable to duty at the highest rate. (Eventhough some atcleare atNiLrateie.10% Butif the importer produces evidence to the satisfaction ‘of the proper officer or the evidence is available regarding the value of any of the articles liable to different rates of duty, such article shallbe chargeable to duty separately at the rate applicable to it.Assessment of accessories supplied with main equipment: ‘Accessories of any article which satisfy the condition of Accessories (conditions) rules, 1963, made in this behalf are chargeable to duty atthe same rate as that ofthe main article Accessories (condition) rule, 1963: 1. Accessories ofand spare parts and maintenance or repairing implements form, any article, 2. When imported alongwith the article shall be chargeable at the same rate ofthe duty as that article, 3._ If proper officers satisfied thatin he ordinary course of rade:- > Such accessories, parts, implements are compulsorily supplied along with that article and > Noseparate charge is made for such supply, their price being included in price of the article elim aeniey Ue] > Where an Industrial or similar project is going to be installed or commissioned or an existing unit is planned to expand, for is intial setting up, a numbers of diferent machineries, raw material, components, auxiliary equipments, spares etc, ae required all these items are classifiable under different heading, > Itinvolve diferent duty for different items and careful scrutiny of each and every item for assessment, this leads to delay in clearance and certain amount of hardship overimporters. > Thus to alleviate the same and streamline the process of assessment, new tariff heading with a flat rate was framed to cover all projectimports under CTA1975 (heading no. 98.01). le Projects Industrial plants © Power projects Project or oil or mineral exploration © Irrigation projects Mining projects © Otherprojectas specitied by .6.1 ‘Shor Title, Extent and Commencement 2 Duty Rate for Basic Customs Duty 3(1) | Additional Customs Duty Equivalent to Excise Duty [CVD] 3(3) Additional Customs Duty ( Counterbalance theExcise duty leviable on any raw materials, '3(5) Additional Customs duty to counterbalance salestax & etc. (SP. CVD] 3(7)_ To Countervall levy of GST 39) | To countervai levy of GST Compensation Ces CUS Te MEAG lina CUMS EAS | SEC.1SHORTTTLE EXTENT AND COMMENCEMENT, 1)This Act may be called the Customs Tariff Act, 1975. 2)It extends to the whole of India. 3)it shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. The rates at which duties of customs shall be levied under the Customs Act, 1962 (BCD levied under section 12), are specified in the First and Second Schedules. aN ¥ ISED SYSTEM usr THREATS | Schedule | | Schedule I! (70 Re) OF NOMENCLATURE] Imported Goods Export GoodsFollowing different types of duties are levied U/S 3 (RED KH Leiy fational ty equal to excise uty ~~ fin => * @ => AD 3(3): Levy of additional duty Countervall effect of Excise Duty on Raw Material (AGD/S()3) Levy of aditional duty Counterail levy of sles tax or VAT “= ied => i> => (ACD (7): Levy of addtional duty Counterval levy of GST JNPT PORT IMPORT a ; MANUFACTURE ACD 39): Levy of additional duty Countervail levy of GST Compensation Cess JNPT PORT — IMPORT. oe. EEE EEE ozo ‘Compensation Cess, MANUFACTUREINTERNATIONAL PRICING SYSTEM v'smart Academy ‘wurwvsmartacademy.com CAVishal Bhattad © osesoesos00 €$)SEC. 3 ADDITIONA! ISTOMS DUTY [ACD] Sec 3 : Additional Custom Duty () (2) ‘Any article which isimportedinto India shall, in addition, be liable toa duty (hereatterin this section referred to as the additional duty) equalto the excise duty > forthe time being eviable on alike article if produced or manufactured in India and if such excise duty on a lke article is leviable at any percentage ofits value, the adoitional duty o which the imported artcle shall be so liable shallbe calculated at that percentage ofthe value ofthe imported article ce Proviso Provided that incase of any alcoholic liquor for human consumption imported into India, the Central Government may, by notification in the Official Gazette, specity the rate of additional duty having regard to the excise duty forthe time being leviable on a like alcoholic liquor produced or manufactured in different States or, if lke alcoholic iquor is not produced or manufactured in any State, then, having regard tothe excise duty which would be leviable for the time being indifferent States on the class or description of alcohaliciquor to hich such imported alcoholic liquor belongs. In this sub-section, the expression “the excise duty for the time being leviable on a like article if produced or manufactured in India” means the excise duty forthe time being in force which would be leviable ona lke article ifproduced or manufacturedin Indiaor, if a like arlcle is not so produced or manufactured, which would be leviable on the class or description of articles towhich the imported article belongs, and where such duty is leviable at fferentrates, the highest duty. Explana- tion -1 For the purpose of calculating under subsections (1) and (3), the additional duty on any imported article, where such dutyis leviable at any percentage ofits value, the value of the imported article shall, notwithstanding anything contained in section 14 of the Customs Act, 1962, be the aggregate of— (|) the value ofthe imported article determined under sub-section (1) of section 14 (Transaction Value) or the tariff value of such article fixed under sub-section (2) ofthat section, as the case may be: and (i). any duty of customs chargeable on thatarticle under section 12ofthe Customs Act, 1962(BCD), and any sum chargeable on that article under any law forthe time being in force as an addition to, and in the same manneras, a duty of customs, butdoes not include— (@) the duty referred to in sub-Section (1), (3), (5) &(9) (b) the safeguard duty referred o in sections 8B and 8C; (6) the countervailing duty referred to in section9; and (d) the anti-dumping duty referred to in section 9A: Provided thatin case ofan article imported into india, — (a) inrelation to whichitis required, under the provisions ofthe "Legal Metrology Act, 2009"* orthe rules made thereunder or under any other law forthe time being in force, to declare on the package thereof the retal sale price of such article; and (b) where the lke article produced or manufactured in India, orin case where such lke articles not so produce or manufactured, then, the class or description of articles to which the imported article belongs, is () th ‘goods specified by notification in the Oficial Gazette under sub-section (1) of section 4A of the Central Excise Act, 1944, the value of the imported article shall be deemed to be the retail sale price declared o the importedartcle less such amount of abatement, if any, from such retail sale price as the Central Government may, by notfcation in the Oficial Gazette, allowin respect of suchlike article under sub-section (2) ofsection 4A ofthat ActExplana- Where on any imported article more than one retail sale price is declared, the maximum of such retail sale price tion-1 _ shalbe deemed tobe the retail sale price for the purposes ofthis section Proviso Provided further that in the case of an article imported into India, where the Central Government has fixed a tariff value forthe like article produced or manufactured in India under sub-section (2) of section 3 of the Central Excise Act, 1944, the value of the imported article shall be deemed to be such tariff value, Explana- Where on any imported article more than one retail sale price is declared, the maximum of such retail sale tion-2 price shallbe deemed tobe the retail sale price forthe purposes ofthis section, (9) Fthe Central Governmentis satisfied that itis necessary n the public interest levy on any imported article [whether on such article dutyisleviable under subsection (1) ornot] > such addtional duty as would counterbalance the excise duty leviable on any raw materials, components and ingredients ofthe same natureas, or > similarto those, used in he production or manufacture of such article, it may, by notification in the Official Gazette, drect that such imported article shall in addition, be liable to an additional duty representing such portion of the excise duty leviable on such raw materials, components and ingredients as, neither case, may be determined by rules made by the Central Governmentin this behalf, Inmaking any rules forthe purposes of subsection (3), the Central Government shall have regard othe average quantum (4) ofthe excise duty payable onthe raw materials, components oringredients usedin the production or manufacture of suchlike article. ifthe Central Governmentis satisfied thatitis necessary n he publicinterest ‘> to levy on any imported article whether on such article duty is leviable under subsection (1) of, as the case may be, sub-section (3) or nal} such additional duty as would counter-balance the sales tax, value added tax, local tax or any other charges for the time being leviable on alike article on its sale, purchase or transportation in India, it may, by notification in the Official Gazette, direct that such imported article shal, in addition, be liable toan additional duty at a rate not exceeding four per cent. ofthe value ofthe imported article as specified in that notification. Explanaiin this sub-section, the expression sales tax, value added tax, local tax or any other charges forthe time being tion _leviable on a lke article on its sale, purchase or transportation in India’ means the sales tax, value added tax, local tax or other charges forthe time being n force, which wouldbe leviable on alike article ifsold, purchased or transported in India or, if lke article is not so sold, purchased or transported, which would be leviable on the class or description of articles to which the imported article belongs, and where such taxes, or, as the case may be, such charges are eviable at iferentrates, the highest such tax or, as the case may be, such charge. (9) Forthe purpose of calculating under sub-section (3), the addtional duty on anyimported atl, the value ofthe imported article shall, notwithstanding anything contained in sub-section (2), orsection 14 ofthe Customs Act, 1962, be the aggregate of— {i) the value of the imported article determined under sub-section (1) of section 14 of the Customs Act, 1962 or the tariff value of such article fixed under sub-section (2) ofthat section, as the case may be; and {i) any duty ofcustoms chargeable on thatarticle under section 12ofthe Customs Act, 1962, and any sum chargeable on that article under any law forthe time being in force as an addition to, andin the same manner as,aduty ofcustoms, but does not include— (a) the duty referred toin sub-section (5), (7) & (9) (b) the safeguard duty referred to in sections 8B and 8C; (0) the countervailing duty referred tin section 9; and (qd) the anti-dumping duty referred to in section 9A CORON Rk) ‘Any article which isimported into India shall, n addition, (7) | Dbe liable to integrated tax ‘2 atsuch rate, not exceeding forty percent. 3 ats levebe under section Sof the integrated Goods and Services Tax Ac, 2017 ona ike aril on ts suppyin india, > onthe valueof heimported article as determined under sub-section (8). or Sub Section (8A), as the case may be(8) Forthe purposes of calculating the integrated tax under sub-section (7) on any imported article where such taxis leviable at any percentage ofitsvalue, the value ofthe imported article shal, notwithstanding anything containedin section 14 ofthe Customs Act, 1962, be the aggregate of— (a)_ the value of the imported article determined under sub-section (1) of section 14 ofthe CustomsAct, 19620r the tariff value of such article fixed under sub-section (2) ofthat section, asthe case may be; and (b)_ any duty of customs chargeable on that article under section 12 ofthe Customs ct, 1962(BCD), and any sum chargeable on that article under any law forthe time being in force as an addition fo, and inthe same manneras, a duty of customs, but does notinclude the tax referred oin sub-section (7) or 2D the cess refered on sub-section (9). (8A) Were the goods deposited ina warehouse are sold to any person before clearance for home consumption or export the value of such goods under subsection (7) shall be — {a) where the whole of the goods are sold, the value determined under sub-section (8) or the transaction value of such goods, whicheverishigher, OR ‘any partofthe goodsis sold, the proportionate value of such goods as determined under sub-section (8) or the transaction value of such goods, whicheveris higher: Provided that where the whole ofthe warehoused goods or any part thereof are sold more than once before such clearance for home consumption or export, the transaction value of the last such transaction shall be the transaction value for the [purposes of clause (a) or clause (b): Provided further that in respect of warehoused goods which remain unsold, the value or the proportionate value, as the ‘case may be, of such goods shallbe determined n accordance withthe provisions of sub-section (8) Explanation.— For the purposes of this sub-section, the expression “transaction value’ in relation to warehoused goods, ‘means the amount paid or payable as consideration forthe sale of such goods (b) wh PortXYZ Ltd. has imported goods Z and filed into bond bill of entry on dated 10th Apr 2019. Goods are depositedin warehouse on 12th Apr2019 following are the details of imported goods. FOB price %40,00,000 Costof transportation %3,00,000 Costofinsurance _%2,50,000 BCD@10% IGST@18% Determine Custom duty payable, 1) ifXYZ Ltd. has sold the entire goods to PQR Ltd. for= 75,00,000 before clearance from warehouse. IfXYZ Ltd. has sold only 40% goods to PQR Ltd. for %38,00,000 before clearance from warehouse. (9) | anyarticlewhichisimported into India shal, in alton, > be liable to the goods and services tax compensation cess > at such rate, asis leviable under section 8 of the Goods and Services Tax (Compensation to States) Cess Act, 2017 2 onalike article on ts supplyin India, > on the value ofthe imported article as determined under sub-section (10) or sub-section (10A), as the case may be (10) For the purposes of calculating the goods and services tax compensation cess under sub-section (9) on any imported article where such cessis leviable at any percentage ofits value, the value of the imported article shal, notwithstanding anything contained in section 14 of the Customs Act, 1962, be the aggregate of (@)_ the value of the imported article determined under sub-section (1) of section 14 ofthe Customs Act, 1962 or the tariff value of such article fixed under sub-section (2) ofthat section, as the case may be; and (b) any duty of customs chargeable on that article under section 12 ofthe Customs Act, 1962,(BCD) and any sum chargeable on that article under any law forthe time being in force as an addition to, andin the same manner as, aduly of customs, but does notinclude > thetax referred to in sub-section (7) or D the cess referred toin sub-section (9)(10a) Where the goods deposited in a warehouse under the provisions ofthe Customs Act, 1962 are sold to any person before clearance for home consumption or export under the said Act, the value of such goods forthe purpose of calculating the The price actually paid or payable for the goods when sold for ‘© Export to India for delivery at the time and place of importation(for imported goods) , or «© Export from India for delivery at the time and place of exportation(for exported goods) , > Where the buyer and seller of the goods are not related and > Price is the sole consideration for the sale > Subject to such other conditions as may be specified in the rules made in this behalf Provided that such transaction value in the case of imported {goods shal include, in addition to the price as aforesaid, any amount paid or payable for costs and services, including ‘© commissions and brokerage, «© engineering, design work, + royalties and licence fees, + costs of transportation to the place of importation, * insurance, ‘ loading, unloading and handing charges to the extent and in the manner specified in the rules made inthis behal-———_ Provided further that the rules made in this behalf may provide for, 1) The circumstances in which the buyer and the seller shall be deemed to be related; il) The manner of determination of value in respect of goods when there is no sale, or the buyer and the seller are related, or price isnot the sole consideration forthe sale orn any other case; ii) The manner of acceptance or rejection of value declared by the importer or exporter, as the case may be, where the proper officer has reason to doubt the truth or accuracy of such value, and determination of value for the purposes of this section: NoTEs: 1. "The price actually paid or payable’ is the total payment made or to be made by the buyer to or for the benefit ofthe seller of imported goods. 