UNIT V CUSTOM LAW LEGISLATIVE BACKGROUND OF THE LEVY PORTS-WAREHOUSE- LEGISLATIVE BACKGROUND OF THE LEVY PORTS WAREHOUSE ion: Entry 83 of the Union List of the Seventh Schedule to the Constitutional Prov Constitution of India is empowered to levy the customs duty by the Central Government of India. The term customs is not new for us. It was customary fora trader who brit goods to a particular kingdom to offer gi that kingdom, The gifts given by the d in those days. In the modem o the king for allowing him to sell his goods in ler to the king was nothing but a customary practice these gifts are collected by the Government of India in the form of Customs Duty ftom the importer who imports the goods from a country outside India and from an exporter who exports the goods to-a country outside India, The Customs enacted by the Parliament in the year 196. per the List I of the Union List t has an exclusive right to make laws. The Customs Act regulates import and export, protecting the Indigenous industry from other countries and so on. The Central Government of India has power to make rules under section 156 of Customs Act, 1962, and also has the power to issue Notifi tions from time to time for the purpose of smooth functioning and effective administration of the Act. As per section 157 of the Custom / 1962, the Central Board of Excise and Customs (CBE&C), now renamed to Central Board of Indircet Tax and Customs (CBIC), has been empowered to make regulations, consistent with 232provisions of the Act. The Commissioner of Customs has the power to issue the Public notices which are also called trade notices, INTRODUCTION Custom Duty is an indirect tax, imposed under the Customs Act formulated in 1962. The power to enact the law is provided under the Constitution of India under the Article 265, which states that —no tax shall be levied or collected except by authority of law||. Entry No. 83 of List I to Schedule VII of the Constitution empowers the Union Government to legislate and collect duties on import and exports. The Customs Act, 1962 is the basic statute which governs entry or exit of different categories of vessels, airerafts, goods. passengers etc., into or outside the country, The Act extends to the whole of the India, Customs Act, 1962 just like any other tax law is primarily for the levy and collection of duties but at the same time it has the other and equally important purposes such as: (i) regulation of imports and exports; (ii) protection of domestic industry; (iii) prevention of smuggling: (iv) conservation and augmentation of foreign exchange and so on. Section 12 of the Custom Act provides that duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 or other applicable Acts on goods imported into or exported from India. LEVY OF CUSTOM DUTY There are four stages in any tax structure, viz., levy, assessment, collection and postponement. The basis of levy of tax is specified in Section 12. charging section of the Customs Act. It identifies the person or properties in respect of which tax or duty is to be levied or charged, Under assessment, the liability for payment of duty is quantified and the last stage is the collcetion of duty which is may be postponed for administrative convenience. As per Seetion 12, out of India as per the rates spe customs duty is imposed on goods imported into or exported fied under the Customs Tariff Act, L975 or any other law. On analysis of Section 12, we derive the following points: (i) Customs duty is imposed on goods when such goods are imported into or exported out of India; (ii) The levy is subject to other provisions of this Act or any other law: (iii) The rates of Basic Custom Duty are as specified under the Tariff Act, 1975 or any other law: (iv) Even goods belonging to Government are subject to levy, though they may be exempted by notification(s) under Section 25, Custom Tariff Act, 1975 has two schedules. Schedule 1prescribes tariff rates for imported goods, known as —Import Tariff] and Schedule I contains tariff for export goods known as —Export Tariff. WAREHOUSING wef. 14-! public warehouse licensed under section 57 or a private warehouse licensed under section 58 5.2016, As per Section 2(43) of the Customs Act. 1962, “warehouse” means a OR Special Warchouse license u/s S8A, Features of Warehousing: 1, Importer can defer payment of import duties by storing the goods in a safe place 2. Importer allowed doing manufacturing in bonded warehouse and then re-exporting from i. 3. The importer can be allowed to keep the goods up to One year without payment of duty from the dute he deposited the goods into warehouse. 4, This time period is extended to Three years for Export Oriented Units and the time period still be extended to Five years if the goods are ‘capital goods. 5. The importer minimizes the charges by keeping ina warchouse, otherwise the demurrage charges at port is heavy. 6. Assistant Commi: to appoint a warchou joner of Customs or Deputy Commissioner of Customs are competent as public bonded warehouse. 7. The Assistant Commissioner of Customs or Deputy Commissioner of Customs may license private warehouse. The license to private warehouse can be cancelled by giving ONE month notice. 8. Only dutiable goods can be deposited in the warehouse 9. Green Bill of Entry has to be submitted by the importer to clear goods from warehouse for home consumption. 10. Rate of duty is applicable as on the date of presentation of Bill of Entry (i.c. sub-bill of entry or ex-bond bill of entry) for home consumption. 11. Reassessment is not allowed after the imported goods originally assessed and warchoused, 12. The exchange rate is the rate at which the Bill of Entry (i.e. “into bond”) is presented for warehousing.13. Ifthe goods which are not removed from warchouse within the permissible period, then subsequent removal called as improper removal. The rate of BCD which is applicable as on the last date on which the goods should have been removed but not removed is applicable, [Kesoram Rayon y Commissioner of Customs (1996)]. wef, 14-5-2016: (1) Section 59 of the Customs Act, 1962, Bond amount fas been increased from twice of the duty amount to thrice of the duty amount and security also will have to be given. (2) Now, rent charges claimable will not be pre-requisite for non- compliances of any of the provisions, since it is the issue of custodian i.c. owner of the warehouse. Licensing of Public Warehousing: See, $7 The Principal Commissioner of Customs or Commissioner of Customs may, subject to such conditions as may be prescribed, license a public warehouse wherein dutiable goods may be deposited. Licensing of Private Warehouses: See. 58 The Principal Commissioner of Customs or Commissioner of Customs may, subject to such conditions as may be prescribed, license a private warehouse wherein dutiable goods imported by or on behalf of the licensee may be deposited. Licensing of Special Warehousing: See. 58A (1) The Principal Commissioner of Customs or Commissioner of Customs may, subject to such conditions as may be prescribed, license a special warehouse wherein dutiable goods may be deposited and such warehouse shall be caused to be locked by the proper officer and no person shall enter the warehouse or remove any goods therefrom without the permission of the proper officer. Sec, S8A (2) The Board may, by notification in the Official Gazette, specily the class of goods which shall be deposited in the special warchouse licensed under sub-section (1) NATURE AND RESTRICTIONS ON EXPORTS AND IMPORTS-LEVY Import / Export Restrictions / Prohibitions under Customs lawUnder sub-section fid) of section 111 and sub-section fid) of Section 113, any goods which are imported or attempted to be imported and exported or attempted to be exported, contrary to any prohibition Imposed by or under the Customs Act ar any other law for the time being in force shall be liable to confiscation. Section 112 of the Customs Act provides for penalty for improper importation and Section 114 of the Customs Act provides for penalty for attempt to export goods improperly. In respect of prohibited goods the Adjudicating Officer may impose penalty upto five times the value of the goods. It is, therefore, absolutely necessary for the trade to know what are the prohibitions or restrictions in force before they contemplate to import or export any goods. The terms "Prohibited Goods" have been defined in sub-section 33 of Section 2 of the Customs Act as meaning “any goods the import or export of which Is subject to any prohibition under the Customs Act or any other law for the time being in force” Under section 11 of the Customs Act, the Central Government has the power to issue Notification under which export or import of any goods can be declared as prohibited. The prohibition can either be absolute or conditional. The specified purposes for which a notification under section 11 can be Issued are maintenance of the security of India, prevention and shortage of goods in the country, conservation of Foreign Exchange, safeguarding balance of payments etc. The Central Govt. has issued many notifications to prohibit import of sensitive goods such as coins, obscene books, printed waste paper containing pages of any holy books, armored guard, fictitious stamps, explosives, narcotic drugs, rock salt, saccharine, etc. Under Export and Import Policy, laid down by the DGFT, in the Ministry of Commerce, certain goods are placed under restricted categories for import and export. Under section 3 and 5 of the Foreign Trade (Development and Regulation) Act, 1992, the Central Government can make provisions for prohibiting, restricting or otherwise regulating the import of export of the goods, As for example, import of second hand goods and second hand capital goods is restricted. Some of the goods are absolutely prohibited for Import and export whereas some goods can be imported or exported against a licence. For example export of human skeleton Is absolutely prohibited whereas export of cattle is allowed