2. Post importation Expenses-The value of imported goods shall nat include the following charges or costs, because they are distinguished from the price actually paid or payable forthe imported goods & all charges or costs are post importation expenses. > Charges for construction, erection, assembly, maintenance, or technical assistance > Cost of transport after importation > Duties and Taxes in India (i) Forimported goods, the conversion in value shall be done with reference to the rate of exchange prevalent on the date of filing bill of entry under section 46, (i) For export goods, the conversion in value shall be done with reference to the rate of exchange prevalent on the date of filing shipping bill (vessel or aircraft) or bill of export (vehicle) under section 50. Tea enc lis {Il Therate of exchange isnotiied by three agencies- ‘= the Central Board of Indirect Taxes and Customs (Board), © the Reserve Bank ofIndia and ‘= the Foreign Exchange Dealers’ Association of inci Forthe| i of customs valuation, “rate: vom ‘means the rate of exchange- for the conversion of Indian currency into foreign currency or foreign currency into Indian currency. Thus, fr the purpose of valuation under customs laws, rate notified by CBIC (Board) shallbe taken into account. The CBIC notifies the rates on a monthly basis applicable from the first day of the month. There are separate rates for goods (selling rate) and export goods (buying rate). Perot PO) a Ue ea AN eet) eee Unga Relevant date for duty Relevant date for Particulars under sec 15 and 16 Exchange Rate Sr. No. T._|If goods entered for home consumption a, BIE presented after Entry inward b. BIE presented before Entry inward 2._|If goods cleared from a warehouse 3._|If goods entered for export under section 50 eee ORL Gas It provides that the Board may fix tariff values for any class ofimported goods or export goods, having regard othe trend of value ‘of such orlike goods by notification in the Official Gazette ifitis satisfied that itisnecessary to do so Where any such tariff values are fixed, the duty shall be chargeable with reference to such tariff value, Provisions of sub- section (2) have an overriding effect on the provisions of sub-section (1). Question: Mr.Xhasimported the gold from U.S. following are the details: Quantity of gold 20,000 grams Date of arival of vessel 14/02/2020 Date ofentryinward granted 15/02/2020 Date ofbillofentry presented 14/02/2020 Particular Value Rate Tariff value 14/02/2020 409Per10gram 10% 1510212020 410 per 10 gram 11% Caloulate the value. Answer:SERUM CLM ACS Imported goods Export goods Notwithstanding anything contained in sub- The value of imported goods shall | | Value of export goods shall be the | section 14(1), ifthe Boards satisfied thatitis, be the transaction value of transaction Value of such || necessary or expedient so to do, it may, by such goodsi.e. to say: goodsi.e. to say: notification in the Official Gazette, fix tariff > Price actually paid or || >» Price actually paid or |) values for any class of imported goods or payable for goods when sold payable for goods when sold || export goods, having regard to the trend of for exportto india. for export from India value of such or ike goods, and where any > For delivery at the time & > For delivery at the time & |} such tariff values are fixed, the duty shall be place ofimportation. place of exportation. chargeable with reference to such tariff > Where the buyer & seller of | | > Where the buyer & seller of | value the goods are not related. the goods are notrelated. > Price is sole consideration |] > Price is sole consideration forsale. forthe sale. > Subject to such other |] > Subject to such other conditions as may be conditions as may be specified in the rules made specified in the rules made in this behalf inthis behalf. 1 | Rs. Normal | Rs, 80 Rs. 60 100 discount offered Rs.20 2 Rs. Rs, 100 | Cost of production of Export | 100 goods is Rs 150 3 | Rs. Rs, | Price of identical goods | 100 400. | prevailing in the market Rs 150. 4 | Rs, Rs. | ContractforRs 100entered | 100 100. | between buyer and seller was before 6 month. On date of importation price of Identical goods prevailing isRs.200 5 Rs. Exclusive} Rs60 | Buyer is asked not to} 100 discount or disclose the specially reduction given reduced price to any other to buyer of Rs party in india 40 6 Rs. Abnormal, Rs20 Rs 20 100 | discount of Rs. 80 is given to buyer to clear the dead stock.‘CUSTOMS VALUATION (DETERMINATION OF PRICE OF IMPORTED GOODS) RULE, 2007 SUBJECT TO RULE 12, the value of imported! goods shall be the TRANSACTION VALUE adjusted in accordance with provisions of RULE 10, , RULE 12 Rejection of Transaction Value RULE 10(1) RULE 102) a) Commission & | a) Costof brokerage transportation b) Cost of Goods or | b) Costof service supplied by | Insurance buyer ) Landing ©) Royalties & license | Charges fees 4) Subsequent pay back totheseller e) All other payments actually made as a condition ofsale RULE 2(2) RELATED For the purpose of these rules, persons shall be deemed to be "related" only if - |. They are officers or directors of one another's businesses; Il. They are legally recognized partners in business; II They are employerand employee; IV. Any person directly or indirectly owns, controls or holds § per cent or more of the outstanding voting stock or shares of both ofthem; V. One of them directly or indirectly ccontrolsthe other; VI. Both of them are directly or indirectly ‘controlled by athird person; Vil. Together they directly or indirectly controlathird person; VIlL They are members of the same family +b) Transaction Value of imported shall be accepted subjectto following conditions a) There are no restrictions as to the disposition or use of the goods by the buyerother than restrictions which- = ‘Are imposed or required by law or by the publicauthortiesin India; or Limit the geographical area’ in wich the goods may be resold or © Do not substantially affect the value ofthe goods; (See Example 1) The sale or price is not subject to some condition or consideration for which a value cannot be determined in respectof the goods being valued. (See Example 2) ©) _ No part of the proceeds of any ‘subsequent resale, disposal or use of the goods by the’ buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment can be made in accordance with the Browision of Rue 10 ofthese res, ani +d) The buyer and seller are not RELATED, Provided that where the buyer and seller are related, that transaction value is acceptable for customs purposes a a gel SUB-RULE (3) below. (Example) .aselerrequres abuyerofalomobiles not to sell or exhibit thom prior to fixed date which represent the begining ofamadel year | Reston of sel rogaring exibition of goods does not substantially affect the value, hence TV is acceptable. (Q.Machineis sol at nominal price ona condition thatthe buyer utes it only foracharlablepurpose {A Resticton regarding se of goods for chaitable use substantaly afect the value and hence TV is not acceptable. (Example2) 2) The seller establishes the price of the imported goods on condition that the buyer wil also buy ether goods in spect quanttes, 1) The price of the imported goods is Aependent upon the price oF prices at which the buyer ofthe imported goods sells other goods to the seller of te importedgoods. «) The prices established on the basis ofa form of payment extraneous to the imported goods, such a6 where the imported goods are sem fished goods which have been provided by the seller fon condition that he will receive @ specified quay ofthe shed goods, Pern Us on aera ola mn rT) peewee (a) Where the buyer and seller are related, the transaction value shall be accepted provided that the examination ‘of the circumstances of the sale ofthe imported goods indicate that the relationship did notinfluence the price In a sale between related persons, the transaction value shall be accepted, whenever the importer demonstrates that the declared value of the goods being valued, closely approximates to one of the following values ascertained ator about the same time. {the transaction value of identical goods, or of similar goods, in salesto unrelated buyersin india; {i) the deductive value for identical goods or similar goods; (ii) the computed value foridentical goods or similar goods Serve ooeoeoererereevw’ Ifthe value cannot be determined under the provisions of rule 3(1) or 3(2), the value shall be determined by proceeding SSN A ee ON09 anjeA syeINDIE * YSN Ul UeyeHEpUN Jsyodul| Aq peyiddr 00} s2yodwyAqpayddnsuogonpoiduipesnsjpore 0g Jeodw|Aqpeyddnsjeveienie — 000). spo0gyo8r 39006 pavodu jo uoqonpoid 14 IESSED8U | Sooo peyodus 'spo06 papodu spoo8 pajodiu °g eIpul u! UeW) ne ueyewepun, ‘youoyanpod || $0 voRonposd ey ul pasy) ‘84) Ul payesodsoauy seyojeys ® ue}d “ul ee ‘yom we uewidoanp ‘Guuaauibu3 (A) reuerew (Wt ~sansuy onyeneqn2}29 ~salsuyy | ouoduy fq pred enyen ayes anren eqns | |J° %z @UNDeW jo aes sayy 00z2 ‘Kuedwioo| suodull Aq pied pueping| 00°01 eulyoeyyjoenien | ‘uoyepodul Jeye eIpul “aiqeXed Jo pied Ayenjoe 2dWex | uno pauleo si sse00ud Yons yey) Joe] au) || ao1ud | papnjour ‘onjea uoyoesueR | 0} Bujpuersuym jou syed vowoesves| af) yeaq you sey enjeA Ul eigipnjou! jou eouey) u) pepe aq jjeys sseooud fue J0} 4844 Yons yey) yuaIXe eu Oo] < pue 2Jesai juanbasans J0| aig hq epew yuauuked sayjo Aue 40 seal anneal Spaeoaudjoyed se pajead | asuedy 40 AyeAOd 210M “UOIIPWEIOXS | soe » uononpoad agin ea) culate (6uipjoy “@weu epel|io auleu pueig | |4° *128 °8 UoRONPoId (A ‘siyBukdoo ‘nou mouy sjuojed sepnput | | YOR2eUUCO Ul @snJ0}}800 ‘$99 e0ue01| pue Ayjefoy :juetuiulog | | P80NPAL 10 yS09 40 By) Je ‘sigeAed opiedAyenjae | 42Ang ey) Aq Ayoauipul Jo ‘20ud ul papnjoul jou exe se9j @Susol| Ajoeup peyddns eveyy < °g AjeAos uons yey yuarxe ayy ol < ssaqyues panizoe spoo “penjenBulsqspoo8 «= 40. spooB Bulmo| payodus! jo jesodsip 40 a/@S Jo UonIpUCD e se AjoauIpUl ey} JO enjea peuot 40 Ayoeuip Aed 0} peuinbeu si Jekng < aekng ‘spoof payodui oj payejay < Toejeataeea_ hq ears eor4 (q x sys joyyeyoq ou uosolefngayig <‘Any commission or brokerage paid by the buyer for conclusion of contracts include in transaction value Selling Commission already charged Invoice ‘Question of separate Rg addition doesnot arse SELLING Selling Commission charged by seller by issuing Rule 10(1)(a) COMMISSION | separateinvoice “s Selling Commission paid by the buyer on the instruction Rule 10(1)) seller tothe foreign agent. Yes Selling Commission paid by the buyer on the instruction sellerto the Local agentindia, Yes Rule 10(1)(a) BUYING “Buying commissions" paid by animporter to his agent for Under Rule 10(1)@), COMMISSION the service of representing him abroad in he purchase of No specifically excluded the goods being valued. VA aa Ce RU] eA Pyne anny BS area) ANd Fu (oanen incre Bombay Dyeing & Mfg Co Ltd. Dismantling charges is includible in TV because without Yes dismanting of machinery, itis not possible to bring the goods to India, tis an implicit condition of sale. 2 yeement of sale depict As per Rule 10(1)(e), any otherpayment made b pate cA eee esis pees crceecaen coca art seller inclucblein TV. Drawing or design | Agreementof sale doesnot ‘As per Rule 10(1)(e), any payment made by buyer to charges. | depict compulsory charged Yes seller as a condition of sale, then itis include in TV by seller but without this conditions sale is also an implicit conaiton drawing itis not possible to install the imported goods, 3. | Interest forlate payment Interest or bank charges are financial charges No related to late payment. Ithas no concem wit sale ‘of goods 4, | Bank charges No -sameas above- Rule 10(2) Amended with N/n : 91/2017 dated 26th September, 2017 erent Rule 2 | place of importation” means the customs station, where the goods are brought for being cleared for home (da) _| consumption or for being removed for deposit in a warehouse — (Pp Tutorial Notes The term’ place of mporaton’ was usedin the Custom Valuation Rules however, esi lem was ot fed n order tobingin dary he éefrton otter place fimpraion has been nsetdin said res Inview of the above defiton, the transaction value of the imported goods interms of section 14 ofthe Customs Act, 1962 wouldinclude the costs, incurred upto the place ofimportation as defined above. & ©)Rule 10(2) - Cost of transportation & Insurance (2). | For the purposes of sub-section (1) of section 14 of the Customs Act, 1962 and these rules, the value of the imported goods shall be the value of such goods, and shall include ~ (@) the cost of transport, loading, unloading and handling charges associated with the delivery ofthe imported goods to the place of importation (b) the cost of insurance to the place of importation ee ling “at” port not includible : The loading, unloading and handling charges associated with delivery of importe ‘goods at the place of importation, shall not be added. Only such charges “upto” the place of importation are added on actual basis Meaning of “loading, unloading and handling charges”: In accordance with Article 8(2) of the WTO Agreement, it means “the cost of transport ofthe imported goods to the port or place of importation’. Thus, only charges incurred for delivery of goods “to” the place of importation (such as the loading and handling charges incurred at the load port) shall be includible in the transaction value. Important Comment: Treatmentof the loading, unloading and handling charges under the amended provisions Thus, under the amended provisions of rule 10(2) of CVR, the loading, unloading and handing charges associated with the delivery ofthe imported goods atthe place ofimportation, shall no longer be added tothe CIF value of the goods. The phrase “loading, unloading and handling charges" appearing in the amended rule isto be understood in context of Aticle 8(2) of the WTO Agreement which reads as “the cost of transport of the imported goods to the port or place of importation’ Gat cist etret forcelten geotent pork necoimayterpantaleereed tent oecmetacoese &otherrelated costto delivery atindian Custom station is not to be included in value ofimported goods. Proviso 1 [Provided that where the cost referred fo in clause (a) is not ascertainable, such cost shall be 20% of the [ree on board value of the goods: Example :- | Particulars uss FOB value 1,000 Freight, loading, unloading and handling charges associated with the delivery ofthe Imported goods| Not known| to the place of importation Insurance charges 10 ‘Answer: Provided further that where the free on board value of the goods is not ascertainable but the sum of free on Proviso 2 | board value of the goods and the cost referred to in clause (b) is ascertainable, the cost referred to in clause (a) shall be 20% of such sum. Example | Particulars US$ FOB value plus insurance charoe 4,010 Freight, loading, unloading and handling charges associated withthe delivery Not known ‘of the imported goods to the place of importation Answer := Proviso 3. | P/ovided also that where the cost referred to in clause (b) is not ascertainable, such cost shall be 1.125% of free on board value of the goods. Example | Particulars US$ FOB value 4,000 Sea freight, loading, unloading and handing charges associated with the 60 delivery ofthe imported goods to the place of importation Insurance charges Not known ‘Answer =Provided also that where the free on board value of the goods is not ascertainable but the sum of free on board transshipped to another customs station in India, Analysis [Circular No. the cost of insurance, transport, loading, unloading, handling —_| 2047) : charges associated with such transshipment shall be excluded. transshipment of goods (from Proviso 4 | value ofthe goods and the cost referred to in clause (a) is ascertainable, the cost referred to in clause (b) shall be 1.125% of such sum, Example Particulars: us$ FOB value plus sea freight and loading, unloading and handling charges associated 1,060 with the delivery of the imported goods to the place of importation Insurance charges Not known Answer:- Proviso 5 | Provided also that in the case of goods imported by air, where the cost referred to in clause (a) is ascertainable, such cost shall not exceed 20% of free on board value of the goods. Calculation of freight or insurance if FOB is cum insurance or freight Case Treatment (a) Sum of FOB" value of goods and | Cost of transportIhandiing under Rule 10(2)(a) = 20% of (FOB Cost of insurance under Rule 10(2)(b)" is | + Insurance Cost of Rule 10(2)(b)] ascertainable Example : FOB and insurance is $10,000. Hence, cost of transport = 20% of 10,000 = $2,000. (a) Sum of FOB Value of goods and | Cost of insurance under Rule 10(2)(b) = 1.125% of [FOB + Transport & Handling Cost under RUle | Transport/Handling cost of Rule 10(2)(a)] 10(2)(a)" is ascertainable Example : FOB and transport/handling is $ 10,000. Hence, insurance= 1.125% of 10,000 = 112.50 Proviso ¢ | Provided also that in the case of goods imported by sea or air and 3912017 - Cus., dated 26-9- ‘osts related to| ports to ICDs(inland Container Depat) : port to port, port to CFS (Container < Freight Station), Airport to } Airport, ete.) within india wil : ™} be excluded, providing eorase | uniform treatment to different} ‘modes of transshipment. Explanation to Rute 10(2) The cost of transport of the imported goods referred to in clause (a) includes the ship demurrage charges on charted vessels, lighterage or barge charges. in cases where ship demurrage charges are paid by the importer for detention of the ship in the harbour before touching the landmass at the docks or at the place of consumption, these charges would be includible in the cost of transportation. in cases where the big mother vessels cannot enter the harbour for any reason and goods are broughtto the docks by smaller vessels lke barges, small boats, etc, the cost incurred by the importer for bringing the goods to the landmass or place of consumption, such as lighterage charges, barge charges will also be included in the cost of transportation.‘An importer from Cochit from there goods are transshipped to Cochin port Determine the assessable value of the imported goods under the Customs Act, 1962 from the following particulars: [RTP] ‘S.No Particulars ‘Amount (i)_[ Cost ofthe machine atthe factory of the exporter US $ 20,000 (i_[ Transport charges from the factory of exporter to the port for shipment US $ 4,000) (i_[ Handling charges paid for loading the machine inthe ship US$ 100 (iv) | Buying commission paid by the importer US$ 100 {(v)_[ Freight charges from exporing country to India US $2,000 (vi)_[ Actual insurance charges paid are not ascertainable = (uil)_[ Charges for design and engineering work undertaken forthe machine inUS| US$ 5,000 (vii) [Unloading and handling charges paid at the place of importation 4,500 (i) [ Transport charges from Mumbai to Cochin port 25,000 (8) [Exchange rate to be considered: 18 = ‘Answer: imports goods from an exporter in US. The vessel carrying the goods reaches Mumbai port first and a)Product 'Z' was imported by Mr. X by air. The details of the import transaction are as follows: [RTP May 2018] Particulars us$ Price of Z al exporters factory 8.500 Freight from factory of the exporter to load airport (airport in the 250 country of exporter) Toading and handling charges at the load airport 250 Freight from load airpor to the aiport of importation in india 4,500 Tnsurance charges 2,000 Though the aircraft arrived on 22.08.20XX, the bill of entry for home consumption was presented by Mr X on 20.08.20XX The other details fumished by Mr. X are: 20.08.20XX 22.08.20XX [Rate of basic customs duty 20% 10% [Exchange rate notifed by CBEC X60 per USS 63 per USS [Exchange rate prescribed by RBI 61 per USS 62 per USS Integrated tax leviable under section 3(7) 18% 12% lof the Customs Tariff Act, 1975 Compute- {)) Value of product 'Z' forthe purpose of levying customs duty (i) customs duty and tax payable Answer :15000 chalices were imported for charitable distribution in India by XY Charitable Trust, The Trust did not pay either forthe cost of goods or for the design and development charges, which was borne by the supplier. Customs officer computed its FOB value at USD 20,000 (including design and development charges), which was accepted by the Trust, Other details obtained were as, follows: (MTP May 2018) si Particulars ‘Amount No. 4, _ [Freight paid (ai) (inUSD) 4,500 2, _ [Design & development charges paid in USA (in USD) 2,500 3.__ [Commission payable to an agent in India (in&) 12,500 4, [Exchange rate notifed by CBEC and rate of basic duly is as follows : Date of Bill of Entry BCD | Exchange Rate in (08.09,20%X_ 20% 60 Date of arrival of aircraft | BCD | Exchange Rate in 30.09.20%X 10% 62 The inter-bank rate was 1 USD = % 63 5.__ | Integrated tax payable uls 3(7) of the Customs Tariff Act, 1975 12% Compute the amount of total customs duty and integrated tax payable on importation of chalices Make suitable assumptions where required. Working notes should form part of your answer.RULE 2(1) (d): IDENTICAL RULE 2(1) (: SIMILAR GOODS “Identical goods’ means imported goods - “Similar goods” means imported goods - 1) Which are same inall respects including i) Which athough notalike in all respects, have | Same physical Quality Reputation Tie Like component ‘Commercially characte | | material which || inter- changeable enable to || withthe goods being perform same || valued having regard function to qualty reputation and trade mark i) Producedin the country in which the goods being valued were produced, and ii) Produced by the same person who produced the goods, or where no such goods are available, goods produced by a diferentperson, But shall not include imported goods where engineering, development work, art work, design work, plan or sketch undertaken in India were completed directly or indirectly by the buyer on these imported goods free of charge or ata reduced cost for use in ‘connection with the production and sale for export of these imported goods. CeIn om (6. usa) (Seung i. Janan) (ipo, Chin) {UG Lie, USA) Plastic Body Shins Sie ‘Sel Bedy Stainless Stel Different Colour Rey RNS A ee Rega =QLLer CPSU GAS LL} 4}Subject to the provisions of Rule 3 of these rules, the value of imported goods shall be the transaction value of identical goods similar goods sold for export to India 1 ‘Such ientcalsimilar goods are imported at substantially same quantity and samo ‘commercial value Sere Tere Asale at same commercial level but indifferent | Adjust Quantity Factor i.e. quantities Quantity Discount A sale at different commercial level but in| Adjust commercial Level factor Substantially same quantities ive Discount sale at diferent commercial level and different | agjustboth the factors quantities or 2) Where the costs and charges referred to in Rule 10(2) (cost of transportation, insurance & etc.) are included in the transaction value of identical goods / similar goods an adjustment shall be made, if there are significant differences in such costs and charges between the goods being valued and the identical goods / similar goods in question arising from differences in distances and means of transport. 3). Inapplying this ule if more than one transaction value of identical goods /similar goods is found, the lowest such value shall beusedto determine the value of imported goods,‘Sagar Dry Fruits Ltd. imported dry fruits and declared the value as under: Nov. 2019 250 MI. 25,000 per MAT. Egypt Do- 450 MT. Do- -Do- It was found that imports were also made by some other dealers as indicated below: Sept. 2019 50.M.T. | 35,000 per M.T. Dubai By importer Mumbai International ct, 2019 20M.T.| 40,000 per M-T. Persia By importer Chennai Fruits Ltd The Customs Department has sought to assess the imports made by Sagar Dry Frits Ld. as “contemporaneous imports under Section 14 read with Rule 4 of the Customs Valuation Rules, 2007. Briefly examine whether the action proposed by the departmentis correct.Question : A consignment of 800 metric tonnes of edible ol of Malaysian origin was imported by a charitable organization in Incia for free distribution to below povertyline citizens in a backward area under the scheme designed by the Food and Agricultural Organization, This being special transaction, a nominal price of USS 10 per metic tonne was charged forthe consignment to cover the freight and insurance charges, The Customs House found out that at or about the time of importation ofthis gift consignment there were following imports of edible ol of Malaysian origin Bae Quantity imported in metric tonnes Unit price in US $(CIF) 1 20 260 2 100 20 3. 500 200 4 900 175 5 400 180 6 780 160 The rale of exchange on the relevant date was 1 US $ = ® 60.00 and the rate of basic customs duty was 10% ad valorem. There is no countervailing duty or special adcitional duty. Calculate the amount of duty leviable on the consignment under the Customs Act, 1962 with appropriate assumptions and explanations, where required. Rey Ifthe value of imported goods cannot be determined under the provisions of ules 3, 4 and 5, the value shall be determined under the provisions of rule 7 or, when the value cannot be determined under that rule, under rule 8: Provided that at the request of the importer, and with the approval ofthe proper officer, the order of application of rules 7 and8 shallbe reversed. G3 ©‘Subjectto the provisions of Rule 3of these rules, ifthe > goods being valued or > Identical or > similarimported goods are sold in India, 1) Inthe condition as imported a) At about the time at which the declaration for determination of value is presented- the value of imported goods shall be based on the unit price at which the imported goods oridentical or similar imported goods are soldin Inia, b) Not at or about the same time of importation of the goods being valued, -he value of imported goods shall, be based ‘onthe unit price at which the imported goods or identical or similar imported goods are soldin India, atthe earliest date after importation but before the expiry of ninety days after suchimportation. ) Unit price under (a) and (b) subject tothe following deductions: i) Ether the commission usually paid or agreed to be paid or the additions usually made for profits and general ‘expenses in connection with sales in India ofimported goods ofthe same class orkind; ii) Theusual costs of transport and insurance and associated costs incurred within India; ii) The customs duties and other taxes payable in India by reason ofimportation or sale ofthe goods. 2) Not in the condition as imported, then, the value shall be based on the unit price at which the imported goods, after further processing, are sold to the sellerin Inca. In such determination, due allowance shall be made for the value added by processing and the deductions provided for in items (ito (ii) as specitiedin (c) {n(1) and (2) Unit price is price at which greatest aggregate quantity sold to persons who are not related to the sellers in India eats Deductive Value = 7000 - [500 +100 + 80 + 20 + 50 + 50 + 200) Deductive Value (Cum Duty) = 6000 Question:- M/s. Jwala & co. imported goods declaring transaction value of 500 per unit, which was rejected. Rules 4 and 5 of Import valuation rules are found inapplicable, M/s. Jwala & co. furnishes you following data and requests you to compute value ofimported goods as per Rule7: (i) Sale pricein india (ater processing, etc.) 1,000Pu, (i) Commission to india agent on above sales 5% offsale price (ii) Costof processing afterimport %65pu. (iv) Freightand Insurance from portofimport onwards %30and% 20 pu (v) General Expenses and Overheads in India are absorbed at T100p.u. (vi) Netproftmmargin normally eamed by others also) 15% ofsale price (ui) Rate of Basic Custom Duty 40% + 10%SWS (No other duty leviable) (vi) Loading, Unloading and Handling charges upto place ofimportation 45 pu V’Smart Academy wanuvsmartacademycom CAVishal Bhattad © o9ssossoso0 (72)Solution: Computation of Custom value under Rule 7 Sale Price in India 1,000 Less: Commission on sales @ 5% of 1,000 50 Cost of processing in India 5 Post -import freight and insurance (& 30 + 20- & 50p.u,) 50 General Expenses (port Import) 100 Net Profit margin in India $ 15% of 1,000 150 ‘Cum- duty price 585 Less: Custom Duty @ 11% (BCD + SWS) [635 x 11/111] (rounded off to nearest rupees) 57.97 oF 8 Custom Value 527 Note :- Handling Charges upto port are already included in value of 7527, as Rule 7 involves reverse working tn at NZ Subject to the provisions of Rule 3, the value of imported goods shall be based on a computed value, which shall consist of the sum of a SO FF a) The cost or value of | b) Anamountforprofitand general expenses equalto | c) The cost or value of all other ‘materials and fabrication or that usually reflected in sales of goods of the same class | expenses under sub-rule (2) of rule ‘other processing employed in | or kind as the goods being valued which are made by | 10. producing theimported goods. | producersinthe country of exportation forexporttoIndia. | j,e, costof transportation, insurance. Question : Miss Harshita imported certain goods from arelated person Mr. Sagar of US and transaction value has been rejected, Rules 4 and 5 of the Import Valuation rules are found inapplicable, as no similarlidentical goods are imported in India. Miss harshita furnishes costrelated data ofimports are requests Customs Authorities to determine value as per Rule 8, The relevant data are - (i)Costof materials incurred by Mr. Sagar $550 (i Making charges incurred by Mr. Sagar $100 (i) Other direct expenses incurred by Mr, Sagar $350 (iv) Overheads Incurred by Mr. Sagar $260 (V)Freightfrom Mr. Sagar factory to US port $90 (vi) Loading charges at US port $50 (vil) Normal netprofitmargin of Mr, Sagar 20% of FOB (vi) Airfreightfrom US portto Indian port $375 (ix) surance from US portto Indian port $175 (x) Exchangerate X60 per$ The Custom Authorities are of the opinion that since value as per rule 7 can be determined at & 145,000 there is no need to apply rules © V'Smart Academy wwwysmartacademy.com GAVishal Bhattad © 09850850800Solution:- A‘ per Rule 6, at opinion of importer, Rule 8 may be applied before Rule 7. Hence, request of Miss Harshita to apply Rule Bis valid and since Rule 8 datais available, Authorities cannot force valuation as per rule 7. Computation of value as per Rule 8 [Cost sheet system] (1) Cost of material incurred by Mr. Sagar $550 (i) Making charges incurred by Mr. Sagar $100 (ii) Other direct expenses incurred by Mr. Sagar $350 (W) Overheads incurred by Mr. Sagar $260 (\) Freight from Mr, Sagar’s factory to US port $90 (vi) Loading charges at US port $50 Total Cost incurred by Mr, Sagar $1,400 (vi) Normal net profit margin of Sagar [20% of FOB or 25% of Cost = 25% of $1,400] $350 FOB Value $1,750 (viii) Air Freight and handling from US port to India [Air freight cannot exceed 20% of FOB; $375 Hence restricted to 20% of $ 1,750 [Rule 10(2)(b)] {ix) Insurance from US port to Indian port [Rule 10(2)(b)| $175 CIF or Assessable Value under Customs $2,150 Assessable Value (in) [$ 2,150 x Exchange rate € 60 per $] 41,29,000 Tea) ‘Subject to the provisions of rule 3, where the value of imported goods cannot be determined under the provisions of any of the preceding rules, then | ‘The value shall be determined No value shall be determined under the provisions of this rule on the basis of \ Minimum customs values; or inIndia; Arbitrary orficitious values. oI using > Theseling pricein India ofthe goods produced in india > Reasonable means || » Asystem which provides for the acceptance for customs purposes of the highest of consistent with the thetwo alternative values; > Theprice ofthe goods on the domestic market ofthe country of exportation; ey pacers > The cost of production other than computed values which have been determined for identcalor similar goods in accordance with the provisions of Rule 8; om > The price of the goods for the export to.a country other than India; > on the basis of data available Re soe nae nea! 1) Theimporter orhisagent shall furnish a) Adeclaration disclosing full and accurate details relating tothe value ofimported goods; and b) Any other statement, information or documentincluding an invoice of the manufacturer or producer of the imported goods where the goods are imported from or through a person other than the manufacturer or producer, as considered necessary by the proper oficerfor determination of the value of imported goods under these rues. 2) Nothing contained in these rules shall be construed as restricting or calling into question the right of the proper officer of customs to satisty himself as tothe truth or accuracy of any statement, information, document or declaration presented for valuation purposes. 3) The provisions of the Customs Act, 1962 relating to confiscation, penalty and prosecution shall apply to cases where wrong declaration, information, statement or documents are furnished under these rules.UEP eu Redes he 1) When the proper officer has > Reason o doubt the truth or accuracy of the value declaredin relation to any imported goods, > He may ask the importer of such goods to furnish further information including documents or other evidence and If, after receiving such further information, or in the absence of a response of such importer, the proper officer sill has reasonable doubt about the truth or accuracy of the value so declared, > It shall be deemed that the value of such imported goods cannot be determined under the provisions of sub-rule (1) of Rule 3{Transaction value). At the request of an importer, the proper officer, shall intimate the importer in writing the grounds for doubting the truth or accuracy of the value declared in relation to goods imported by such importer and provide a reasonable opportunity of being heard, before taking a final decision under sub-rule (1). EXPLANATION: Forthe removal of doubts, itis hereby declared that, This rule by itself does not provide a method for determination of value, it provides a mechanism and procedure for rejection cof declared value in cases where there is reasonable doubt that the declared value does not represent the transaction value; where the declared value is rejected, the value shall be determined by proceeding sequentially in accordance with rules 4 to 8 ‘The declared value shall be accepted where the proper officer is satisfied about the truth and accuracy ofthe deciared value after the said enquiry in consultation wih the importers. ‘The proper officer shall have the powers to raise doubts on the truth or accuracy of the declared value based on certain reasons which may include - a. The significantly higher value at which identical or simitar goods imported at or about the same time in comparable quantiiesina comparable commercial transaction were assessed; b. Theale involves an abnormal discount or abnormal reduction from the ordinary competitive pice; c. Thesaleinvolves special discounts imited to exclusive agents; d. The mis-dectaration of goods in parameters such as description, quality, quantity, country of origin, year of manufacture orproduction; e. Thenon declaration of parameters such as brand, grade, specifications thathave relevance to value; The fraudulent or manipulated documents.'USTOMS VALUATION (DETERMINATION OF VALUE OF EXPORT GOODS) RULE, 2007 RULE 2 (1)(A) GOODS OF LIKE KIND AND QUALITY “goods of like kind and quality” means export goods which are identical or similar in physical characteristics, quality and reputation as the goods being valued, and perform the same functions or are commercially interchangeable with the goods being valued, produced by the same person ora different person; and RULE 2(2) RELATED ‘Same as defined under Rule 2(2) Customs Valuation (Determination of Price of mported Goods) Rule 1988 (iE As Ue Rea VU UO Rel 2s 3(1) Subjectto ule 8, the value of export goods shallbe the transaction value. 3(2) The transaction value shall be accepted even where the buyer and seller are related, provided that the relationship has not influenced the price. 3(3) I the value cannot be determined under the provisions of sub-rule (1) and sub-rule (2), the value shall be determined by proceeding sequentially through rules 410.6 ETS uk aoa eaten een 1) Thevalue ofthe export goods shallbe based on > thetransaction value of goods oflike kind and quality > exportedator about the same time > tootherbuyersin the same destination country ofimportation or > initsabsence another destination country ofimportation adjusted in accordance with the provisions of sub-rule (2) 2) Indetermining the value of export goods under sub-rule (1), the proper officer shall make such adjustments as appear to him reasonable, taking into consideration the relevant factors, including- > diferencein the dates of exportation, > diference in commerciallevels and quantity levels, > diference in composition, quality and design between the goods to be assessed and the goods with which they are being compared, > diferencein domestic freight andinsurance charges depending onthe place of exportation, (iE aU aL lithe value cannotbe determined under rule 4, it shall be based on a computed value, which shall include the folowing: a) Costofproduction, manufacture or processing of export goods; b) Charges, fany forthe design orbrand; c) Anamounttowards profit eS Ss) 1) Subjectto the provisions of rule 3, where the value ofthe export goods cannot be determined under the provisions of rules 4 and5, the value shall be determined using reasonable means consistent wth > the principles and > general provisions ofthese rules > provided thatlocal market price ofthe export goods may notbe the only basis for determining the value of export goods. Tea) UN) Aa 4 The exporter shall furnish a declaration relating to the value of export goods in the manner specified in this behalf.RULE 8 REJECTION OF DECLARED VALUE 1) When the proper officer has reason to doubt the truth or accuracy ofthe value declared in relation to any export goods, he may ask the exporter of such goods to furnish further information including documents or other evidence and if, > Afterreceiving such furtherinformation, or > Intheabsence of aresponse of such exporter, > The proper offcerstil has reasonable doubt about te truth or accuracy of the value so declared, > The transaction value shall be deemed to have not been determined n accordance with sub-rule (1) ofrule3. 