against an export licence. Another example is provided by Notification No.44(RE-2000) 1997 dated 24.11.2000 in terms of which all packaged products which are subject to provisions of the Standards of Weights and Measures (Packaged Commodities) Rules, 1997, when produced/packed/sold in domestic market, shall be subject to compliance of all the provisions of the said Rules, when imported into India. All packaged commodities imported into India shall carry the name and address of the importer, net quantity in terms of standard unit of weights measures, month and year of packing and maximum retail sale price 236including other taxes, local or otherwise. In case any of the conditions is not fulfilled, the import of packaged products shall be held as prohibited, rendering such goods llable to confiscation. Another restriction under the aforesaid Notification issued by the Ministry of Commerce is that the import of a large number of products, presently numbering 133, are required to comply with the mandatory Indian Quality Standards (IQS) and for this purpose exporters of these products to India are required to register themselves with Bureau of Indian Standards (BIS). Non-fulfillment of the above requirement shall render such goods Import and export of some specified goods may be restricted/prohibited under other laws such as Environment Protection Act, Wild Life Act, Indian Trade and Merchandise Marks Act, Arms Act, etc. Prohibition under those acts will also apply to the penal provisions of the Customs Act, rendering such goods liable to confiscation under section 111(d) of the Customs Act (for import) and 113 (d) of the Customs Act (for export). Any Importer or Exporter for being knowingly concerned In any fraudulent evasion or attempted evasion of any prohibition under the Customs Act or any other law for the time being in force in respect to any import or export of goods, shall be liable to punishment with imprisonment for a maximum term of three years (seven years in respect of notified goods) under section 135 of the Customs Act. Any person who Is reasonably believed to be guilty of an offence, punishable under section 135, may be arrested under the provisions of section 104 of the Customs Act. Keeping in view the above penal provisions in the Customs Act to deal with any deliberate evasion of prohibition/restriction of import of export of specified goods, It Is advisable for the Trade to be well conversant with the provisions of EXIM Policy, the Customs Act, as also other allied Acts. They must make sure that before any imports are effected or export planned, they are aware of any prohibition/restrictions and requirements subject to which alone goods can be imported/exported, so that they do. not get penalised and goods do not get invalved in confiscation etc. proceedings at the hands of Customs authorities. EXEMPTION AND COLLECTIO CUSTOMS 237Customs Duty Goods are imported In or exported from India through sea, air or land. Goods may even come through post parcel or as baggage when passengers travel in and out of the country. The Customs Act was formulated in the year 1962 to prevent the illegal import and export of goods. Moreover, all imported goods are subject to the duty to affording protection to indigenous industries as well as to keep the imports to a minimum in the interests of Indian companies and to secure the exchange rate of the Indian currency; In this article, we look at customs duty in India in detail Objective of Customs Act and Customs Duty The following purposes are the reason why Customs Duty Is levied on the import and export of goods in India 1. To restrict the imports for conserving foreign exchange. 2. To protect the imports and exports of goods for achieving the policy objectives of the Government, 3. To regulate export 4. To co-ordinating legal provisions with other laws dealing with the foreign exchange such as the Foreign Trade Act and the Foreign Exchange Requlation Act, 5, To safeguard domestic trade, 6. To protect the revenue of resources. 7. To protect the industries in india from unfair competition. 8. To prevent the smugaling of goods and activities related to the same. 9. To prevent the dumping of goods. Types of Customs Duty in India ‘The different types of duties of customs collected are as follows, Basic Custom Duty Surcharge Additional duty of customs Special Additional duties ‘Other levies like Countervailing duty, Antidumping duty, Safeguard duty and so on. Also, cess duty is leviable of certain goods. veere Mode of Levy of Customs Duty They are three modes of imposing Customs Duty, They are as follows: Specific Duties A Specific Custom Duty is a kind of duty impased on every unit of a commodity imported or exported. For example, INR 10 on each metre of cloth imported or INR 1,000/- on each TV set imported. In these cases, the value of the commodity is not taken into consideration, Ad Valorem Duties Ad Valorem is the Latin for ‘According’ to the ‘Value’ or ‘Worth, Ad Valorem custom duty is a duty imposed on the total value of a commodity imported or exported. For example, 10 per cent of the 238F.0.8 value of cloth imported or 20 per cent of the C.l.F value of TV sets imported. In the case of Ad Valorem custom duty, the physical units of commodity are not taken into consideration. Therefore it is the method of charging duty, tax, or fee according to the value of the goods and services, instead of by a fixed rate, or by the weight or the quantity. Compound Duties Compound custom duty is a combination of specific and Ad Valorem custom duties. In this case, the quantity, as well as the value of the commodity, is taken into consideration while computing tariff. Exemptions from Customs Duty There are a few exemptions from Customs duty, and they are as follows. + The Central Govemment can grant exemptions by Issuing a notification. Capital goods and spares can be imparted under “project imports” at concessional/ Nil rate of custams duty, + Section 25 of the Customs Act authorises the Central Government to issue notification granting exemption from customs duty partially or wholly on any goods. + The exemptions may be in respect of primary duty or auxiliary duty. + General or specific exemptions may be granted, While general exemptions are in respect to the user of goods, specific exemptions are in respect of various products. + The exemptions are also granted subject to fulfilment of certain conditions. Types of Exemptions The following are the types of exemptions from Customs Duty, 1, By notification 2. By particular order on the Adhoc basis: 3. General exemptions 4, Exemptions to Oil and Natural Gas Corporations Limited fiONGC}/ Oil India Limited fiOIL) 5. Other exemptions “Customs Duty Drawbacks” “Drawbacks” about any goods manufactured in india and exported has elther of the following meanings. 1. Rebate of duty chargeable. 2. Rebate of duty of excise, 3, A drawback is equal to the Customs duty paid on imported inputs and the Excise duty paid ‘on indigenous inputs. Value of the Customs Act Customs Duty is an armaunt that is payable as percentage of ‘value’ often called as ‘Assessable Value’ or Customs Value. Sections 14fi1) provides the follewing criteria for deciding ‘value’ for Customs Duty, 1, Price at which such oF like goods are ordinarily sold or offered for sale,2. Price for the delivery at the time and place for importation or exportation. 3. Price should be in the course of International Trade. 4. Seller and buyer have absolutely no interest in the business of each other, or ane of them has no interest in the other, 5. Price should be sole considerations for sale or offer for sale. 6. The rate of exchange as appropriate on the date of presentation of Bill of Entry as fixed by CBE&C fiBoard) by Notification should be considered. This criterion is entirely appropriate for valuing export goods. However, in the case of import goods valuation is required to be done according to valuation rules as stated in Chapter 6 Para 5 of the CBE & C's Customs Manual, 2001 Scope and Coverage of Customs Law Customs Law in India is covered under many Acts, rules, regulations and notifications. Some of the essential laws conceming Customs Duty has been mentioned below, The Customs Act of 1962 The Customs Act of 1962 is the most crucial Act that provides for the implementation and collection of duty on goods imported and exported in the country. This Act also deals with the Import and Export procedures, Prohibitions on importation and exportation of goods, penalties, offences and much more. The Customs Tariff Act of 1975 The Customs Tariff Act of 1975 contains two schedules. Schedule-1 gives the classification and rate of duties for imports. On the other hand, Schedule-2 gave classification and rated of duties for exports. In addition to these two schedules, the Customs Tariff Act makes provisions for duties like additional duty CVD), special duty, anti-dumping duty and protective duties. Note: The Customs Act of 1962 regulates the levy of duties of customs while the Customs Tariff Act of 1975 fixes the rates of the taxes. Rules under the Customs Act The Section 156 of the Customs Act of 1962 states that the Central Government has been. empowered to make regulations that are consistent with the provisions of the Act and to carry out the main purposes of the Act. Multiple rules have been framed under these powers. The principal rules of this Act have been mentioned below. 