2) Atthe request of an exporter, the proper officer shall intimate the exporter in writing the ground for doubting the truth or accuracy of the value declared in relation to the export goods by such exporter and provide a reasonable opportunity of being heard, before taking final decision under sub-rule (1) Explanation Fortheremovalof doubts hereby declared 1. This rl by itself doesnot provide amethod for determination of valu, provides a mechanism and procedure for rejection of declared vain casos wher there is reasonable doubt that he declared value does notrepesentthe transaction value; where the declared valves rejected the value shal bedeterminedby proceeding sequently in accordance wihules 406. 2. The declared value shal be accepted where the proper ofcers satisfied about the Luh or accuracy of the declared value after the sid enquiry in consultation with the exporter. 3. The proper ofcershallhave the powers to raise doubts onthe declared value based on certain reasons which may clude 2. The signicantvariatonin value at which goods of ke kind and qualty exported at or about the same time in comparable quantities na comparable commercal transaction wereassessed ». The signicanty higher value comparedtothe market value of goods of ke kind and quality at thetime of export ©. The misdeclaraton of gods in parameters such as desrotion,qually, quantity, yearofmanufacture or production Problem 4 : Compute export duty from the following data: (I) FOB price of goods : US $ 1,00,000. {i) Shipping bil presented electronically on 26-02-2020 {ii) Proper officer passed order permitting clearance and loading of goods for export on 04-03-2020. {iv) Rate of exchange and rate of export duty are as under : Rate of Exchange _Rate of Export Duty (On 26-02-2020 1 US $=%55 10% (On 04-03-2020 1 US$ = 56 8% Rate of exchange is notified for export by Central Board of Indirect Tax and Customs. Make suitable assumptions wherever required and show the working (M13)Sele TU ete Objective - Goods imported into India to provide and finance education, health social securities Levy - The Social Welfare Surcharge on imported goods shall be in addition to any other duties of customs or tax or cess chargeable on such goods, under the Customs Act, 1962 or any other aw forthe time being in force. Rate - 10% on aggregate of duties, taxess and cesses levied under section 12 of the Custom Act, 1962, but not including safeguard duty , countervailing duty and anti-dumping duty. ie, 10% of BCD) Note:- Social Welfare Surcharge is not applicable on export goods SPECIAL CASES OF VALUATION Determination of assessable value in case of sale of warehoused goods before being cleared for home consumption [Circular No.11/2010 dated 03.06.2010} Issue: Whether the assessable value of the warehoused goods which are sold before being cleared for home consumption should be taken as the price at which the original importer has sold the goods, before a Bill of Entry for home consumptionis fled? Clarification: Section 14 ofthe Customs Act provides that the value othe imported goodsis the transaction value of goods. Transaction value is defined to mean the price actually paid or payable for the goods when sold for export India for delivery atthe time and place ofimportation, In the instant case, the goods are sold after being warehoused, therefore, it cannot be said that export of goods is not complete and thus the sale of warehoused goods cannot be considered a sale for exportto India. Hence, the price atwhich the imported goods are sold after warehousing them in India does not qualify to be the transaction value as per section 14,)PROBLEMS FOR SELF PRACTICE Q.1 Compute the duty payable under the Customs Act, 1962 for an imported equipment based on the following information: (i) Assessable value ofthe imported equipment US $ 10,100 (i) Date ofbill ofentryis 25 4.20XX. Basic customs duty on this dates 10% and exchange rate notified by the CBICisUS$ 1 = 765. (ii) Date ofentryinwardsis21.4.20XX. Basic customs duty on this dateis 20% and exchange rate notified by the CBICisUSS 1= 60 (iv) Additional duty payable under section 37) ofthe Customs TarifAct, 1975: 12% Make suitable assumptions where required and show the relevantworkings and round off our answer tothe nearestrupee Q.2.Ashish imported some goods in February, 20XX and the goods were cleared from Mumbai port for warehousing on &th February, 20XX after assessment. Assessable value was € 4, 86,000 (US $ 10,000 at the rate of exchange € 48.60 per US$). The rate of duty on that date was 35% (assume that no additional duty is payable). The goods were warehoused at Pune and were cleared from Pune warehouse on 4th March, 20XX, when rate of duty was 30% and exchange rate was % 48.75=1 US §. What is. the duty payable while removing the goods from Pune on 4th March, 20XX? Answer:3.An importer in India imported raw materials @ US $ 25,000 FOB. The goods were packed for which US $ 600 were charged extra. ‘The goods were stuffed in Container, the price of which was US $ 2,000. Insurance charges and ocean freight of US $ 250 and 800, respectively were paid. Acommission of US $500 had to be paid to abroker for arranging the deal; 1US$=48) > Customs Dutyis 35%, > GSTon similar goods in ndiais 5%. Determine the duty payable. Answer:Q.4, Determine the Assessable Value for the Customs Act, 1962in respect ofimport of amachine from UK: (i) FOBValue £6,000 (i)AirFreight £1,500 (ii) Design and Development Charges paidin UK £500 (iv) Design and Development Charges paidin India 10,000 (v) Commission paidto Local Agents 1% of FOB Value (vi) Date of Bill of Entry 10-4-20XX (Exchange Rate notified by CBICE 1= % 84) Insurance Charges are notascertainable. Make assumptions where required and provide suitable explanations,Q5 Mihir Limited has imported a machine from Japan at an FOB cost of 50,000 yen (Japanese). The other expenses incurred are as follows: (i) Freightfrom Japantolndian Port S,000 yen, (i) Insurance paidtoinsurerin India 2,500. (ii) Designing charges paidto consultancy frm in Japan 7,500 yen, (iv) MisMinirspent& 25,000 inindia for development work connected with the machine. (v)_ Transportation costtrom Indian Portto factory 7,500 (vi) CBIC announced exchange rate of 1 yen = & 0.59 by Notification under Section 14(3) ofthe Customs Act, 1962, The exchange rate prevailing onthat day in the marketwas 1 yen = 0.4052. (vil) Mis. Minitmade paymentto the Bank based on an exchange rate of 1 yen =¥ 0.5920. (vii) The Commission payable tthe agentin India was at 5% ofthe FOB pricein Indian Rupees. Therate of Customs duty is 20% Similar goods are subjectto 12% GST inIndia. Clearly showing your workings to arrive atthe total Assessable value in Rupees for purposes of Levy of Customs duty, Answer:Q.6. Dhiraj'imports by air from USA Gear cutting machine complete with accessories and spares. Its HS classification is 84.6140 and Value US $f.0.b. 20,000 Other relevant datelinformation: 41}. Atthe request of Dhiraj, US $1,000 have been incurred for improving the design, etc. of machine, butis notreflectedin the invoice, but willbe paidby the party 2) Goods ae insured but premiumis not shown/ avaiable in invoice 3). Freight-US $6,000. 4) Commission tobe paid tolocal agentin India. 4,500. 5) _Freightand insurance from airporttofactoryis 84,500 6) Exchange raleis US$ 1 =%.45 7) Duties of Customs: Basic-25% GST-12%, Compute () Assessable value (i) Customs duty Answer:7. Mis Rakesh Industries imported by Air from USA certain goods at CIF value US $ 6,500. Air freight US $ 1,400 and insurance charges US $ 100 were also paid. Bill of Entry was presented on 28-02-20XX, but the date of arrival on 10-03-20XX. Other relevantinformationis as follows: Rate of Exchange as announced by CBIC - US $ 1=% 48.80 as on 28-02-20XX and 46.60 as on 10-3-20XX. Rate of Exchange as announced by RBIUS$ 1 =% 46.70 as on28-02-20XX and & 46.50 as on 10-03-20XX. Rate of Custom Duty" Basic Customs Duty -30% as on 28-02-20XX and 25% as on 10-03-XX *GST- 18% as on 28-02-XX and 18% as on 10-03-XX* Compute the Assessable Value and Custom duty payable. Answer:Q. 8, Mr. Backpack imported second-hand goods from a UK supplier by air, which was contracted on CIF basic. However, there were changes in prices in the international market between the date of contact and actual importation. As aresult of several negotiations, the parties agreed for a negotiated price payable as follows: Particular Contract Price (£) | Changed Price (£)| Negotiated Price (£) CIF Value 5000 5800 5500 Air Freight 300 600 500 Insurance 500 650 600 Other details for computing assessable value and duty payable are tabled below: Particular Amount Vendor inspection changes (inspection carried out by foreign supplier on his £600 own, not required under contractor for making the goods ready for shipment) Commission payable to local agent @ 1% of FOB in local currency Date of bill of entry Basic customs duty Exchange rate in& (notified by CBIC) 18.02.20XX 10% 102 Date of arrival of aircraft | Basic custom duty Exchange rate in& (notified by CBIC) 15.02.20XX 15% 98 Inter-bank rate 1 UK Pound = 106 Compute the assessable value and calculate basic customs duly payable by Mr. BackpackQ.9:BSA& Company Ltd, has imported a machine from U.K. From the following particulars furnished by i, arrive at the assessable value for the purpose of customs duty payable. feed Ter ()__| FO.Bcostofthe machine 410,000 UK. Pounds {i)_| Freight (ai) 3,000 U.K. Pounds (ii) | Engineering and design charges paid toa firmin UK. 500 UK. Pounds (iv) | License fee relating to imported goods payable by the | 20% of F.0.B. cost buyeras.a condition of sale (v)__ | Materials and components supplied by the buyer free of 20,000 costvalued (vi) | Insurance paidto the insurerin India 6,000 (vil) | Buying commission paid by the buyertohis agentin UK. 400 U.K. Pounds Other particulars: (i) Inter-bank exchange rateas arrived by the authorized dealer : €98 per U.K, Pound (i) CBIChad notified for purpose of section 14 ofthe Customs Act, 1962, exchange rate of 100 per U.K. Pound. (ii) Importer paid % 5,000 towards demurrage charges for delay in clearing the machine from the Airport (Make suitable assumptions wherever required and show workings with explanations) Answer:tion of customs duty from the following data: Q.10: Computethe assessable value or the purpose of determi Machinery imported from USAby air(FOB price) 4,000 ‘Accessories compulsorily supplied alongwith the machinery 4,000 Aictreight 1,200 Insurance charges ea eka Localagent's commission tobe paidin Indian currency. 9,300 ‘Transportation from indian airport to factory 4,000 Exchangerate US$ 1=%60 Provide explanations where necessary.Terms used in Commercial Parlance It would be useful to know and understand the term and contents of documents used in the International trade transaction (1) Invoice Thisis the basic commercial document showing particulars regarding description of goods D quantity and unitprice ciscounts andnet price ‘Dnames ofconsignorandconsignee payment particulars ‘> Contract or acceptance of order onthe basis of wich the goods are supplied. (2) Packing specification Giving particulars ofthe contents of each ofeach of the package in the consignment. (3) Certificate of Origin ‘K cerificate issued by the competent authority in the country of manufacture giving the extent of the manufacture in that country, (4) Billof Lading ‘Anegotiable document given by the carriers ofthe cargo giving particulars of (@) Portof shipment (0) No. ofpackages coveredby the consignment —_(c) Marks andnumbers| on the page (a) Name of the vessel in which the goods have been dispatched (¢) Name ofthe consignee of the goods, ({} whether te freight has been pre-paid oris tobe colected at the| destination. itis a negotiable document which has to be surrendered tothe carrer for getting delivery of the| goods, (6) Air Consignment Note itis a document corresponding to BillofLading, in he case of cargo imported or exported by ar (6) Indent itis a document showing the particulars of the consignment for which the buyer has placed an order with the supplier. It normally gives particulars about () full description of the goods (i) unit price (i) mode of payment (v) quantity required (v) delivery instructions, (7) Quotation itisa document, which indicates the price, the terms and other conditions on which the seleris wiling to supply goods to the buyer (8) Acceptance Itrefersto the formalisation of the contract of sale between the buyer and the seller. Once the seler| of the goods sends his acceptance of the order of the buyer (the indent) the contract is complete The acceptance will inter alia contain particulars of description of the goods to be supplied, unit price, including discounts and other charges, time and terms of delivery, penal ciause for breach of contract, agreed terms of payment. (9) Letter of Credit This isan instrument delivered by the bank intimating the seller that the buyer has instructed the bankand the bank will according to these instructions pay the seller ofthe goods, the bill amount for the supply of the goods on presentation of certain documents evidencing shipment ofthe goods. (10) Sight draft ‘document evidencing the amount of money paid forthe importation. (11) Delivery Order ‘An authorisation given by the local agent ofthe carriers, on surrender of the original negotiable copy ofthe bill oflading or air consignment note, directing the custodian of the cargo to deliver the consignmentto the importer or his agent. (12) Mate's Receipt Areceipt given by the Fist mate or First officer or cargo supervisor of the conveyance certifying the total quantity ofthe consignment received on board the vessel or the aircraft Abil of lading or air consignmentnote issued by the agent of the Carrier Company on surrender ofthe mate's receipt. (13) Retirement of The originalnegotiable copies ofthe shipment documentslike invoice, packing specification, documents certificate of origin (14) Non-negotiable | Since retirement ofthe original document takes time, non negotiable documents are given to the documents importer to facilitate clearance (15) BoatlLighterage Sometimes the vessel is unable to get a berthalongside the quay in the harbour. The goods are Charge then transported from the ship tothe shore by boats/ lighters. The charges paid therefore arecalled Boat/Lighterage charges. (16) Customs Broker | Since the importers exporters may notbe able to devote ime and eneray to clearimported goods or export goods, and since itinvolves running about to several organisations apart from custome, like Port, Trust, steamer agents, insurance companies, the assistance of agency organisation having adquate technical knowledge and expertise has been provided inthe form of customs broker. (17) Insurance cover Itis customary to insure all goods which are traded in the course of international rade. The general cover relates to risk on account of loss, pilferage, fre, storm etc, However, loss of goods. on account of seizure of goods due to war, isa separate cover. [tis therefore customary to refer to the insurance as marine iskinsurance and war riskinsurance, The policy and cover of such insurance isarelevantdocumentfor valuation 2)RUTH SSS TSU ES CNS mj OR EXCEPTION TO SEC 12 ble of Content ~ ‘As we know Sec 12 provides that duties of Customs shall be levied on goods. However, it ‘may be noted that this Levy is subject to other sections in this Act, For instance, [sec13 [Duty onpilfered goods. 