1. The Custorns Valuation Rules of 1988; For the valuation of imported goods for calculating duty payable, 2. The Customs and Central Excise Duties Drawback Rules of 1995: The mode of calculating rules of duty drawback on exports 3. Re-export of Imported Goods 4. Bagyage Rules of 1998: This stated the rules and allowances for bringing In baggage from abroad by Indian and tourists who visited the country. Duty-free baggage allowance carried by an international passenger, when coming to India is INR 50,000/- per individual, Before ‘the 31st of March, 2016, the amount was INR 45,000/-, With effect from the First of April, 2016, all intemational passengers travelling to India need not file declarations if not carrying dutiable goods as part of the baggage they bring along with them, 2405. Customs Rules of 1996: This states the import of goods at a concessional rate of duty for manufacture of excisable goods. It also provides the procedure to be followed when goods are imported into India for export purposes, Regulations under the Customs Act Under Section 157 of Customs Act of 1962, the Board has the authority to make rules that are consistent with provisions of the Act to carry out the purpases of the Act, Various regulations have been framed under these powers such as the ones stated below. 1, Project Import Regulations of 1986: Procedures for project imports 2. Customs House Agents Licensing Regulations of 1984 Other Specifics Notifications under the Customs Act Various sections authorise the Central Gayernment to issue notifications, The main sections have been stated below, 1, Section 25fi1): This section is to grant partial of full exemption from the duty, and Section 11 states the prohibition of import or export of goods. 2. Other sections are: A few of the other sections are ones like Section 118 that specifies natified goods and Section 11-1 that determines specific goods Board Circulars Central Bureau of indirect Taxes and Customs is empowered under Section 1514 of the Customs Act. The Bureau has the power to issue instructions, and directions to the officers of customs and they are required to observe and follow, This is for uniformity in the classification of goods or concerning the levy of duty. Customs Manual of 2001 ‘The Manual gives an overview of the Customs Law and Procedures Public Notices The Commissioners of Customs would issue Public Notices. COLLECTION OF CUSTOMS DUTY Custom Duty? Under Section 24122), goods includes the following Stores Vessels, aircraft, and vehicles 241Baggage Currency and negotiable instruments Other moveable property What is Custom Duty? Custom duly is a type of indirect tax that Is levied on all the gaodis that are imported to the country as well as some goods exported from the country. The duly levied on the former is referred fo as import duty while that on the latter is referred to as the export duty. To simplity it, any tarit f that is introduced on goods across national borders is reterred to as custom duty. The duty levied depends on the value of the goods, its dimensions and weight along with a lat of other criteria. While value-based duties are called valorem duties, quantily-based duties are called specit ic duties. On the other| hand, duties on values plus other factors are called compound duties. Custom Duty in India Custom Duly in the country falls under the Customs Act, 1962. As per this act, the goverment levies duties on both import and export of goods along with their procedures, prohibitions, penalties etc, Matters pertaining to this duty tall under the CBEC (Central Board ot Excise and Customs), a division of the Department ot Revenue of the Ministry of Finance. The CBEC:helas in formulating policies w.rt. the collection and imposition of custom duties including custom duly evasions, prevention of smuggling etc. It oversees the tax administration of inland andl foreign travel. thas, dif {erent divisions to take care of {i eld work such as the Gommissionerate of Customs, Central Revenues Laboratory and Directorates et. Types of Custom Duty Custom duties ate levied on nearly all goods that are imported inta the nation. While export duties are levied on goods as specif i ed by the Second Schedule, import duties are not levied on certain items like fertilizers, food gins, Mesaving drugs etc. Custom duty can be classified into the folowing types * Basic Customs Duty: This duly is imposed on the value of goods ata speci! i ed rate as itis { \xed on ar ad-valorem basis. After being amended time and again, itis currently regulated by the Custams Tarif 1 Act, 1975. The Central Government, however, holds the rights to exempt speci ie goods trom this tax + Countervalling Duty: CVD or Additional Customs Duly is levied on imported goods that fall under Section 3 of the Customs Tart t Act of 1975, Itis the same as the Central Extise Duty which is levied on similar goods that are produced in India. ‘+ Education Cess: The cess used to be levied at 27% and an additional 1% of the aggregate af customs duties. * Protective Duty: This duty is imposed in order to shield the domestic industry against the imports at rates that are recommended by the Tarit_ t Commisstoner.+ Safeguard Duty: As the name suggests, this duly serves as a means of safeguarding the rise in exports, Sometimes, if the government feels that a rise in exports can damage the existing domestic industry, it may levy this duly. + Ant-Dumping Duty: This duty is based on the dumping margin, ie. the dit f erence between the export price and the normal price. It is only imposed when the goods that are imported are below the tair market price: Calculating Custom Duty Custom duty can be calculated on either a specif ic oran ad valorem basis. The value of goods, for the latter, is determined by Rule 3{i) of the Customs Valuation Rules, 2007, If there is ne quantif i able data w.rt, valuation factors, then the valuation of the items Is done using other means based on a system of hierarchy, as follows: + Comparative Value Method: This method compares transaction values of items similarin nature (Rule 4) + Comparative Value Method: This methad compares transaction values of items similar in nature (Rule 5) + Deduetive Value Method: This method uses the sale price of items in the importing country (Rule 7) + Comparative Value Method: This method uses costs related the fabrication, materials as well as prot it jn the production country (Flule 8) * Fallback Method: This method is based on the earlier methods that of fer higher | | exibilily (Rule 9) Custom Duty Online ‘The portal that contains online custom duty is the ICEGATE ar Indian Gustoms Electronic Commerce/ Electronic Data Interchange (EC or ED!) Gateway. It allows the clients of the Customs Department an e+ | ling service that includes trade and cargo carriers. which is collectively known as Trading Partner. Through ICEGATE, one can do an electronic | ling of Bill of Entry and shipping bills lang with messages belween the trading partner and customns through email, web upload or FTP. This portal particularly helps airline and shipping agents who f ile their manifests, Additionally, cargo logistics as well as custodians are able to have interactions with customs EDI Jor pieces of information related to-cargo and lopsics. Besiias e-f | ing, document tracking, e-payment, onine registration of |PR, PAN based CHA data, code status and verif i cation of certain licenses can be done too. For any queries and issues, the 24°7 helpdesk can be contacted by trading partners, Payment of Custom Duty In the world of the internet, payment of custom duty hasnt been left far behind. It can easily be paid online with a few simple stepe: * First, access the e-payment portal of ICEGATE. + ‘Then, enter the import or export code ar simply key in the login credentials given by ICEGATE * Finally, cick on e-payment + You will be able to check all the e-challans that are in your name 243+ You can then select the challan which you have to pay and choose the payment method or select the bank * You will be redirected to the payment gateway of the bank + Initiate the payment + Once'it is dane, you will be redirected fo the ICEGATE portal +The last step would be to click on the print button and save the payment copy. Custom Duty Calculator This calculator serves as a simple tool for calculating the custom duty you have to pay. You can gain access to ft al the ICEGATE portal. Upon accessing the custom duty calculator, you will have to enter the CTH or HS Code of the goods that you plan to import. You will have to enter # description of maximum 30 characters and then select the country of arigin, be ft for preferential duty or antidumping, If you want to see the list of goods, then simply click on the search tab and the list matching your criteria will appear, You can choose the right one and then gain ‘access to a charl loaded with relevant information, In this dynamic chart, you can enler the values lo check the exact custom duty you ought to pay. Custom Duty Rates These rates can either be specit | c or ad valorem, The duty, in general, varies trom the range 0-150%. The average rate, however is 11.90%. There is a list to refer to for goods that are exempted from this duty. “Hire tv iro oa ar ip ab to anon Ty tne * LO: Landing charge - 1% GIF * CVD: Countervailing Duty — 0%, 6% or 12% (CIFD + LC) * CEX: Education and Higher Education Cess = 3% CVD + CESS; Education + Higher Education —3% (Duty + CEX (Education and Higher Education Gess) + CVD) + Additional CVD: 4% (CIFD + LC + CVD + CESS + CEX) DUTIES AND OVERVIEW OF LAW AND PROCEDURE India’s Import Policy: Procedures and Duties In India, the import and export of goods is governed by the Foreign Trade (Development & Regulation) Act, 1992 and India's Export Import (EXIM) Policy. India’s Directorate General of Foreign Trade (DGFT) is the principal governing bady responsible for all matters related to EXIM PolicyImporters are required to register with the DGFT to obtain an Importer Exporter Code. ‘Number (IEC) issued against their Permanent Account Number (PAN), before engaging in EXIM activities. After an IEC has been obtained, the source of items for import must be identified and declared. The Indian Trade Classification — Harmonized System (ITC-HS) allows for the free import of most goods without a special import license. Certain goods that fall under the following categories require special permission or licensing. 