'Sec22_| Abatement of duty on damaged or deteriorated goods, 'Sec23__| Remission of duly on Lost, Destroyed or abandoned goods 'Sec20 | _ Re-importation of goods. Sec21_| Goods derelict wreck ete 'Sec24 | _Denaturing & Mutilation 'Sec25_ | __ ExemptionDUTY ON PILFERED GOODS Damage of goods before unloasing L038 or Damage uring unloading Loss or damage > during transit fom port warchouse Loss of goods before unloading Lost Loss or Damage Damage : Sec 22's applicable Loss / Destruction : Sec 23 is applicable © V'Smart Academy wwwysmartacademy.com GAVishal Bhattad © 09850850800CONCESSI Wait MS OR EXCEPTION TO SEC 12 The term ‘ilfer is defined to mean to steal, especially in small quantities ie. pety theft”. Therefore the term does notinclude loss oftotal package. Sec. 13 provides that, > Ifanygoods are pilfered > —_Afterunloading thereof and before the proper officer has made an order for clearance forhome consumption or depositin warehouse. > Theimportershall note liable to pay the duty leviable on such goods. > —_Exceptwhere such goods are restored to the importer ater pilferage. So importer shall not be liable to pay duty i goods are pilfered at port before an order for clearance is made. But in the case where ‘such goods are later on restored then the importer shall become liable to pay the duty. Pilferage of goods deposited in a warehouse is nat covered by S.13 Inorder to claim pilferage the following circumstances should exist: there should be evidence of tampering with the packages; b. there should be blank space for the missing articles in the package; and ¢. the missing articles should be unitarticles [and notpart articles) ‘As per Sec. 45(3}, if goods are pilfered before the Order of Clearance by the officer. The Customs Duty is payable by the officer (Port! Airport / Railway Authority) under whose custody the goods were lying. (normally post authority or airport authority)The relevant date fr calculating the duty payable on pilfered goods by the custodian is the date of filing of Import General Manifest or Report. Tutorial Notes ‘Que:- Whatif goods are restored othe importer after pilferage? ‘Ans:-Where such goods are restored tothe importer after piferage, the importer lable to duty. Que :- What assessee does not examine the goods before paymant of import duty and accordingly assossoe paid import duty on total lunitimported and later he found some pilferage. Whether he is eligible for refund of import duty paid on pilfered quantity since as per normal Iractice assessee does not pay import duty on pilferage has taken place before order 'Ans:- twas hel that duty has been pag, ishallbe refunded provided piferage has taken place before order of clearance. [Que = Incase pilferage is raised after clearance order uls47 but before taking actual delivery of goods, Whether assess lunder sec 13, lAns:-Clearance of goods for home consumption, which s physical emovalof goods, s possible nly ater an orders passed under sec47, Such clearance, the two notte be equated. hance assessee willnatbe eligible for bnefitunder section 13, will eligible for benefit Example:- Mr. X, imported 10,000 power bank from China, before order of clearance Mr. X found that 10 power bankare missing from one of the box. Can Mr. X take the benefit of pilfered goods ? Calculate the amount of duty payable by Mr. X. Would your answer will differ if power bank are restored to the importer. Value of goods 28,00,000 BCD rate 10% Answer:‘Where it is shown to the satisfaction of the acide + a) Thatany imported goods had been damaged or deteriorated at any time before or during the unloading of the goods in India or b) That any imported goods, other than warehous goods had been damaged > Atany time after the unloading thereof in India butbefore theirexamination us 17 > onaccountofany accident > not due to any wilful act, negligence or default ofthe importer, his employee oragent, or ¢) That any warehouse goods had been damaged Pat anytime before clearance for home consumption > onaccount ofany accident > not due to any willful act, negligence or default of owner, his employee oragent Value of goods after damage or deterioration Value of goods before damage or deterioration 2). Value of damaged goods may be ascertained by folowing methods at the option ofthe owner > Thevalue ofsuch goods may be ascertained by Proper Officer or > The goods may be sold by Proper Officer by auction or by tender or with consent of the owner in any other manner and ‘gross sale proceed shall be deemed to be value ofthe goods. + (Note: word usedis gross sale that means expenditure on sale shall notbe allowed as deduction.) Example: Value of goods is = 10,000 After damage the valueis % 8,000 Duty rateis 10% calculate duty payable? without prejudice tothe prov ofSec. 13 D> where itis shown to the satisfaction of AC that any imported goods have been lost or destroyed, otherwise than asa result ofpitferage > at any time before clearance for home ‘consumption > then ACIDC shallremit the duty on such goods. According to Sec23(2) > The owner ofanyimported goods may > at any time before an order for clearance of goods for home SEC 23(2) “ABANDONED OF RIGHTS ON GOODS. y consumption uls 47 or an order for permitting the deposit of goods in a warehouse u/s 60 has been made, relinquish his title to the goods and thereupon he shall notbe liable othe duty thereon, © Provided that the owner of any suc! ported goods shall not be allowed to relinquish his title to such goods regarding which an offence appears to have been committed under this Act or any other law for the time inginforce.torial Notes: Meaning of relinquish 4."Relinquish’ means to give over the possession o contolo, leave of 2. The aforementioned right can be exercised at any time before the passing ofthe order for clearance for home consumption Before that date it isopentothe importerto relinquish het tothe goods. 3,Goods abandoned by importers Sometimes it may sohappen thatthe importeris unwiling or unableto take delivery ofthe imported goods. Some of the itely causes may be (the goods maynotbe according tothe specifications; (i)the goods may have been damaged or deteriorated dung voyage and as such may natbe useful the importer, (i) there mighthave been breach of contract and, therefore, theimporter may be urwilingta ake delivery ofthe goods. 4.Relinquishmentis done by endorsing the documentaf ttle, viz. Bill ofLading Airway Bil ete. in favour ofthe Principal Commissioner/Commissioner of Customs along with theinvoice. the importer does so, he willnt be requiredtopay he duty amount Question:= Mls. Decent Laminates imported resin impregnated paper and plywood for the purpose of manufacture of furniture, The said goods were warehoused from the date of their import. M/s. Decent Laminates sought an extension of the warehousing period, which was granted. However, even after the expiry of extended period, it did not remove the goods from the warehouse, Subsequently it applied for remission of duty under section 23 of the Customs Act, 1962 on the ground that the imported goods had become unfit for use on account of non-availability of orders for clearance and hadlost their shelf life also. Explain, with the help of a decided case law, if any, whether the application for remission of duty filed by M/s. Decent Laminates is valid in law. (3 Marks, Noy 2013) ‘Answer: No, the application for remission of duty fled by Mis Decent Laminatesis not valid inlaw. The facts of the given case are similar tothe case of CCE v. Decorative Laminates (I) Pvt, Ltd, 2010 (257) E.L.T, 61 (Kar.) wherein the High Court held that the circumstances made out under section 23 were not applicable in the instant case as the destruction/oss ofthe goods had not occurred before the clearance forhome consumption. Remission can be granted under section 23 only when the imported goods have been lost or destroyed at any time before clearance for home consumption. The High Court clarified thatthe expression “at any time before clearance for home consumption’ as provided in section 23 means the time period as per the initial order during which the goods are warehoused or before the expiry of the extended date for clearance and nat ater the lapse of such periods. The said expression cannot extend to a period after the lapse ofthe extended period merely because the goods were not cleared within the stipulated time. Instead, it would be a case of goods improperly removed from the warehouse Question: Compare the provisions of reduced duty iailty in respect of (1) Pilfered Goods, (2) Damaged or Deteriorated Goods, and (3) Lost, Destroyed or Abandoned Goods, Solution: Basis Pilferage of goods under Section 13, Loss or destruction of goods under section23 Meaning The word ‘pifer’ means to steal, especialy in small | The word Tost’ or destroyed’ refers to total los ‘quantities; pety theft ‘of goods i.e. loss is forever and beyon recovery, Abandonment of goods is possible \where the importer is unwilinglunable to take} the delivery ofthe imported goods. Duty on goods “The importer shall not be liable to pay the duty levible | The duty paid on such goods shal be remitted ‘on such goods, tothe importer ‘Subsequent Where the pilfered goods are restored to the importer In case of destruction of goods, the restoration restoration of goods after piferage, the importer become liable to duty. isnotpossible. Provisions of section 18 are not applicable to | Provisions of section 23 apply to warehoused| Warehoused goods warehoused goods. {goods also, ‘Onus to prove the | The onus to prove the pilferage does not lie on the | The importer has to prove the loss/ destructor pilferage/destruction or | importer asitis obvious atthe time of examination by the to the satisfaction of the Assistant! Deput loss of goods proper officer. [Commissioner of Customs. Time of occurrence of | The imported goods must have been pilfered after the | The imported goods must have been pilferage or loss / | unloading thereof and before the proper officer has | lostidestroyed atany time before clearance for destruction made an order for clearance for home consumption or | home consumption under section 47. depositina warehouse. Whatis the difference between sec13,23and22? ‘Ans:- 2 Section 13 deals wih plferage and dutyisnot payable thereon (goods may be recovered and duty willbe paidon being recovered) ‘> Section 23(1) deals with complet loss/destructon of goods and duty is remitted (goods arenot recoverable and dutys never payable) ' Section 22 deals with damageldestructon of goods and duty is abated ie duty is payable on reduced value of goods ( goods are available and cleared, butduyispaidon reduction value)‘SECTION 24: POWER TO MAKE RULES FOR DENATURING OR MUTILATION OF GOODS DENATURING :- Denaturing means athing' the essential characteristic of which changed and render it unfit for main purpose for which such thing is mean to be used, but however the said thing may be used as any other goods. MUTILATION: - Mutilation means to render the product imperfect by cutting or destroying i. It is part destruction of goods. According to Sec. 24, ‘The CG may make rules For permitting at the request of owner The denaturing and mutilation of imported goods Which are ordinarily used for more than one purpose Soas to render them unfit for one or more purposes and any goods are so Denatured or Mutilated they shall be chargeable to duty as if the goods had been imported in the denatured or mutilated form. In exercise of the power under this Section, the CG has framed 'Denaturing spirit Rules 1972" EXAMPLE - 1 DENATURING: Denaturing of Alcohol into Spirit. Duty is payable on spirit and not on aleohol. MUTILATION: In case, low quality Copper is imported then the importer can apply for mutilation of such copper into Copper Scrap. In such circumstances an import duty of Copper Scrap will be charged instead of Copper. denatured or mutlated ‘hay shall be chargeable to duly a5 f the goods had been imported inthe natured or mutilated [ fom, DERELICT — abe = SEC 21: DERLICT, JETSAM, FLOTSAM AND WRECK ¥ s y v - y | DERELICT FLOTSAM WRECK ‘Any cargo, vessel, etc. any cargo, vessel, etc.| |any cargo, vessel, etc.| | cargoorvesselorany property| abandoned inthe sea with no abandoned in the sea with no| | abandoned in the sea with no which are cast ashore by tides| hope of recovery. hope of recovery. hope of recovery. after ship wreck. a V'Smart Academy wwwysmartacademy.com GAVishal Bhattad (09850850800Aligoods, derelict, jetsam, flotsam and wreck brought or coming into India, shall be dealt with as ifthey were imported intoIndia, Unless itbe shown tothe satisfaction ofthe proper oficr that hey are entitled to be admitted duty-free under this Act. Example Distinguish between Jetsam andFlotsam Answer Jetsam and Flotsam are goods which are jettisoned (ic. thrown with speed) from the vessel nto the sea to reduce weight of vessel to prevent i from sinking. They are not abandoned goods. Jetsam gets sunk whereas Flotsam does not sink but floats. Duty is payable on both unless they are entitled tobe admitted free of duty It provides that, if goods are imported into India after exportation thereform, © Such goods shall be liable to duty and © Be subject to all the condition and restriction, if any © Towhich goods ofthe like kind and value are liable on the importation thereot This means that re-imported goods are treated at par with other goods, which are imported. However, the following notifications have provided certain concessions in hisregard: (I) Concessional duty payable in case ofre-importation of goods exported for repairs or exported under duty drawback et. [Goods exported under claim for duty | Amount of incentive availed of atthe time of export. |(a) Time-limit for re-importation the |drawback, refund of integrated tax time limit for re-importation is 3 paid on export goods, bond without years. Thisis extendable to years. payment of integrated tax, etc |b) Same goods the exported goods [Goods other than those falingunder [Duly of customs which would be levable the value) and the re-mported goods must be ISI. No. 1 exported for repairs abroad |of re-mported goods after repairs were made up of the same. the fair cost of repairs caried out including cost of —_(c) No change in ownership In case materials used in repairs (whether such costs are ‘of point (2")the ownership of the actualy incurred or not, insurance and freight charges, goods should also not have both ways. changed. However, these concessions would not be applicable if +re-imported goods had been exported by EQU oraunitin FTP +1e-imported goods had been exported from a public/private warehouse + resimported goods which fall under Fourth schedule to the Central Excise Act, 1944, [Notification No. 45/2017 Cus. dated 30.06.2017 |Goods manufactured in India and re-imported for | 3 years {a) Goods must be re-exported within 6 repairs or for reconditioning other than the speciied| in case of export to Nepal, such | months (extendable il 1 year) ofthe date |goods time-limit is 10 years, ‘of reimportation, (b) The Assistant Commissioner! Deputy [Goods manufactured in India and re-mported for eee 2. |(a) Reprocessing (b) Refining (c) Re-making 1 year regards identity of the goods. (d) Subject to any process similar to the processes: () The importer oy time of importation referred to in clauses (a) to (c) above. ceaeeabor [Notification no. 158/95 Cus. dated 14.11.1995 as amended vide Notification No, 60/2018 Cus dated 11.09.2018] Note: In above (point), i any loss ofimported goods is noticed during such operation, such loss shal be exempted from whole ofthe custom duties subjectto the satisfaction of Assistant/ Deputy Commissioner of Customs ‘The exemptionis available even quantity re-imported is shor or lowin quantity aslongas nature and variety of goodsis sameIustration 1 Amachine was originally imported from Japan at € 250 lakh in July, 20XX on payment of all duties of customs. The said machine was exported (sent-back) to supplier for repairs in December, 20XX and re-imported without any remanufacturing or re-processing in October nextyearafter repairs, Since the machine was under warranty period, the repairs were carried outfree of cost. However, the fair cost of repairs carried out (including cost of material 6 lakh) would have been % 9 lakh. Actual insurance and freight charges (to and from) were & 3 lakh. The rate of basic customs duty is 10% and integrated taxis 12%. Ignore GST compensation cess. Compute the amount of customs duty payable (if any) on re-import ofthe machine after repairs, The ownership of the machine has notbeen changed during the period Note: The importer intends to avail exemption, if any, with regard to reimportation of goods which had been exported for repairs abroad. Answer As per Notification No, 45/2017 Cus, dated 30.06.2017, duty payable on reimportation of goods which had been exported for repairs abroadis the duty of customs which would be leviable if the value of re-imported goods after repairs were made up of the fair cost of repairs carried out including cost of materials used in repairs (whether such costs are actually incurred or not) insurance and freight charges, both ways. However, following conditions need o be satisfied for availing this concession (a) goods must be re-imported within 3 years, extendable by further? years, after their exportation; (b) exported goods and the r-imported goods must be the same; (c) ownership ofthe goods should not change. Since all the conditions specified above are fulfilled in the given case, the customs duty payable on re-imported goods will be computed as under: Value of goods re-imported after exports [& 9 lakh (including cost of materials) + & 3 lakh} 1200,000 ‘Add: Basic customs duty @ 10% (A) 4,20,000 ‘Add: Social Welfare Surcharge @ 10% on & 1,20,000 (B) 12,000 Value for computing integrated tax 43,32,000 Integrated tax @ 12% (& 13,32,000 x 12%) - (C) 4,59,840 ‘Customs duty and integrated tax payable [(A) +(8)+ (C)] 291,840Central Government's power to grant exemption Article 266 ofthe Constitution provides that "No tax shall be levied or collected except by authority of law". The power of the Central Government to alter the duty rate structure is known as delegated legislation and this power is alvays subject to superintendence and check by Parliament a. General exemption: If the Central Government is satisfied that itis necessary in the public interest so to do, it may, by notification in the Offical Gazette, ‘exempt generally ether absolutely or subject to such conditions (to be fullled before or ater clearance) as may be specified in the notfication, goods of any specified description from the whole or any part of duty of customs leviable thereon. b. Special exemption: If the Central Government is satisfied that it s necessary in the public interest so to do, it may, by ‘special order in each case, exempt from payment of duty, any goods on which duty s leviable only under circumstances of ‘an exceptional nature to be statedin such order. Further, no duty shall be collected the amountof duty leviableis equal to, oless than, one hundred rupees. Both the above mentioned exemptions may be granted by providing forthe levy of duty on such goods at arate expressedina form or method different rom the form or methodin which the statutory duty isleviable. Further, the duty leviable under such altered form or method shall in no case exceed the statutory duty leviable under the normalform or method. ‘Where the Central Governmentis satisfied that itis necessary in the public interest so to do, it ay, by notification, exempt such of the goods which are imported for the purposes of repair, further processing or manufacture, as may be specified therein, fromthe whole or any part of duty of customs leviable thereon, subjectto the folowing conditions, namely— {@) the goods shall be re-exported after such repair, further processing or manufacture, as the case may be, within a period of ‘one year from the date on which the order for clearance ofthe imported goodsis made; (b) the imported goods are identiiablein the export goods; and (¢)such other conditions as may be specitiedin thatnotfcationNotwithstanding anything contained in section 20, where the Central Government is satisfied that itis necessary in the public interest so to do, it may, by notification, exempt such of the goods which are re-imported after being exported for the purposes of repair, further processing or manufacture, as may be specified therein, from the whole or any part of duty of customs leviable thereon, subjectto the following conditions, namely :— (a) the goods shal be re-imported into India after such repair, further processing or manufacture, as the case may be, within a period ofone year from the date on which the order permitting clearance for exportis made; (b)the exported goods are identifablein the re-imported goods; and {c)such other conditions as may be specified in thatnotifcationOia te mcs) BY POST, COURIER Sec 82 Table of Conte Label or Declaration accompanying goods tobe treated as entry Omittec Sec 83: Rate of duty and tariff valuation in respect of goods imported or exported by post Sec 84: Regulations regarding goods Imported or to be Export by Post (- Post master wil prepare ist of parcels & send it to {Duty amount passed on to ‘customs | department. Woof 4 @ customs authori Customs authority will retum the assessed ¢. appraisement | parcel with certificates, brePOST OR COURIER 1. Therate of duty and tariff value, if any, applicable to any goods imported by, post or courier shall be the rate and valuation in force on the date on which the postal authorities or the authorised courier present to the proper officer a list containing the particulars of such goods forthe purpose of assessing the duty thereon. Butif such goods are imported by a ‘vessel and the lst ofthe goods containing the particulars was presented before the date of the arrival of the vessel, it shall be deemed to have been presented on the date of such arrival. 