1) Licensed (Restricted) Items — Licensed items can only be imported after obtaining an import license from the DGFT. These include some consumer goods such as precious and semi-precious stones, products related to safety and security, seeds, plants, animals, insecticides, pharmaceuticals and chemicals, and some electronic tems. 2) Canalized Items — Canalized items can only be imported via specified transportation channels, and methods, or through government agencies such as the State Tradina Corporation (STC). ‘These include petroleum products, bulk agricultural products such as grains and vegetable olls, and some pharmaceutical products 3) Prohibited items — These goods are strictly prohibited from import and include tallow fat, animal rennet, wild animals, and unprocessed ivory. Import Procedures All importers must follow detailed customs clearance formalities when importing goods into India. Acomprehensive overview of EXIM procedures can be found on the Indian Directorate of General Valuation’s website 245Import Procedures Bill of Entry Every importer is required ta begin by submitting a Bill of Entry under Section 46. This document certifies the description and value of goods entering the country. The Bill of Entry should be ‘submitted as follows: 1) The original and duplicate for customs: 2) Acopy for the importer 3) A copy for the bank 4) A copy for making remittances: Under the Electronic Data Interchange (EDI), no formal Bill of Entry is required (as it is recorded electronically) but the importer is required to file a cargo declaration after prescribing particulars required for processing of the entry for customs clearance. Bills of Entry can be one of three types: 1) Bill of Entry for Home Consumption — This form is used when the imported goods are to be cleared on payment of full duty. Home consumption means use within India, itis white colored and hence often called the ‘white bill of entry’. 2) Bill of Entry for Housing — If the imported goods are not required immediately, importers may store the goods in a warehouse without the payment of duty under a bond and then clear them from the warehouse when required on payment of duty, This will enable the deferment of payment of the customs duty until goods are actually required, This Bill of Entry is printed on yellow paper 246and is thus often called the ‘yellow bill of entry’, Its also called the ‘into bond bill of entry’ as the bond is executed for the transfer of goods in a warehouse without paying duty. 3) Bill of Entry for Ex-Bond Clearance — The third type is for ex-bond clearance. This is used for clearance from the warehouse on payment of duty and is printed an green paper. Itis important to note that the rate of duty applicable is as it exists on the date a good is removed from a warehouse. Therefore, if the rate changes after goods have been cleared from a customs port, the customs duty as assessed on a yellow bill of entry (Bill of Entry for Housing) and paid an the value listed on the green bill of entry (Bill of Entry for Ex-Bond Clearance) will not be the same. Other non-EDI documents Ifa Bill of Entry is filed without using the Electronic Data Interchange system, the following documents are also generally required: + Signed invoice; + Packing list; + Bill of lading or delivery order/air waybill; + GATT declaration form; « Importer/CHA declaration; + Import license wherever necessary; + Letter of credit/bank draft; + Insurance document; + Industrial license, if required; + Test report in case of chemicals; + Adhoc exemption order; + DEEC Book/DEPB in original, where applicable; + Catalogue, technical write up, literature in case of machineries, spares or chemicals as may be applicable; + Separately split up value of spares, components, and machinery; and, + Certificate of Origin, if preferential rate of duty is claimed. Import Duties The Indian government levies several types of import duties on goods. These include Basic Customs Duty Basic Customs Duty (BCD) is the standard tax rate applied to goods, ar the standard preferential rate in the case of goods imported from specified countries, a7The rates of customs duties are outlined in the First and Second Schedules of the Customs Tariff. Act. 1975, ‘The First Schedule specifies rates of import duty and the Second specifies rates of export duty. BCD is divided into standard and preferential rates, with goods imported from countries holding trade agreements with the Indian central government eligible for lower preferential rates. IGST and Compensation Cess Additional duties of customs, commonly referred to as the Countervailing Duty (CVD) and Special Additional Duty of Customs (SAD), has been be replaced by the levy of the Integrated Goods and_ Services Tax (IGST), barring a few exceptions, such as pan masala and certain petroleum products. The IGST replaces the previous system of federal and state categories of indirect taxation. A Customs Duty calculator is made available on the online portal of excise and customs, the ICEGATE website, There are seven rates prescribed for IGST—Nil, 0.25 percent, 3 percent 5 percent, 12 percent, 18 percent, and 28 percent. The actual rate applicable to an item will depend n its classification and will be specified in Schedules notified under Section 5 of the IGST Act, 2017. Further, a few items such as aerated water products, tobacco products, and motor vehicles, among others, will altract an additional levy of the GST Compensation Cess, over and above IGST, The Cess is calculated on the transaction value or the price at which the goods are sold. The Goods and Services Tax (Compensation to States) Act, 2017 was enacted to levy Compensation Cess for providing compensation to Indian states for the loss of revenue arising on account of implementation of the Goods and Services Tax from July 1, 2017. The Compensation Gess on goods imported into India shall be levied and collected in accordance with the provisions of Section 3 of the Customs Tariff Act, 1975, at the point when duties of customs are levied on the said goods under Section 12 of the Customs Act, 1962, on a value determined under the Customs Tariff Act, 1975. Anti-Dumping Duty The central government may impose an anti-dumping duty ifit determines a good is being imported at below fair market price, and an importer will be notified if this is the case ‘The duty cannot exceed the difference between the export and normal price (margin of dumping). 248This does not apply to goods imported by 100 percent Export Oriented Units (EOU) and units in Free Trade Zones (FTZs) and Special Economic Zones (SEZs). Ifan importer is notified by the federal government then an Anti-Dumping duty is to be imposed, the notification will remain valid for five years with the possibility of being extended to 10 years. Safeguard Duty Unlike Anti-Dumping Duty, the imposition of Safeguard Duty does not require the central government to determine a good is being imported at below fair market price. Safeguard Duty is imposed if the government decides that a sudden increase in exports is causing, or threatens to cause, serious damage to a dornestic industry. A notification regarding the imposition of Safeguard Duty is valid for four years with the possibility of being extended to 10 years. Protective Duty A protective duty is sametimes imposed to protect domestic industry from imports. Ifthe Tariff Commission issues a recommendation for the imposition of a Protective Duty, the central government may choose to impose this at a rate that does not exceed that recommended by the Tariff Commission, The federal government can specify the period up to which the protective duty will remain in force, reduce or extend the period, and adjust the effective rate, Social Welfare Surcharge ‘The Education Cess and Secondary and Higher Education Cess on imported goods is now abolished and replaced by the Social Welfare Surcharge, This surcharge will be levied at the rate of 10 percent of the aggregate duties of custams, on imported goods. CLEARANCE OF GOODS FROM THE PORT, INCLUDING BAGGAGE 249Any commercial cargo, whether itis for import or export, requires customer clearance. Simply put, this means that businesses engaged in exporting and importing goods to and from the country need to clear specific customs bariers as outlined by the government The customs clearance process typically involves preparing documents that may be submitted electronically or physically with the consignment. This helps concemed authorities to caleulate taxes and duties that will be levied on the cargo. The type of documents required for customs clearance usually depends on the type of goods being shipped. It may also vary depending on the country of origin and the destination of the cargo. However, as a thumb rule. there are a set of general documents that most businesses need to comply with when importing or exporting goods. List of Documents for Customs Clearance and Forwarding Here is a list of documents that are needed for customs clearance and forwarding of goods to and from India: Pro Forma Invoice The Pro Forma Invoice documents the intention of the exporter to sell a predetermined quantity of goods or products, This invoice is generated as per the outlined terms and conditions agreed upon between the exporter and the importer, through a recognised medium of communication such as email, fax, telephone or in person. It is similar to a “Purchase Order’, which is issued prior to completing the sales transaction. Customs Packing List ‘The customs packing List states the list of items included in the shipment that can be matched against the pro forma invoice by any concerned party involved in the transaction. This list is sent along with the intemational shipment and is especially convenient for transportation companies as they know exactly what is being shipped. Individual customs packing lists are secured outside each individual container to minimise the risk of exporting incorrect cargo internationally. Country of Origin or COO Certificate The Country of Origin Certificate is a declaration issued by the exporter that certifies that the goods being shipped have been completely acquired, produced, manufactured or processed ina particular country,Customs Invoice A customs invoice is a mandatory document for any export trade. The customs clearance department will ask for this document first as it contains information about the order, including details such as description, selling price, quantity, packaging costs, weight or volume of the goods to determine customs import value at the destination port, freight insurance, terms of delivery and payment, ete, A customs representative will match this information with the order and decide whether to clear this for forwarding or not. Shipping Bill A shipping bill ig a traditional report where the downside is asserted and prinvarily serves asa measurable record. This can be submitted through a custom online software system (ICEGATE). To obtain the shipping bill, the exporter will need the following documents: ¢ GR Forms for shipment to all the countries © Packing list (with various details such as information about the content, quantity, the gross and net weight of each package) © Export License * Indent * Acceptance of Contract * Invoices (with all relevant information such as the number of packages, quantity, price, correct specification of goods, etc.) © Purchase Order © Letter of Credit * AR4and Invoice . Examination or QC Certificate Port Trust document Bill of Lading Bill of Lading is a legal document issued by the carrier to the shipper. It acts as evidence of the contract for transport for goods and products, mentioned in the bill provided by the cartier. It also includes product information such as type, quantity, and destination that the goods are being carried to. This bill can also be treated asa shipment receipt at the port of destination where it must be produced to the customs official for clearance by the exporter. Regardless of the form of transportation, this is a must-have document that should accompany the goods and must be duly signed by the authorised representative from the hipper, and receiver. The Bill of Lading comes in handy if there is any asset theft. carrier, Bill of Sight Bill of Sight is a declaration from the exporter made to the customs department in case the receiver is unsure of the nature of goods being shipped. The Bill of Sight permits the receiver 251of goods to inspect them before making payments towards applicable duties. Applying for a bill of sight becomes necessary as itacts as a substitute document if the exporter does not have all the must-have information and documents needed for the bill of entry, Along with the bill of sight, the exporter also needs to submit a letter that allows forthe clearance of goods by customs, Letter of Credit Letter of credit is shared by the importer’s bank, stating that the importer will honour payment to the exporter of the sum specified to complete the transaction. Depending on the terms of payment between the exporter and importer, the order is dispatched only after the exporter has this letter of credit. Bill of Exchange Bill of Exchange is an altemative payment option where the importer is to clear payments for goods received trom the exporter either on-demand or at a fixed or determinable future, I is similar to promissory notes that can be drawn by banks or individuals, You can even transfer a Bill of Exchange by endorsement. Export License Businesses must have an export license thal they can provide to customs in order to export or forward any products, This only needs to be produced when the shipper is exporting goods to an intemational destination for the very first time. This type of license may vary depending on the type of export you intend to make. This can be done by applying with the licensing authority, and the permit is eventually issued by the Chief Controller of Exports and Imports. Warehouse Receipt Warchouse Receipt receipt is generated once the exporter has cleared all relevant export duties and freight charges post customs clearance. This is needed only when an ICD in involved Health Certificates Health Certificate is applicable only when there are food progucts that are of animal or non animal origin involved in international trade. The document certifies that the food contained in the shipment is fit for consumption by humans and has been vetted to meet all standards of safety, rules and regulations prior to exporting. This certificate is issued by authorised governmental organisations from where the shipment originates. tv 3Although these documents are generally common submissions, additional documents may be required in certain cases. For example, industrial license, test report, insurance certificate, GATT declaration, registration cum membership certificate, documents for duty benefits or central excise documents could be essential for certain types of imports. B. sAGE Any baggage that you desire you send through cargo shipping will be treated as an unaccompanied baggage. Regardless, a free allowance In such case cannot be considered in the case of baggage clearance and is reasonably charged to the customs duty at 35% Ad valorem + 3% Education Cess. In addition to this, only personal items including items like all used items of personal wear including shirts, suits, shoes, shoe brush & polish, blouses, sarees, undergarments, pants, neckties, handkerchiefs, dentures, gloves, cosmetics in use, towels, toiletries, bedding, blankets, used bedding, umbrella, walking sticks, used shoes, hair dryer, hearing aid, shaving kit, Spectacles, one watch etc. can be imported free of duty. Application of the Baggage Rules are also extended to an unaccompanied baggage except where they have been specifically excluded trom the cargo shipment. An unaccompanied baggage must be in the personal possession abroad at the destination of the passenger mandatorily and shall be dispatched within one month of his/her arrival In India or within further reasonable period as and when the Deputy / Assistant Commissioner of Customs may allow. The unaccompanied baggage may land in India two months before the arrival of the passenger himself/herself or within such period, but under na circumstance exceeding one year, if you are-an Indian citizen who has stayed abroad for more than two years and your short visits to India are less than 180 days in total within the last 2 years, you are eligible to claim the Concessional rate of duty under Transfer of Residence. GOODS IMPORTED OR EXPORTED BY POST AND ORES AND GOODS IN TRANSIT CHAPTER XI - SPECIAL PROVISIONS REGARDING BAGGAGE, GOODS IMPORTED OR EXPORTED BY POST, AND STORES Baggage 77. Declaration by owner of baggage. - The owner of any baggage shall, for the purpose of clearing It, make a declaration of its contents to the proper officer, 78. Determination of rate of duty and tariff valuation in respect of baggage. - The rate of duty and tariff valuation, if any, applicable to baggage shall be the rate and valuation In force on the date on which a declaration is made in respect of such baggage under section 77. 79. Bona fide baggage exempted from duty. - 1. The proper officer may, subject to any rules made under sub- section (2), pass free of duty - ‘a. any article In the baggage of a passenger or a member of the crew in respect of which the said officer Is satisfied that 53it has been in his use for such minimum period as may be specified in the rules; b, any article in the baggage of a passenger in respect of which the said officer is satisfied that it is for the use of the passenger or his family or Is a bona fide glft or souvenir; provided that the value of each such article and the total value of all such articles does not exceed such limits as may be specified in the rules. 2. the Central Government may make rules for the purpose of carrying out the provisions of this section and, in particular, such rules may specify - ‘a. the minimum period for which any article has been used by @ passenger or a member of the crew for the purpose of clause (a) of sub-section (1); b, the maximum value of any individual article and the maximum total value of all the articles which may be passed free of duty under clause (b) of sub-section (1); «. the conditions (to be fulfilled before or after clearance) subject to which any baggage may be passed free of duty. 3. Different rules may be made under sub-section (2) for different classes of persons. 80. Temporary detention of baggage. - Where the baggage of a passenger contains any article which is dutiable or the Import of which is prohibited and in respect of which a true declaration has been made under section 77, the proper officer may, at the request of the passenger, detain such article for the purpose of being returned to him on his leaving India and if for any reason, the passenger is not able to collect the article at the time of his leaving India, the article may be returned to him through any other passenger authorised by him and leaving India or as cargo consigned in his name. 81. Regulations in respect of baggage. - The Board may make regulations, - 1. providing for the manner of declaring the contents of any baggage} 2. providing for the custody, examination, assessment to duty and clearance of baggage; 3. providing for the transit or transhipment of baggage from one customs station to another or to a place outside India, Goods imported or exported by post zzz. Label or declaration accompanying goods to be treated as entry. - In the case of goods Imported or exported by post, any label or declaration accompanying the goods, which contains the description, quantity and value thereof, shall be deemed to be an entry for import or export, as the case may be, for the purposes of this Act. aaaa. Rate of duty and tariff valuation in respect of goods imported or exported by post. - 1. The rate of duty and tariff value, if any, applicable to any goods imported by post shall be the rate and valuation in force on the date on which the postal authorities present to the proper officer 254a list containing the particulars of such goods for the purpose of assessing the duty thereon : Provided that if such goods are imported by a vessel and the list of the 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. The rate of duty and tariff value, if any, applicable to any goods exported by post shall be the rate and valuation in force on the date on which the exporter delivers such goods to the postal authorities for exportation, 78. Regulations regarding goods imported or to be exported by post. - The Board may make regulations providing for - 1, the form and manner in which an entry may be made in respect of any specified class of goods imported or to be exported by post, other than goods which are accompanied by a label or declaration containing the description, quantity and value thereof; 2, the examination, assessment to duty, and clearance of goods Imported or to be exported by post; 3. the transit or transhipment of goods imported by post, from one customs station to another or to a place outside India. Stores zzz, 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 warehoused without the goods being assessed to duty. aaaa. Transit and transhipment of stores. - 1. Any stores imported in a vessel or aircraft may, without payment of duty, remain on board such vessel or aircraft while it is 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 alrcraft as stores for consumption therein as provided In section 87 or section 90. 