2. Therate of duty and tai value, if any, applicable to any goods exported by post or courier shall be the rate and valuation in force on the date on which the exporter delivers such goods to the postal authorities or authorised Courier for exportation. EXPORT GOODS ¥ IMPORTED GOODS + Relevant date is date on which the| If goods imported by vessels If goods imported exporter delivers such goods to by Aircraftivehicle the postal authorities for ¥ exportation. ¥ t ¥ If list of the goods containing the] if list of the goods containing th¢| Relevant date for duty rate and tariff value Particulars was presented after) particulars was presented before the | is date on which postal authorities present the date of the arrival ofthe vessel, | |date of the arrival ofthe vessel, to proper officer a list for appraisement, ¥ ¥ [Relevant date for duty rate and tariff] [Relevant date for duly rate and tari value is the date on which postal] | value is the date of arrival of such authorities present to proper officera| | vessel listfor appraisement. Question:- Mis. XYZ Ltd. imported certain goods valuing 715 lakh (assessable value) from America by post. Compute the amount of duty payable by the importer in the light of the following information: Date of presentation of alist containing particular of goods to proper officer of custom 15/05/2018 Rate of duty prevalent on the date of such presentation 75% Date of arrival of vessel through which the packet containing the said goods was imported 20/05/2018 Rate of duty prevalent on the date of such arrival 10% Answer:- The Board may make regulations providing for a) The formandmannerin which an entry may be made in respect of goods imported or to be exported by post or Courier. b) Theexamination, assessmentto duty, and clearance of goods imported orto be exported by post or Courier c) The transit or transhipment of goods imported by post or Courier from one customs station to another or to a place outside India. Biue Dard (USA Office) sending parcels by post into India- detalls of parcels in transit send to branch office in India Examination which submits such deta to the PO — and PO on basis of such information is presenting “Advance Parcel List to Question the Customs Officer Date of Presentation of such Advance ParcelList= 10th Jan, 2014 (Rate of Customs Duty = 20%] Date of rival of Conveyance carrying the post = 25th Jan, 2014 [Rate of Customs Duty = 30%] Determine the applicable rate of customs duty under the following 2 situation: Case: Postis atving ino india by vessel Case 2: Postis atving into India by Aircraft (Airroute) / Vehicle (iand Route) cy)Table of Content Sections Descriptions Sec 2 (38) | Stores Seo 2 (21) | Foreign going vessels J Aircraft Seo2(7) | Coastal Goods Sec85 | Stores may be allowed to be warehoused without assessment to duly. $eo86 | Transit and Transhipment of Stores sec87 _| Imported stores may be consumed on board a foreign-going Vessel or aircraft Sec.88 | Application of Section 69 (Export after Warehousing) & Drawback to Stores Sec89 | Stores to be free of Export Duty Sec'90__| Concessions in respect of Imported Stores for the Navy INTRODUCTION Theres a popular belief that custom duty is on trade andmerchandise only and goods brought nto India or taken out of India inthe course of international trade alone are liableto duty. Normally stores are not imported into are exported out of Incia in course of international trade but by the very fact of there being brought into Incia froma place outside India and vice versa. sometime such stores cleared in India & subjectto customs duty. special provisions is needed to keep control over such stores. Stores principally coverup Goods intended for consumption by the passengers and crew on board official aircraftwith ornot sold > food, drink otherneed of passengers and crew > certain essential medical tems lke irstaidbox, oxygen etc, > life saving things, ife quotes & etc > Entertainment equipmentiike musical instrument, video! radio systems, Goods necessary for the operation and maintenance of vessels or Aircraft > Diesel il, fumace oil, petrol, aviation turbine fuel > spare parts forthe maintenance and repairs ofthe conveyance DEFINITIONS SEC 2 (38) : “STORES” MEANS INCLUDES Fuel and spare parts and other articles of eee) eee OL equipment, whether or not for immediate fitting, 12) 101)qulog Buneys uoy9ex3 110 sjesseq |@AeN, yeog Burysiy CAVishal Bhattad @ 09850850800 \wuwysmartacademy.com @ V'Smart AcademyFOREIGN - GOING VESSEL OR AIRCRAFT & INCLUDES + t ¥ ‘ 0 fi «i Any naval vessel of a | | Any vessel engaged in| Any vessel or aircraft foreign Government | |fishing or any other| proceeding to a place taking part in any naval | | operations outside the | outside India for any exercises; territorial waters of India; | | purpose whatsoever; SECTION 85: STORES MAY BE ALLOWED TO BE WAREHOUSED WITHOUT ASSESSMENT TO DUTY. > Where any imported goods are entered for warehousing and > the importer makes and subscribes to a declaration that the goods are to be supplied as stores to vessels or aircrafts, without payment of import duty under this Chapter, > the proper officer may permit the goods to be warchoused without the goods being assessed to duty (Warehousing without warehousing) it has been found convenient to allow imported ship stores to be kept in a bonded warehouse and thereafter supply it to vessels/aircrat as and when required, Normally when imported goods are allowed to be kept in a warehouse the importer is required to bind him to pay the duty on the imported goods by execution of double duty bond. Butitis dificult in case of stores to execute bond everytime for temporary period, Hence under section 85 a facilly of warehousing without warehousingis allowed. wo, NS 7] mii SECTION 86: TRANSIT AND TRANSHIPMENT OF STORES 4. Any stores imported in a vessel or aircraft may, without payment of duty, remain on board such vessel or aircraft while itis in India 2. Any stores imported in a vessel or aircraft may, with the permission of the proper officer, be transferred to any vessel or aircraft as stores for consumption therein as provided in section 87 or section 90. SECTION 87 IMPORTED STORES MAY BE CONSUMED ON BOARD A FOREIGN-GOING Se ee Na Any imported stores on board a vessel or aircraft may, without payment of duty, be consumed thereon as stores during the period such vessel or aircrafts a foreign-going vessel or aircraft alte!SECTION 88: APPLICATION OF SECTION 69 (EXPORT AFTER WAREHOUSING) & DRAWBACK TO STORES Warehoused goods may be cleared for issue as stores on board to foreign going vessels and Aircraft without payment of import duty. |M.J. EXPORTS LTD. V. CEGAT 1992 (60) E.L.T. 161 (S.C.) The supreme court held thatthe imported goods can be exported without clearing it for home consumption without payment of duty from the warehouse under section 69 if imported goods are taken on board any foreign going vessels or Aircraft, duty paid on their import shall be repaid as drawback as follows: Aircraft Fuel and lubricant oil 100% Drawback Other stores e.g. food, drink etc) 98% Drawoack Vessel Fuel, lubricant oil and other stores 98 % Drawback SECTION 89: STORES TO BE FREE OF EXPORT DUTY Goods produced or manufactured in India and required as stores on any foreign-going vessel or aircraft may be exported free of duty in such quantities as the proper officer may determine, having regard to the size of the vessel or aircraft, the number of passengers and crew and the length ofthe voyage or journey on which the vessel o aircrafts about to depart SECTION 90: CONCESSIONS IN RESPECT OF IMPORTED STORES FOR THE NAVY 41) Imported stores may be consumed on Board a naval ship without payment of duty. 2) Imported stores supplied to the ship of Indian navy are not subject to Import Duty. 3) The Imported stores taken on board any ship of Indian Navy are allowed to 100% duty drawback,le of Conte’ ‘Sec 74 | Drawback Allowable on re-export of Duty-paid Goods. Sec 75 _| Drawback on imported materials used in the manufacture of goods which are exported. Sec 75A | Interest on drawback ‘Sec 76 _| Prohibition and regulation of drawback in certain cases ‘Sec.26 | Re-importation of goodsBCU on 4, Goods have been originally importedinto India 2, The Duty has been paid ontheirlmportation 3, Such goods are capable ofbeing ea ified which have been imported into India on their exportation 4, The goods are enterin exports such in any ofthe following mode > Exportas cargo and let Export order passed thereon by proper officer > Export by post and the proper officer make an order permitting clearance of the goods for exportation, > Exportas Baggage and officer makes an order permitting clearance ofthe goods for exportation ‘and after ensuring that there is no prohibition or restriction on their export, should have permitted clearance of such goods for export 5. The goods should have been identified to the satisfaction of the Assistant or Deputy Commissioner of Customs as the goods, which were imported, and 6, The goods should have been entered for export within two years from the date of payment of duty on the importation thereof Provided that, the aforesaid period of two years may, on sufficient cause being shown, be extended by the Board by such further period, asit may deem fit Once these conditions are satisfied, then 98% of the import duty paid on such goods at the time of importation shall be repaid as drawback. (2) the rate of drawback in the case of goods which have been used afer the importation thereof shall be such as the Central Government, having regard tothe > duration ofuse, > depreciationinvalueand > otherrelevantcircumstances, may, by notficationin the Official Gazette, fixthe percentage of drawback. Note: 1, Incase of provisional assessments 18, the of date of Payment of provisional duty shall be deemedtobe date of payment of duty 2. However, in any particular case, the aforesaid period of two years may, on sufficient cause being shown, be extended by the Board by such further period, as it may deem fi. 3. “Export”, with its grammatical variations and cognate expressions means taking out of India toa place outside India and includes loading of provisions or store or equipment for use on board a vessel or aircraft proceeding toa foreign port or airport (Rule 2 of Re- export of imported goods(Drawback of Customs Duties) Rules, 1995) 4. “Drawback’, in relation to any goods exported out of India, means the refund of duty paid on importation of such goods in terms of section 74 ofthe Customs Act Rule 2 of Re-exporofimported goods (Drawback of Customs Duties) Rules, 1995) ‘Goods are said to be entered n exportation onthe date when’ Let export order is received. ‘Same goods must be r-exported for drawback uls 74. Part of machinery notallowed tobe exported Case study - MILLIPORE (INDIA) PRIVATE LTD. 1999 (113) E.L.T. 62 (Kar.) Question: Merely demonstration in exhibition or testing before use amounts exportation after use? Observation : Theresa difference between display and demonstration. Once a machine is operated, may be fora shorter time {or demonstration or exhibition to show its performance ete, the machinery is used Once there is operation of a machinery by ‘way of demonstration, it amounts tots use and the refund could be claimed only under Section 74(2) and not under Section 74(1) as re exportation as suchof Customs Act, 1962. DUE Ua cal AOL Sc a aul i) __Notmore than 3 months 95% ji) More than 3 butnot more than 6 85% ili) ‘More than 6 but not more than 9 75% iv) More than 9 but not more than 12 70% ¥)___ More than 12 but not more than 15 65% vi) More than 15 but not more than 18 60% vi) More than 18 NILDrawback is calculated by reducing the import duty pai ‘on the period of usage as stipulated below: respect of such motor car or goods by a certain percentage based (@)_|_ Use per quarter for tst year % (©) | Per quarter for 3d year 212% (b)_|_ Use per quarter for 2nd year 3h (@) | Per quarter for 4th year 2% Note: 1) Where the period involved is more than 24 months, drawback should be allowed only ifthe period has been extended on sufficient cause being shown, 2) Ant-dumping duty, Safeguard duties and countervailing duties are rebatable as duty drawback, CBIC has clarified that safeguard duties, anti-dumping duties and countervailing duties are rebatable as drawbackin terms of section 75 of the CustomsAct, 3) Drawback is not available for the following items: a) °) 9) Wearing apparel ) Tea chests Unexposed photographic films, paper and plates and x-ray films Exposed cinematograph fms duly passed by the Board of Film Censors in India. Examples:- Mr, Ximported a goods worth & 2,00,000 and paid import duty thereon 760,000. Later on Mr. x export the same goods. Calculate amount of drawback in following cases- ‘As such within T year ‘fier use within 77 months ‘As such within 2 years 2 monihs| ‘Afior use 14 months 1 days ‘Affer use within 3 months ‘Afler_use affer 2 years ‘After use within 3 months Imported machinery unpacked, installed, tested and re-export requested after six months of import - It amounts to ‘use after importation’ under Section 74(2) of Customs Act, 1962 and case is not covered under Section 74(1) Date of IGM 31-12-2017 _| Date of IGM 31-12-2017 Date of fling Bill of Entry 01-01-2018 _| Date of filing Bill of Entry 01-01-2018 Date of payment of Duty 01-01-2018 | Date of provisional assessment of Duty | 02-01-2018 Order of clearance forhome consumption | 10-01-2018 | Date of payment of provisional Duty 02-01-2018 Order of clearance forhhome consumption | 02-02-2018 Date of Final assessment 28-02-2018 Date of fling shipping Bill 25-12-2019 _| Date of fling shipping Bil 25-12-2019 Het Export order (re-export order) Let Export Order 28-12-2019 Whether DBK available or not? Whether DBK available or not? Would your answer differ if Would your answer diferf Date of let Export order u/s 51 05-04-2020 | Date of let Export order u/s 51 06-01-2020 Ans. Ans.TEU meer naa hoes sca nun nes (Rule 5 of Re-export ofimported goods (Drawback of Customs Duties) Rules, 1995) 1) Aclaim for drawback under these rules shall be filed in the prescribed form within three months from the date 'Let Export’ by proper officer of customs: ‘Authority Period of extension] Application Fee Grantirefuse of extension Assistan/Deputy three months __| (!) 