78. __ Imported stores may be consumed on board a foreign-going vessel or aircraft. - Any imported stores on board a vessel or aircraft {other than stores to which section 90 applies) may, without payment of duty, be consumed thereon as stores during the period such vessel or aircraft is a foreign-going vessel or aircraft. 79. Application of section 69 and Chapter X to stores. - The provisions of section 69 and Chapter X shall apply to stores (other than those to which section 90 applies) as they apply to other goods, subject to the modifications that- 1. for the words "exported to any place outside India" or the word “exported”, wherever they occur, the words "taken on board any foreign-going vessel or aircraft as stores" shall be substituted; nw2. in the case of drawback on fuel and lubricating oil taken on board any foreign-going aircraft as stores, sub-section (1) of section 74 shall have effect as if for the words “ninety-eight per cent", the words "the whole" were substituted. zzz. _ 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 of the voyage or journey on which the vessel or aircraft is about to depart. aaaa. Concessions In respect of Imported stores for the Navy. - 1, Imported stores specified in sub-section (3) may without payment of duty be consumed on board a ship of the Indian Navy. 2. The provisions of section 69 and Chapter X shall apply to stores specified In sub-section (3) as they apply to other goods, subject to the modifications that - a. for the words "exported to any place outside India" or the word "exported" wherever they occur, the words "taken on board a ship of the Indian Navy" shall be substituted; b, for the words "ninety-eight per cent" in sub-section (1) of section 74, the words "the whole" shall be substituted. 3. The stores referred to in sub-sections (1) and (2) are the following: - a, stores for the use of a ship of the Indian Navy; b. stores supplied free by the Government for the use of the crew of a ship of the Indian Navy In accordance with thelr conditions of service. CHAPTER VIII - GOODS IN TRANSIT 52. Chapter not to apply to baggage, postal articles and stores. - The provisions of this Chapter shall not apply to (a) baggage, (b) goods ported by post, and (c) stores. 53. Transit of certain goods without payment of duty. - Subject to the provisions of section 11, any goods Imported In a conveyance and mentioned In the import manifest or the Import report, as the case may be, as for transit in the same conveyance to any place outside India or any customs station may be allowed to be so transited without payment of duty. 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 transhipment shall be presented to the proper officer in the prescribed form. Provided that where the goods are being transhipped under an international treaty or bilateral agreement between the Government of India and Government of a foreign country, a declaration for transhipment instead of a bill of transhipment shall be presented to the proper officer In the prescribed form . 2562. Subject to the provisions of section 11, where any goods imported into a customs station are mentioned in the import manifest or the import report, as the case may be, as for transhipment to any place outside India, such goods may be allowed to be so transhipped without payment of duty. 3. Where any goods imported into a customs station are mentioned in the import manifest or the import report, as the case may be, as for transhipment - a. to any major port as defined in the Indian Ports Act, 1908 (15 of 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. to any other customs station and the proper officer is satisfied that the goods are bonafide intended for transhipment to such 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 at the customs station to which transhipment is allowed. 55. Liability of duty on goods transited under section 53 or ‘transhipped under section 54. - Where any goods are allowed to be 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 like manner as goods are entered on the first importation thereof and the provisions of this Act and any rules and regulations shall, so far as may be, apply in relation to such goods. 56. Transport of certain classes of goods subject to prescribed conditions. - 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 ‘territory, subject to such conditions as may be prescribed for the due arrival of such goods at the place of destination. Import of Goods Through Post The import and export of goods by post are provided by the Postal Department through its Sub- Foreign Post Offices and Foreign Post Offices. Customs facilities for assessment, examination, clearance etc. are available at these Post Offices. Limited facility for export clearances is also provided at Export Extention Counters opened by the Postal Department where parcels for export are accepted and cleared by the Customs. Legal Provisions Goods that are imported through posts are classified under Chapter Heading 9804 of the Customs Tariff Act, 1975 and the rate of duty that is applicable is charged on every good that is allowed for importing thraugh posts. Heading 9804 applies to goods that are permitted far 237import through posts, exempted from prohibition under Fareign Trade Development and Regulation) Act, 1992. The goods against an import license or Customs Clearance Permit cannot be imported through posts. Mareover, motor vehicles, alcoholic drinks and goods that are imported through courier are not covered under Heading 9804. Goods that are imported or exported by posts are governed by Sections 82,83 and 64 of the Customs Act, 1962 and the procedure requires for the clearance of goods through posts is stated in Rules regarding Postal Parcels and Letter Packets from Foreign Ports In/ Out of india of 1953. Goods not to be Filed To import and export of goods through posts, any label or declaration accompanying the packet or parcel mentioning details like description, quantity and the value of the qoods is treated as an entry for import or export of the goods and no separate manifest for such goods |s require to be filed Filing of Bill of Entry The relevant date for the rate of duty and tariff value that is applicable to goods for import through posts is the date on which the postal authorities present the list containing the details of the goods for assessment to the concemed officer of customs. Therefore, the presentation of the list is equivalent to the filing of Billof Entry so far as the assessment of goods that are imported by post. Entry Inward of the Vessel When the post parcels come through a vessel and the list presented by the postal authorities is presented before the arrival of the vessel, the rate of duty and the tariff value that is applicable shall be as on date of arrival of the vessel which is the Entry Inward of the vessel, For export goods, the relevant date for the rate of duty and tariff value applicable is the date on which the exporter delivers the goods to postal authorities for exportation. Clearance of Letter Mail Articles Letter Mail Articles are usually cleared by the Customs at the time of the arrival and sorting unless they hold contraband or dutiable articles. In such cases, the Letter Mail will be further examined at the Foreign Post Offices or Sub-Foreign Post Offices. Importability of Dutiable Items Through Posts Import of dutiable goods through letter, packet or parce! is strictly prohibited unless a letter or packets contains a declaration that states the nature, weight and value of the contents on the front side or if such a declaration Is attached alongside specifying that the letter/ packet may be opened for Customs examination. Dutlable goods are not imported by pasts if Customs is not satisfied with the details of nature, weight and the value of the contents in the declaration. Items that are for personal use which are exempted from the prohibitions under the FTP or the Customs Act 1962, can be imported by the postal channel on payment of appropriate duties under the Tariff Heading 9804 of the Customs Tariff Act, 1975. If the Customs duty payable does not exceed Rs, 100, it will be exempted Import of Gifts Through PostBona fide gifts that are up to a value limit of Rs, 10,000 imparted by posts are exempted from Basic and Additional Customs duties vide Notification No. 171/93-Cus., dated 16-09-1993. In addition to this, items that are not prohibited far importation under Foreign Trade fiDevelopment and Regulation Act, 1992 can also be imported as gifts. The sender of the gift may not be residing in the country from where the goods have been despatched and any person abroad can send gifts to