1% of the FOB value of exports] The concemed authority may, on Commissioner of . or an application and after making Customs: (li) % 1000/- whicheveris less | such enquiry as he thinks fit, grant extension or refuse to grant extension after recording in writing i whichever th for such refusal (li) % 2000/- whichever is less ie reasons for suc! Principal Commissioner! | further extension | (I) 2% of the FOB value of exports| ‘Commissioner of Customs| of six months 2) The claim shallbe fled long with following documents, namely:- @ Triplicate copy ofthe Shipping Bill bearing examination report recorded by the proper officer of the customs at the ime of export. © Copy of illofEntry orany other prescribed document against which goods were cleared on importation @ Importinvoice. © Evidence of payment of duty pad atthe time of importation of the goods. @ Permission from Reserve Bank of India for re-exports of goods, wherever necessary. @ Exportinvoice and packing list. © Copy of Bill oflading or Airway bil. © Any other documents as may be specitiedin the deficiency memo Examination Objective: Question With reference to drawback on re-export of duty paid imported goods under section 74 of the Customs Act, 41962, answer in brief the following questions: {i)Whatis the time limit for re-exportation of goods as such? (i) Whatis the rate of duty drawback ifthe goods are exported without use? (i) Is duty drawback allowed on re-export of wearing apparelwithoutuse? (3 Marks, Nov2013) Hint:(i)2 years (extension allowed by CBEC) (i) 98% (il) yes /Subjective questions: Explain briefly the provisions regarding drawback allowable on re-export of duty paid goods as such. (5 Marks, Nov2005) State brief the provisions under the Customs Act, 1962relating to duty drawback on re-export of goods. (3Marks, May 2011) Practical problems 4.Ram Ltd has imported 5 main frame computer system from USA DEC 2014 paying Customs Duty Rs 60 lakhs. Due to some technical snags that developed in that systems in March 2015, the supplier sent his technicians to India to resolve the same. No solution was found. In uly 2015,Ram Ltd decided toreship/Return the goods to foreign supplier. Ram Itd has approach you for advice whether import Duty already paid can be got back from the central Government when the {goods are reshipped Examine with reference to provision of Customs Act, 1962 (RTP.NOV-00) Hint: Period of usages 8 months. Hence drawback @75%Pare UL ee use Oe eal toe ELE eee} sora oa Frew scouo0 Conditions: 1. Central Government may notify goods of any class or description manufactured, processed or on which any operation has been carried outin ngia 2. _ Such noted goods have been entered forexportby folowing mode ‘© Exportas cargo and let Export order passed thereon by proper oficer © Exportby post and the proper officer make an order permitting clearance of the goods for exportation. Whereit appears to the Central Government that: 4)inrespect of goods manufactured, processed or on which any operation has been carried outin India 2) Being goods which have been entered for export and in respect of which an clearance order has been made under section 51 by he proper officer, or being goods entered for export by post under clause (a) of section 84 and in respect of which clearance orderhas been made by he proper officer a drawback should be allowed of the duties of customs chargeable under this Actor any imported materials class or description used in the ‘manufacture or processing of such goods or carrying out any operation on such goods, the Central Government may by notification in the Official Gazette, direct that drawback shall be allowed,Drawbacknotto be allowed in certain cases [proviso to section75(1)] No drawback of duty shallbe alowed under this sectionif: (@) the export value ofthe finished goods or the class of goods is ess than the value oftheimported | NNNTESEATBLERINNNN material used inthe manufacture or processing of such goods or carrying outany operation on [Essent value] Value of | Eighty of such goods or class of goods; or ———N strict rae (0) the export value is not more than such percentage ofthe value ofthe imported materials used in aiaaral the manufacture or processing of such goods or carrying out any operation on such goods or [Rs 1o1__| Rs. 100 class of goods as maybe notified by the Central Government; or Rs 100 | Rs. 100. Recovery of Drawback Rs.99 | Rs 100 (c) any drawback has been allowed on any goods and the sale proceeds in respect of such goods are not received by or on behalf of the exporter in India within the time allowed under the Foreign Exchange ManagementAct (FEMA) or any extension of the said period by RBI, > In such a case, the drawback shall be deemed never to have been allowed and the Central Government, may, by rules made under sub-section (2) spect the procedure forthe | wPervaNe | Yetaol | Ely of recovery oragustmentofthe amountofsuch drawback tol In this regard, Central Government is empowered to preserbe the circumstances |e tt | Re 100 under which duty drawback would nat be eisalowed even though the expor remitances are [Rs 0 Rs 100 natrecelved within the period allowed under FEMA Rs 109 | Rs 100 (1A) Where it appears to the Central Government that the quantity ofa particular material importedinto India is more than the total quant ofike materalthathas been used inthe goods manufactured, processed or on which any operation has been carried outinInaia]and exported outside India, then, the Central Government may, by notfcation inthe Official Gazette, declare that so much of the material as is contained in the goods exported shall, forthe purpose of sub-section (1), be deemed to be imported material. ? \Tutorial Notes Itwillbe noticed thatin the case of drawback under section 74 the amount of drawback was related othe actual duty paid on the goods. didnot have any correlation to either the valuation ofthe goods atthe time of exportation or the prevallig rates of duty onthe goodsat tne ime of export. However, the case of section 75 drawback, since the identiy ofthe inputs which have suffered customs or excise duly as the case may be, is extinguished in the final produc, there has been anecessit to correlate the grantof drawback with the value ofthe goods » Tutorial Notes Clarification regarding duty drawback allowad in cases of short realization of oxport proceeds due to bank charges deducted by foreign banks [As per circular no, 33/2019 Duty drawback may be permitted on FOB value without deducting foreign bank charges. Custom officer may consider on efits exporter’ requests for regularizing such short realization on account of foreign bank charges based an documentary evidence such as export invoice, bank's confirmation regarding foreign bank charges etc. ojustiy such deduction. era Bo Discussion on some important Rules (a) “Drawback” in elation to any goods manufactured in India and exported, means the rebate of duty ‘excluding integrated tax leviable under sub-section (7) and compensation cess leviable under sub section (9) respectively of section 3 of the Customs Tariff Act, 1975., chargeable on © any imported materials or © excisable materials used or Used inthe manufacture of such goods {(b) Excisable material | Means any material produced or manufactured in India subject to @ duty of excise under the Central Excises Act, 1944 (c)Export With its grammatical variations and cognate expressions, means © {aking out of Inia to a place outside India or © taking out from a place in Domestic Tarif Area (DTA) toa special economic zone and © includes loading of provisions or store or equipment for use on board a vessel or aircraft proceeding toa foreign port (a) Imported material_|means any material imported into India and on which duty is chargeable under the Customs Act, 1962 cy)7 |, [Includes processing of or any other operation carried out on goods, and the term manufacturer shall be {e) “Manufacture’ construed accordingly /Analysis: In short, drawback under section Sis allowed 1. Tomanufacturer (including processor or person carrying outany other operations on goods) 2. Only of excise duty or Custom duties [IGST and GST Cess are not eligible for drawback]; Hence GST has tobe taken as creditor refund as per Central Goods and Services Tax (CGST) Actor Rules. 3. Both domestic materials on which excise duty is charged and imported material on which custom duty is. charged, can be usedto manufacturelprocess into finalproduct. (f) “Tax Invoice” means the tax invoice referred to in section 31 of the Central Goods and Services Tax Act, 2017 Briefly explain the term Export for purpose of duty drawback uls 75 of the Customs Act, 1962. 1s duly Examnaion drawback available ifthe goods do not reach the destination? ANSWER: As per Rule 2(c) of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995, "Export" means 2) Taking out of inaia toa place outside India, or b) Taking out from a place in Domestic TarffArea to a Special Economic Zone, and (©) Includes loading of provisions or store or equipment for use on board a vessel or aircraft proceeding toa foreign port. Drawback-When export goods get destroyed in transit’? For the purposes of export, India’ includes territorial waters of India, Therefore, if export goods are destroyed while in transit, before they cross the territorial waters of India, then, there would be no’export’ as the goods didn't move outof india. However, ifthe goods are destroyed in high seas (Le. beyond territorial waters of India), then, for the purposes of drawback, the export shall be completed; and the same shall be eligible for drawback. -[Sun Industries v. CC. [1988] 35 ELT 241 (SC) and UOI v. Rajindra Dyeing & Printing Mill Ltd. [2005] 180 ELT 433 (SC)] Poon ree me cat Peon (1), Drawbackto be allowed : drawback may be allowed on the export of goods - @ atsuch amount, orat such rates, as may be determined by the Central Government # subjectto the provisions ofthe Customs and Central Excise laws rules and these rules. (2), Rate of drawback on FOB or on quantity: Rate of drawback has been expressed as a percentage of free on board [FOB] value or rate per unit quantity of export goods. Such rates are, unless specifically stated otherwise, are inclusive of rate applicable to packing materials. (3) Determining amountirate of drawback having regard to certain parameters : In determining amount rate of drawback under this rule, Central Government shall have regard to (@) the average quantity or value of each class or description of the materials from which a particular class of goods is ‘ordinarily produced or manufactured in India (b)the average quantity or value of the imported materials or excisable materials used for production or manufacture in India of a particular class or goods. (c) average amount of duties paid on imported or excisable materials used in manufacture of semis, components and imtermediate products which are sued in the manufacture of goods. (4) Rates of drawback not to apply : The rates of drawback shall not be applicable to export of a commodity or product if such ‘commodity orproductis- (a) manufactured party or whollyn a warehouse under section 65 of Customs Act, 1962; (0) manufactured or exported in discharge of export obligation against an Advance Authorisation or Duty Free Import Authorisation issued under Duty Exemption Scheme of Foreign Trade Policy; (d) Manufactured or exported by any ofthe units situated in free trade zones or export processing zones or special economic. zones; {e) Manufactured or exported availing the benefit ofthe notification no, 32/1997, dated 1-4-1997 (this notfication allows ‘exemption to goods imported for execution ofan export order placed on the importer by the supplier of goods for jobbing) Pee CteDP ULerAC Sasa CMs ELAS eM aA) ea MeL } All Industry Rate (AIR) (Rule 3) v 1, Itisnotifed by the central government It is based on FOB price of export goods subjectto Value Cap. 3. Normally itis revised on 1st June after considering the changes in budget. 4. Itshall be determined after considering the following information - ~ Average duty paid on imported material - Average Duty paid on Excisable ‘material usedin the production ~ Average duty paid on material used for t When the drawback rate is low, a SPECIAL BRAND RATE wil be applicable, Where the rate is lower than 4/5th (i.e. 80%) of the dutyltaxes paid, revised rate may be applied for within 3 months from the date of ‘announcement ofAIR, ‘Acide Extension for further 3 months Prncipal Comm | Further extension for # Comm 6 months Proper rate wil be fixed by the Principal ‘Commissioner or Commissioner brand rate letter will be issued accordingly and Brand Rate (Rule 6) ' Brand rate shall be issued for such goods for which no AIR is announced by the Central Government. Exporter shall apply for brand rate within 3 months from the date ofannouncementofAIR. ‘Acide Extension for further S months Principal Comm | Further extension for Comm, 6 months Fortis purpose exporter shal submittothe Principal Commissioner or Commissioner records pertaining to - The proportion in which the materials or packing or containing exports goods Le wil be allowed subject — components are used in the production ~ Average FOB price of export goods. a or manufacture of goods and the duties paidon such materials or components Principal Commissioner or Commissioner after carrying necessary enquiry fx brand rate for such exporter. Application Fees 1.4% of FOB or 1000 whicheverisless Rule 9: Upper Limit of Drawback amount or rate - The drawback amount or rate 2. in case Principal commissioner & ‘determined under rule 3 shall not exceed one third of the marketprice of the export Commissioner applicable fees : 2% of product. FOB or 2000 which everisless Appl 4.1% of FOB or 1000 whicheveris less 2. In case Principal commissioner & Commissioner applicable fees : 2% of FOB or2000 which everis less - the average amount of duties paid on materials wasted in the process of manufacture and catalyticagents. RULE 4. Revision of rates. - The Central Government may revise amount or rates determined under rule 3. RULE 5. Relevant Date for Determination of AIR ‘Where the amount or rate of drawback is allowed with retrospective effect, such amount or rate shall be allowed from such date as may be specified by the Central Government by notification in the Official Gazette which shall not be earlier than the date of changes in the rates of uty on inputs used inthe export goods Provided that, In case of Goods exported by filing Shipping Bill /Bill of Export Date of Let Export Order In case of Goods Exported by Post ==> Date of Delivery of Export Goods to the Postal Authority Iustration- Rule 7: An exporter exported 2,000 pairs ofleather shoes @ &750 per pair. Alindustry rate of drawbackis fixed on average basisi.e, @11% of FOB subject o maximum of 80 per pai The exporter found that the actual duty paid on inputs was & 1,95,000. He has approached you, as a consultant, to apply under Rule 7 of the drawback rues for fixation of special brand rate. Advices him suitable Solution : The relevant determination under Rule 7 ofthe CCE Drawback Rules, 2017 is 4.Allindustry Rates : (a) 11% of FOB = 11% of 2,000 paitsx750 per pair= 1,65,000 (b) Maximum Limit= 2,000 pairs x80 per pair= 160,000 (c)Drawback=Lower ofa) or (b) = 1,60,000 2. Actual Duty paid on inputs = 1,95,000. 3. Rule 7 not applies : Since AIR (1,60,000) is not less than (80% of actual 1,95,000) hence, benefit of rule 7 cannot be applied The exporter will have to claim AIR drawback 4. ifactual duty is 205,000 : factual duty paid on inputs 2,05,000 then since AIR is ess than 80% of actual taxes, hence, Rule 7 apples. The exporter shall not claim AIR and shall directly apply for Special Brand Rate under rule 7, In case of Rule 7, he willbe provisionally pad full drawbackimmediately OOOO Ue Oc ed [Rule 8] Noamount or rate of drawback shall be determined in respect of any goods or class of goods under rule 6 or ule 7, asthe casemay be ifthe export value ofeach of such goods or class of goods inthe bil of export or shipping bilis {i)less than the value ofthe imported materials used in the manufacture of such goods or class of goods, or {isnot more than such percentage of the value ofthe imported materials used in the manufacture of such goods or class of goods as the Central Government may, by notification in the Official Gazette, specify in this behalf. 113)oa Pend RRR) ete eae Statemient/Declaration to be made on exports other than by Post: Inthe case of exports other than by post, the exporters shall at the time of export ofthe goods. [A] (2) State on shipping bl or bill or export, the description, quantity and such other particulars as are necessary for deciding whether the goods are entitled to drawback, andifso, atwhatrate orrates and (b) make a declaration on the relevant shipping bill orbillor exportthat- (i) claim for drawback under these rules is beingmade;, {i) in respect of duties of Customs and Central Excise paid on containers, packing materials and materials used in manufacture of export goods on which drawback is claimed, no separate claim for rebate of duty under Central Excise Rules, 2002 orany other lawhas been or willbe made tothe Central Excise authorities [B] fumish to the proper officer of Customs, a copy of shipmentinvoice or any other document giving particulars ofthe description, quantitand value ofthe goods robe exported. In case of Rule 6 or 7 : Where the amount o rate of drawback has been determined under rule 6 or rule 7 the exporter shall make an additional declaration onthe relevant shipping bill orbillofexport that - {@) there is no change in the manufacturing formula and in the quantum per unit of the imported materials or components, i any, utiisedin the manufacture of export goods; and (b) the materials or components, which have been stated in the application under rule 6 or rule 7 to have been imported, continue to be so imported and are not being obtained from indigenous sources. Manner and time for claiming drawback on goods exported other than by post [1] E-shipping bill or Triplicate copy of shipping bill is deemed claim for drawback: Electronic shipping billin Electronic Data Interchange (EDI) under the claim of drawback or ‘Triplicate copy of the shipping bill for export of goods under a claim of drawback shall be deemed to be a claim for drawback filed on the date on which the proper officer of Customs makes on order permitting clearance and loading of goods for exportation under section 61 and said claim for drawback shall be retained by the proper officer making such order. [2] Documents to be filed : Drawback claim shall be accompanied by following documents, namely {i) copy fexport contractor letter of credit, as the case may be {il) copy ofARE-1, wherever applicable (ii) insurance certificate, wherever necessary, and (iv) copy of communication regarding rate of drawback where drawback claim is for Brand rate or special in (2) above, it shall be returned to the claimant with a deficiency memo in the form prescribed by the Principal commissioner or commissioner of Customs within 10 days and shall be deemed not to have been filed for the purpose of section 75A. [3] Incomplete claim claim treated as filed on date of duly completed claim: (a) the said claim for drawback is incomplete in any material particulars or is without the documents specified in (2) above, it shall be retumed to the claimant with a deficiency memo in the form prescribed by the Principal Commissioner or ‘Commissioner of Customs within 10 days and shallbe deemed not to have been fed forthe purpose of section 75A, (b) Ifexporterresubmts claim for drawback after complying with requirements specified in deficiency memo the same willbe treated as a claim fled for the purpose of section 75A. [4] Testing of export goods - Time upto 1 month excluded for computing interest : For computing the period of one month prescribed u/s 75A for payment of drawback to the claimant, the time taken in testing of the export goods, not more than 1 month, shall be excluded ‘Examination 4, application: Application for provisional drawback, should be made in wring othe Principal Commissioner or Commissioner, Question alongwith application for Brand Rate! Special Brand Rate, 2, Request : The application shall be for grant of provisional amount towards drawback on the export of goods, where the determination of amount orate of drawbackis pending 3. Furnishing of Bond : To ensure that any erroneous or ineligible drawback is repaid by the Manufacturer / Exporter (Assessee) ata later time, the ‘commissioner may drectthe assessee to furish / executed a General Bond for anamount (a) Brand Rate: Not exceeding the amount of drawback claimed. (b) Special Brand Rate : Equivalent o the dference between the All Industry Drawback Rate and Drawback amount determined by the Principal Commissioner or Commissioner Principal Commissioner or Commissioner may also impose such other condition, he deems fi 4. Order for Provisional Payment : Principal Commissioner or Commissioner may allow and pass an order for provisional payment of drawback ‘Maximum amount of provisional paymentis the amount of Drawoack claimed by the Assessee. 5.Adjustment : When tne amount ofraw/back payable onthe goodsis finally determined, the amount provisionally paid tothe applicant shall be adjusted ‘againsthe drawback finaly payable, {a) Provisional amount> Final Drawback: Excess paid shall be repaidby the Applicant. {) {Provisional amount whichis dutiable or > theimport of whichis prohibited and > __ inrespectofwhich a true declarationhas been made under section 77, ‘The proper oficer may, a he request of the passenger, detain such article > forthe purpose of being returned to him on his leaving India and > _ifforanyreason, the passengers not abe to collect the article atthe time ofhisleaving inca, the article may be returned to him through any other passenger authorised by him and leaving India oras cargo consigned inhis name. Ma. Ibrahim. Secretary, Ministry of Finance, 2000 (123) ELT 239 (Mac), ‘The declaration of te goods brought ni an absolute necessity, the goods are not declared under section 77, the passenger cannot subsequent claim the benefit under section 80 and te goods are able for confiscation, Eyer Ne a ey includes all persons who are residing in the same house and form part of the same domestic establishment; means a child not more than two years of age; means a person holding a valid passport issued under the Passports Act, 1967 (15 of 1967) and normally residing in India; course of any twelve months period fo legitimate non-immigrant purposes; es means things required for satisfying daily necessities but does not include jewellery. (2) Words and expression used and not defined in these rules but defined in the Customs Act, 1962 (52 of 1962) shall have the same meaning respectively assigned to them in the said Act. eal means a person not normally resident in India, who enters India for a stay of not more than six months in the eZ}SSS Sees Situations [ee] fe stustons itwses | [1] © Indian resident or + [2 Indian resident or > a foreigner residing in India or 2 a foreigner residing in India or ‘D a tourist of Indian o a tourist of Indian origin T used personal effects and Travel souveniTs |=, T) used personal effects and travel souvenirs | Free i) articles other than those mentioned in il articles other than those mentioned in |x 5,000 Annexureel Annexure-| 4) passenger Is arriving by Land Route No beef 2 | 2 fourst of foreign origin b) Passenger is arriving by other Route 215,000 T) used personal effects and travel souvenirs | Fee ‘Slourist offoreian orn i articles other than those mentioned in 15,000] | 2| 1) Used personal effects and travel souvenirs Tee Annexure-| i articles other tran those mentioned in Annexure 3 | Sanfant a) passenger is ariving by Land Route No bene 1) used personal effects and travel souvenirs | Fee ) Passenger is arriving by other Route 15,000 i) articles other than those mentioned in No bene) [| Salant Annexures| 3] 1) used personal effects and ravel souvenirs [Fee i) articles other than those mentioned in No benef Annexure-L Explanation. - The free allowance of a passenger under this rule shall not be allowed to pool wth the free alowance of any other passenger. 1.Fire arms, 2.Cartridges of fire arms exceeding 50, 3.Cigarettes exceeding 100 or cigars exceeding 25 or tobacco exceeding 125 gms. 4.Alcoholic liquor or wines in excess of two litres. 5.Gold or silver, in any form, other than ornaments. 6. Flat Panel (LCD/LED/Plasma) Television Example:- ‘An India resident goes to Nepal on tour. He purchase Color TV of t 35,000 , a laptop Computer of & 72,000 and hair dryer of % 2000 in a duty free shop in Nepal and bring the same to India, What is the duty payable a) fhe return by air _—_b) If he by Land Route AnswerExample Gregory Peg of foreign origin has come on travel visa, to tour in India. He carries with him, as part of baggage, the following: Travel Souvenir 85,000 Other articles carried on in person 4,50,000 120 sticks of cigarettes of ¥ 100 each 12,000 Fire arm with 100 cartridges (Value includes the value of cartridges at @ 7500 per cartridges). 4,00,000 Determine customs duty payable, if the effective rate of customs duty is 38. short explanations where required.(CA Final May 18 old) Answer:- \clusive of Social welfare surcharge, with Uae esas A passenger residing abroad for more than one year, on return to India () Additional Jewellery allowances (2) Gentleman Passenger jewellery upto a weight, of 20 grams with a value cap of & 50,000 Lady Passenger jewellery upto a weight, of 40 grams with a value cap of 1,00,000 Example Weight of [Value of [Duty free | Assessable] Duty liability) Remarks Jewellery Jewellery (Z) allowance Value | @ 36.05% (ingms) Mal 17 52,000 | 50,000] 2,000 721 | 20 grams with caping & 50,000 MrB] 22 | 44,000 | 40,000] 4,000 | 1,442 | Max 20 grams with caping & 0,000 ms.c] 38 | 1,10,500 |1,00,000] 10,500 | 3,785 | 40 grams with caping & 1,00,000 Ms.D] 45 | 90,000 | 80,000 | 10,000 | 3,605 | 40 grams with caping & 1,00,000 126)Uuonexejal ON ‘sieak 22s4y Bulpeoeud aly u uoisseou0o iy) payeae you sey sebuess ‘BunUM Ul papiooai aq| 0} suoseei Jo} seouejswinauio jejoads ul syUOU xs Jo s820%e| Uy. SYA WoYs euopuoD AeW swlo}sND Jo JAUOISs\UIWIOD Jo swiysng jo sauo}ssiwwo jediouyg ay) uonipucd 04 (Q) ue ‘syjuow xis paeoxe jou pinoys sueaf Bulpaoaid omy 3uy Buunp JsiA Yous uo expuy UI Aes eIOL ‘uyum ui pepuooes @q 0} suoseas 10} seouejswnoio jeroads ayy Aq Jo pewene Gujeq uoyeoen so enea| jeune} () ~Joqunode uo s1wnjad Aue auy y swo}sng Jo seu0|ssuuwog juejsissy 40 swo}sn) ‘eouapisal Jo 4SueN, Uo Jealue “soodnu wpe} any jo enjen eyeBai66e ue oydn ||| unxeuuy ul pauojueus sejue Jo seuoissiuwog Andaq £q peuopuoo eq ueo peo.ge [sy jo ayep ey Sulpecead Alaye;peuuu! | Sulpnjout ynq | eunxauuy 10 | esnxeuuy ye pays|| as0y) “euoui so sieek peosge sieeK omy jo Aes wnwuyy () | wey, sa\jo ‘sejue pjoyesnoy esnoy pue [euosieg | om) jo Ae}s wNw}UIYy “soadnayyey omjo onjen ~"sieek easy) Gupeoeid s1eaf omy Bulpeoaid yj ul uoJsseou09 siMq payene eney Jou pnoys sebuessed uelpu) ey) 2804) UeY) J8YJO “sejomte pjoyesnoy pue jeuosied ey) Bulinp 120K uo yo Aes wnwsulyy Jebuessed uejpul ‘soodns yye| ou jo enjen aqebei66e ue ojdn ‘I einouuy u! pauoquew sapIue Supnjoul ynq || eunxeuuy Jo | eunxeuuy ul pauojuews SOU} UEY) J8YJO ‘See pjoyssnoy pue jeuosieg steak auo ojdn syjuow xis wos Jebvessed uerpul -saadnu puesnowy Ayxisjo.njen ayeGe166e ue odn || eunxeuuy ul peuonuew se;ILE Supnjouy yng || eunxeuuy Jo | eunxeuuy ul pauouew S04} UEY) JYJO ‘sePIVe poyssnoy pue jeuosiag squow xis oydn s\quow ae.4y wo1y io} ‘0q Aew aseo ey) se “p 40 ¢ @InJ Jepun eouemoye ebefGeq aay Ainp jexaue6 ey) 0} UORIppe UI aq piNOM eoUeMo|/e SI4L ‘mojag xipueddy: 84) Ul UaAl6 JeuUeW 24) Ul WuNjad Sly UO SajoqJe Jo soUEJe|9 Bey Ajnp paMolje aq ||IM ‘eIDUJ 0} ZoUapIsed siy BuLve}sUeN SI JO ‘peoige Uo|ssajoud B Ul pabeBue s| OyM ‘uosed y_ FERED LCR PED La eRThe importand export of currency under these rules shall be governed in accordance with the provisions of the Foreign Exchange Management (Exportand Import of Currency) Regulations, 2015, and the notifications issued thereunder. (1) These rules shall apply to unaccompanied baggage except where they have been specifically excluded: Provided that the said unaccompanied baggage had been in the possession, abroad, of the passenger and is dispatched within one month of his arrival in India or within such further period as the Deputy Commissioner of Customs or Assistant Commissioner of Customs may allow: The said unaccompanied baggage can also land in India upto 2 months before the arrival of the passenger. However, if the passenger's not abe to arrive in India within two months due to circumstances beyond his control like sudden ilness to himself or any member of family, natural calamities, disturbed conditions, disruption of the transport or travel arrangements in the country etc., the Deputy/Assistant Commissioner may extend the said period of 2 months upto a maximum of 1 year for reasons to be recorded (1) These rules shall also apply to the members of the crew engaged in a foreign going conveyance for importation oftheir baggage atthe time offinal pay offon termination of heir engagement. (2) Notwithstanding anything contained in sub-rule (1), a member of crew of a vessel or an aircraft other than those referred to in sub-rule (1), shall be allowed to bring articles lke chocolates, cheese, cosmetics and other petty gift items for their personal or family use which shall notexceed the value of one thousand and five hundred rupees, Colour Television, Video Home Theatre System, Dish Washer Domestcrefigeratos of capacity above 30 lires ori equivalent Deep Freezer \Video camera othe combination of any such Video camera with one or more ofthe following goods, namely:- (a) television receiver, (0) sound recording or reproducing apparatus; {6} video reproducing apparatus, 7. Cinematographic fms of 35mm and above. 8, Goldorsiver,inany form, other than omaments. ‘Video Cassette Recorder or Video Cassette Player or Video Television Receiver or Video Cassette Disk Player. Digital Video Disc player. Music System. ‘Ai-Conditoner. Microwave Oven, WordProcessing Machine. FaxMachine. Portable Photocopying Machine 8, Washing Machine, 10.Electrical or Liquefied Petroleum Gas Cooking Range. 11. Personal Computer (Desktop Computer) 412. Laptop Computer (Nate book Computer 18. Domestic Rettigeratorsof capacity upto 300 tres orits equivalentMr.A, an Indian resident, aged 50 years, returned to India after visiting England on 10/04/2011. He had been to England on 1/04/2011. On his way back to India he brought following goods with him - a) His personal effects like clothes etc. valued at 40,000; b) 1 litre of Wine worth 1,000; ¢) Avideo cassette recorder worth?11,000; d) Amicrowave oven worth 20,000. Whatis the customs duty payable?Example Gregory Peg of foreign origin has come on travel visa, to tour in India. He carries with him,as part of baggage, the following: Travel Souvenit 85,000 Other articles carried on in person 150,000 120 sticks of cigarettes of €100 each 12,000 Fire arm with 100 cartridges (value includes the value of cartridges at 400,000 © 500 per cartridge), Determine customs duty payable, ifthe effective rate of customs duty is 38.5 % inclusive of Social welfare surcharge, with short explanations where required, ‘Answer:USO St ae eo Types of Duties CLASSIFICATION OF GOODS Table of Conte 1, Features of Tarif 2. Rules for Interpretation of Tarif [Statutory Principles] Rule 1 Tite of Sections & Chapters are only forreference Rule2 Classification of imcomplete/unfinished goods & mixture/combination Rule 3 Classification of goods n case oftwo or more headings Ruled AkinRule Rule 5 Classification of Cases and Packing Material Rule6 _Classificationin Subheading 3. Non Statutory Principle 4. Trade Parlance Theory 5. Evplanatory Notes toHSN Table of Conte Sec4 |Special Rate for preferential Countries Sec5 | Lowrate under international Trade agreement sec 6i7_| Protective Duties Sec 8B | Safeguard Duty Sec 8C | Specific Safeguard Duty for impor from China Rule9: | CVD on Subsidies Article Rule 9A | Ant-Dumping Duty Rule 98: | No Levy under Section 9 and 9A in certain cases: Rule 9C_| Appeal‘yuey %SZL by seuno | = 0666 LOL Jo uone}esdsayul 104 sainy ‘%gZL By, seqnoueing | 4 6 40 (yjo) seinu enneyaudueyuy EHO, & |evau96 paljeo osie S13] %Szh By 7H0_ 06 €1 by by = Lb SCL by, aeGns 99g - 0021 LOLb Taye Buy Uanl6 218 en ae 40 Buunoney pappe Bululejuoo jou Jens Mey s9qou seydeyo sejou uojoas W404 GMOs NI"3sOuONS 3UNd ATIVOINSHO ONY YVONS 1338 YO 3NV: ‘srajadeyo ay) Jo ‘suoqoas ayy BuluuiBeq oun y Buluuibaq oun t ty) @) ‘Ainp 30 aye wn oy WHEL, sieydeuo 66 suooes 12 ‘2ue0 seBns Jo sjuenyjsuod J84IO PUB SessejOUL Jo sanpisel fq pepunouns ‘ais (908} 6upesy) 20000 BuywyejUod Ai (e “Asauon}29ju09 seBins pue sieBng 2} YaLdVHO | ‘equunuio fyquen peuiuzejepeid ploy 9 pauBysep (e]s1ueO.0 eeq whup “uoueD 40 Beq ‘apiog ‘sel ‘x0q ‘veo ‘un “ajdwexe 4o)) yews 10 @6ye| seyisym' JeulejU09 & SUBS J2UIE}U09 JUN), SBINLILSENS OD9VEOL + G3UNLOVINNYW GNY OD9¥BOL NYOANIA ONY LididS ‘S2OVUaAAS 'S44NLSGOOS GRAVE eT HEL UI SHOOD JO UONESIISSE/D bo | | | i %8 sebns wespueyy | = wel qua “set habbereueg [= | oe Tadeup sy I 0 2 oN Buipeau-gng u poyeds se6ns ave) | Ql ———— | |Classification | Determination of headings or sub-headings of the CTA 1975 under which the said goods are of Goods covered Need of (a) Determination of rate of Duty (b) Determination of eligibility of exemption (c) Determination Classification _| of deemed manufacture Features of || Columns in Custom Tariff Act, 1975 (CTA) = EIGHT DIGIT CODING SYSTEM [17011310] Tariff (Tan Eight Dig Description Firsttwo digi indicated) 17 | Chapter no {Q) [Description of Goods | Names and Classification Noxt wo digits indicate | 01 | Heading no {3)_[Units Kilograms Metres, Unis. Lives, eto] [Nextdigitindicate | 13 Subheading no (4) [Rate of Duty 10%, 4%, Ni ete Nxt wa digi indeaie | 10 | Specie product iD Dash System Std. Unit] uitof mesure and ued acta Sing | Indales sub dassicationofaricie-Specially shaped shall be Classification | Musical instrument cases, | DSuitable for long term use _| classified with ofCases and | Gun cases, Presented with the articles | main article packing Drawing instrument cases, Normally sold with article material Necklace cases and similar ‘containers; b) Packing Material or Presented with the arficles | shall be containers classified with main article. Notapplcabeto (a) abnormal packing (b) Durable and returnable packing a Rule 6 Classification of goods shall be determined in accordance with terms of the relevant sub- Classification in| headings and any notes therein, mutatis mutandis, shall apply to above rules. Sub-heading DS meee CEL Cy 1, Meaning : Internationally accepted Product Coding system for Categorisation and Classification of commodities and was conceived and devised by the world Customs Organisation (WCD). 2. Features : 8 digit code suitable for multi-purpose nomenclature. 3. Reliance : HSN can be relied for classification under the Tariff Schedule, if there is no conflict between Indian Tariff Schedule and HSN. 4, Relevance of Notes : Only the Section Notes and chapter notes have legal status. Explanatory Notes to HSN do not have any legal status. 1,Department : To establish correct Tariff Heading under which the product fails. Onus is on the department to establish alternate classification. 2.Assessee : When certain goods are prima facie covered by the generic description, the burden to prove that they are not so covered would be on the person claiming so. 1. Goods are to be classified as they are known in trade and commerce, ifit is neither defined in Schedule to CETA nor in CEA 2. Conditions : (a) a particular product description under trade parlance occurs by itself in a Tariff Entry, and (b) there is no conflict between Tariff entry and any other entry requiring reconciliation. 3.Exception : (a) Scientific and Technical Terms, and (b) Conflict with Statutory Context. eCUSTOMS TARIFF ACT 1975 Section 4 ‘Shor Title, Extent and Commencement ; ; Section 2 Duty Rate for Basic Customs Duty Already discussed in Chapter No. 4 Section 3 ‘Additional Customs Duty ifthe goods are imported from the areas notified by the Central Government tobe preferential areas, then the rate of duty under column (5) willbe applicable The Government may by notification under section 25 of the Customs Act prescribe preferential rate of duty in respect of imports from certain preferential areas Conditions to be fulfilled for preferential rate of duty: The importer will have to full the following conditions to make the imported goods eligible for preferential rate of du (@)Althe time ofimportation, he should make a specific claim forthe preferential rate (b) He should also ciaim that the goods are produced or manufactured in such preferential area, (c) The area shouldbe notified under section 4(3) ofthe Customs TariffActto be a preferential area, (d) The origin ofthe goods shall be determined in accordance with the rules made under section 4(2) ofthe Customs TariffAct ifthe importer fast discharge the above duties, the goods shall be liable to standardrate of duty 1, Where undera trade agreement between the Government of India and the Government of a foreign country or territory, duty ata rate lower than that specifiedin the First Schedule isto be charged on articles which are the produce or manufacture of such foreign country or territory, the Central Government may, by notification in the Offical Gazette, make rules for determining if any article is the produce or manufacture of such foreign country or territory and for requiring the owner to make a claim atthe time of importation, supported by such evidence as may be prescribed inthe said rules, for assessment atthe appropriate lower rate under such agreement, 2, any question arises whether any trade agreement applies to any country or teritory, or whether it has ceased to apply to India or any foreign county or territory, it shall be referred to the Central Government for decision and the decision of the Central Government shallbe final and shall not be liable to be questioned in any courtoflaw.*8010) u| Bulag ally 1 40} me| Joyo Aue JO Joy siyj Japun asodu! 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