relatives, business associates, friends, companies and acquaintances. The gifts have to be for bona fide personal use, The rule is fallowed so that the person receives gifts genuinely free and the payment is mode made for it through other means. The frequency and quantity of the gifts should not give rise to the belief that it has been used as a route in transferring money. These gifts can be received by individuals, societies, institutions like schools and colleges and by even corporate bodies. Calculation of Value Limit To calculate a value limit of Rs. 10,000 for imports of gifts. postal charges ar the airfreight will not be taken into consideration. The value of Rs. 10,000 js taken as the value of goods in the country from where these were despatched. If the value of gifts received exceeds Rs. 10,000, the receiver has to pay the Customs duty on the whole consignment, even if the goods were received free Unsolicited. Moreover, at the discretion, of the Assistant) Deputy Commissioner, if the goods are restricted for import, the receiver has liability tor a penalty for such import. even it the goods have been sent unsolicited. These restricted goods are also liable to confiscation and the receiver has to pay redemption fine in lieu of confiscation in addition to duty and penalty, Certain restricted goods like narcotic drugs, arms, ammunition, obscene films/ printed material etc. are liable to absolute confiscation and the receiver is liable to penal action, even if the goods have been sent unsolicited. Customs duty is chargeable on gift assessed over Rs. 10,000 by the Customs. For post parcels, the department collects the assessed duty from the receiver of the gift and subsequently deposits it with the customs, Import of Samples Through Post Bonafide Commercial samples and prototypes that are imported by posts are exempted from Customs duty, subjected to the value limit of Rs. 10,000 if the samples are supplied for free of cost, Importers with IEC Code Those imparters having an EC code number can import commercial samples through posts without payment of duty upto a value of Rs, 1000,000 or 15 units in number within a duration of 12 months. These goods shall be marked as ‘Samples’. The importer is required to submit a declaration to the effect that the samples are solely used for the purpose of being shown to the exporters for securing or executing export orders. The importer is also required to undertake if the declaration os fake, where he has to pay an appropriate duty on the goods that are Imported as commercial samples. Import Of Indian and Foreign Currencies by Post According to the provisions of Foreign Exchange Management Act 1999, no individual can bring or send India any foreign exchange or Indian currency unless a special or general permission Is granted by the RBI, Import of Indian currencies and coins by post is also not allowed.Conditions to Import Currencies by Post In order to decrease the pendency and to avoid delay in clearance of mail articles, Customs may permit the import of both Indian and foreign currencies that are received by residents by post if the value is not more than Rs. 5,009, subjected to the conditions that are given below, + Approval is granted by the Assistant/ Deputy Commissioner of Custems. + Adetailed record has to be maintained of the exemptions granted «The Record of the name and addresses of the remitter and addressee in India has to be maintained. + Ifa spurt id noticed in the number of covers that is received in a specific time period, the matter shauld be reported to the respective Regional Office of RBI. Parcels or packets containing foreigny Indian currency, etc., valuing more than Rs, 5,009 will be detained and adjudicated on merits and will be released on the basis of ‘No Qbjection Certificate’ from the RBI, A general permit will be given to the Authorised Dealers to import currency notes from their overseas branches/ correspandents for meeting their normal banking requirements. There Is no particular clearance required from RBI for these imports. Procedure in Case of Postal Imports Rules regarding the Postal Parcels and Letter Packets fram Foreign Ports in/ out india follow a procedure for landing and clearing at notified ports/ airports/ LCSs of parcels and packets that are forwarded by foreign mails ar passenger vehicles or airliners, This procedure is broadly classified as follows, + The boxes or bags holding the parcels shall be labelled as ‘Postal Parcel’, ‘Parcel Post’, Parcel Mall’ ‘Letter Mail’, and will be permitted to pass at specified Foreign Parcel Department of the Foreign Post Offices and Sub-Foreign Post Offices. + The postmaster an receipt of the parcel mail gives it to the Customs the required documents. The following are the required documents that have to be furnished to the Customs. 1, memo mentioning the total number of parcels that are received from each country of origin. 2. Parcel Bills in the form of a sheet fiin triplicate) and the senders’ declaration ff available) and any other relevant documents that may be required for examination, assessment etc by the Customs Department. The relative Customs Declarations and dispatch notes. Other information that is required in connection with the preparation of the Parcel Bills that the Post Office is able to furnish. DUTY DRAWBACKS PROVISIONS 260Duty Drawback provisions are made to grant rebate of duty or tax chargeable on any imported / excisable materials and input services used in the manufacture of export goods. The duties and taxes neutralized under the scheme are (i) Customs and Union Excise Duties in respect of inputs and (ii) Service Tax in respect of input services. Duty Drawback is of two types: (i) All Industry Rate and (ii) Brand Rate. The legal framework is provided under Sections 75 and 76 af the Customs Act, 1962 and the Customs and Cental Excise Duties and Service Tax Drawback Rules, 1995 (Drawback Rules, 1995) issued under the provisions of Section 75 of the Customs ‘Act, 1962, Section 37 of the Central Excise Act, 1944 and Section 93 A read with section 94 of the Finance Act, 1994the Finance Act, 1994. The duty drawback scheme has been notified for a large number of export products by the Government after an assessment of the average incidence of Customs, Central Excise duties, Service Tax and Transaction Cost suffered by the export products. Duty Drawback Scheme aims to provide the refund/ recoupment of custom and excise duties paid on inputs or raw materials and service tax paid on the input services used in the manufacture of export goods. In this article, we look at the procedure for claiming Duty Drawback of export in India Customs Act, 1962 The Duty Drawback provisions are described under Section 74 and Section 75 under the Customs Act, 1962. This Act laid down the various restrictions and conditions to claim drawback of duties under certain situations. + Section 74: As per section 74, if the re-exports of imported goods, which are identified quickly and within two years from the date of payment of duty on the Importation, Then an exporter is eligible to claim 98% of the duty paid by him as drawback under section 74 «Section 75: As per section 75, if the export of goods manufactured or processed out of imported material with value addition, then a drawback should be allowed of duties of customs chargeable on any imported materials of a class or description. If sale proceeds not received within the stipulated period, a drawback is to be reversed or adjusted. Duty Drawback under section 75 can be claimed either as a fixed percentage depending upon the value of goods exported. Goods Eligible for Drawback The following are the eligible goods for the duty drawback. To export goods imported into India To export goods imported into India after having been taken for use To export goods manufactured/produced out of imported material Jo export goods manufactured/produced out of indigenous material ‘To export goods manufactured /produced out of imported or and indigenous materials. 261Eligibility Criteria The below following are the minimum criteria to claim for processing drawback claim. * Any individual must be the legal owner of the goods at the time the goods are exported. * You must have paid customs duty on imported goods. + Duty drawback is available on most goods on which customs duty was paid on importati and which has been exported. Documents Required The below following are the documents required for processing drawback claim. “TTiplicate copy of the Shipping Bill Copy of the Bill of entry Import Invoice Proof af payment of duty paid on the importation of goods, Approval from the Reserve Bank of india for re-exports of goods Copy of the Bill of Lading or Airway bill Copy of the Bank Certified Invoices, Sixtuplicate Copy of AR-4 Export invoice and packing list. Freight and Insurance certificate Copy of the Test report of goods Modvat Declaration worksheet showing the drawback amount claimed DEEC Book ang licence copy where applicable, Transhipment certificate where applicable Blank acknowledgement card in duplicate Pre-receipt for drawback amount on the reverse of Shipping Bill duly signed on the Rs1i- revenue stamp Duty Drawback Rates The following are the drawback rates of which import duty with the fixed percentage shall be allowed in respect of used goods after their importation and which have been out of custams control. S$. The period between the date of clearance and the date __ Percent of drawbac! No. when the goods are placed under Customs control for export 1, Not more than 3 months 95% 2. More than 3 months but not more than 6 months 85% 3, 6-9 months 75% 4 9-12 months 10% ion ke 2625. 12-15 months 65% 6, 15-8 months 60% 7. More than 18 months Nil Procedure for Claiming Duty Drawback The procedure for claiming duty drawback on export goods fiwhether AIR or Brand Rate) to be claimed at the time of export and requisite particulars filled in the prescribed format of Shipping Bill/Bill of Export under Drawback. If the processing of documents has been computerised, then the exporter is not required to file any separate application for claiming duty drawback. in the case of manual export, a separate application is to be submitted for claiming duty drawback. The claim is to be accompanied by certain documents as laid down in the Drawback Rules 1995. Triplicate copy of the shipping bill becomes the application only after the Export General Manifest is filed. AUTHORITIES - POWERS AND FUNCTIONS OFFICERS OF CUSTOMS 3. Classes of officers of customs.— There shall be the following classes of officers of customs, namely:- a. Chief Commissioners of Customs; b. Commissioners of Customs; c. Commissioners of Customs (Appeals); (cc) Joint Commissioners of Customs; d. Deputy Commissioners of Customs; @. Assistant Commissioners of Customs or Deputy Commissioner of Customs; f. such other class of officers of customs as may be appointed for the purposes of this Act. 4. Appointment of officers of customs. — a, The Board may appoint such persons as it thinks fit to be officers of customs. b. Without prejudice to the provisions of sub-section (1), Board may authorise a Chief Commissioner of Custom or a Joint or Assistant Commissioner of Customs or Deputy Commissioner of Customs to appoint officers of customs below the rank of Assistant Commissioner of Customs or Deputy Commissioner of Customs. 4. Powers of officers of customs. - a. Subject to such conditions and limitations as the Board may impose, an officer of customs may exercise the powers and discharge the duties conferred or imposed on him under this Act. 263b. An officer of customs may exercise the powers and discharge the duties conferred or imposed under this Act on any other officer of customs who Is subordinate to him. c. Notwithstanding anything contained in this section, a Commissioner ( Appeals) shall not exercise the powers and discharge the duties conferred or imposed on an officer of Sustoms other than those specified in Chapter XV and section 2. Entrustment of functions of Board and customs officers on certain other officers. - The Central Government may, by notification in the Official Gazette, entrust either conditionally or unconditionally to any officer of the Central or the State Government or a local authority any functions of the Board or any officer of customs under this Act. Classes, Appointment of officers of Customs & Central Excise Officer under Indirect Tax Laws 1. Introduction 1.1. It is essential that officers working in various wings of Gustoms, Excise and Service tax department remain aware of legal provisions relating to their appointment, powers and functions under three main tax laws dealing with in-direct taxes, namely, Customs Act, 1962; Central Excise Act, 1944 and the Finance Act, 1994. 1.2. In addition to exercising powers under three indirect tax statutes, they also derive powers given to them under various other allied laws such as NDPS Act,1985; PITNDPS Act, Chemical Weapons Convention Act,2000 etc. in which certain powers far specific purposes have been giver to our departmental officers for implementation in the field 1.3. As the officers of our department have been given powers under various allied Acts, similarly the officers of various other departments have also been empowered under Customs Act, 1962 to exercise power of Custom officers subject to such limitation as have been specified in such empowering notification. 1.4. Therefore, to understand the topic, it would be appropriate to divide this topic into three parts: (a). Legal provisions (including natifications)providing for appointment, powers of officers of Customs, Central Excise and Service Tax department under three indirect tax statutes: (b). Powers given to the officers of other departments under the indirect tax statutes, (o). Legal provisions under various other allied Acts empowering officers of Customs, Central Excise and Service Tax department to exercise powers under these Acts. POWERS OF CUSTOM AUTHORITY Sec 100. Power to search suspected persons entering or leaving India, ete. Sec 101. Power to search suspected persons in certain other cases, See 103. Power to screen or X-ray bodies of suspected persons for detecting seereted goods. 264See 104. Power to arrest— See 105. Power to search premises. See 106. Power to stop and search conveyances. See 106A. Power to inspect. See 107, Power to examine persons. See 108. Power to summon persons to evidence and produce documents. See 109, Power to require production of order permitting clearance of goods imported by land. See 109A. Power to undertake controlled delivery. See 110, Seizure of goods, documents and things. Sec 144. Power to take samph See 100. Power to search suspected persons entering or leaving India, ete— (1) If the proper officer has reason to believe that any person to whom this section applies has secreted about his person, any goods liable to confiscation or any documents n thereto, he may search that person. (2) This section applies to the Following persons. namel (a) any person who has landed from or is about to board, or is on board any vessel within the Tndian customs waters: (b) any person who has landed from or is about to board, or is on board a foreign-going aircrait; (c) any person who has got out of, or is about to get into. or is in, a vehicle, which has arrived from. or is to proceed to any place outside India: (d) any person not included in clauses (a), (b) or (¢) Who has entered or is about to leave India; (e) any person in a customs area, See 101, Power to search suspected persons in certain other cases. — (1) Without prejudice to the provisions of seetion 100, if an officer of customs empowered in this behalf by general or special order of the 2 [Principal Commissioner of Customs or Commissioner of Customs], has reason to believe that any person has secreted about his person any goods of the description specified in sub-section (2) which are liable to confiscation, or documents relating thereto, he may search that person. (2) The goods referred to in sub-section (1) are the following:— 265(a) gold; (by diamonds: (c) manuti tures of wold or diamonds; (dy watches: (e) any other class of goods which the Central Government may, by notification in the Official Gazette, specify. See 103. Power to screen or X-ray bodies of suspected persons for detecting secreted goods. (1) Where the proper officer has reason to believe that any person referred to in sub-section (2) of section 100 has any goods liable to confiscation secreted inside his body, he may detain such person and produce him without unnecessary delay before the nearest magistrate. (2) A magistrate before whom any person is brought under sub-section (1) shall, if he sees no reasonable ground for believing that such person has any such goods seereted inside his body, forthwith discharge such person. (3) Where any such magistrate has reasonable ground for believing that such person has any such goods secreted inside his hody and the magistrate is satisfied that for the purpose of discovering such goods it is necessary to have the body of such person screened or X-rayed, he may make an order to that effect, (4) Where a magistrate has made any order under sub-section (3), in relation to any person, the proper officer shall, as soon as practicable, take such person before a radiologist possessing qualifications recognized by the Central Government for the purpose of this and such person shall allow the radiologist to screen or X-ray his body. section (5) A radiologist before whom any person is brought under sub-section (4) shall, after sereening or X-raying the body of such person, forward his report, together with any X-ray pictures taken by him, to the magistrate without unnecessary delay. (6) Where on receipt ofa report from a radiologist under sub-section (5) or otherwise, the magistrate is satisfied that any person has any goods liable to confiscation secreted inside his body, he may direct that suitable action for bringing out such goods be taken on the advice and under the supervision of @ registered medical practitioner and such person shall be bound to comply with such direction: Provided that in the case of a female no such action shall be taken except on the advice and under the supervision of a female registered medical practitioner. (7) Where any person is brought before a magistrate under this section, such magistrate m: for the purpose of enforcing the provisions of this section order such person to be kept in such custody and for such period as he may direct. (8) Nothing in this section shall apply to any person referred to in sub-section (1), who admits that goods liable to confiscation are Scereted inside his body, and who voluntarily submits himself for suitable action being taken for bringing out such goods. Explanation — 266For the purposes of this seetion, the expression —registered medical practitioner] means any person who holds a qualification granted by an authority specified in the Schedule to the Indian Medical Degrees Act, 1916 (7 of 1916), or notified under section 3 of that Act, or by an authority specified in any of the Schedules to the Indian Medical Couneil Act, 1956 (102 of 1956). FUNCTION OF CUSTOM AUTHORITY 4. Collection of Customs Duty on Intemational Airports, Seaports, Custom Houses, Intemational Alr Cargo Stations & Intemational ICD's. 2, Collection of Customs Duty on Land Customs Station, Inland Container Depots (ICD's), Special Economic Zones (SEZ’s) & Container Freight Stations (CFS's) 3. Prevention of Smuggling on International Airports & Sea. 4. Prevention of Smuggling thraugh Land Customs Station & Borcer Check Points, SEZ UNITS 1. Special Economic Zone - Meaning A special economic zone fiSEZ) Is a dedicated zone wherein businesses enjoy simpler tax and easier legal compliances. SEZs are located within a country’s national borders. However, they are treated as a foreign territory for tax purposes, This is why the supply from and to special economic zones have a little different treatment than the regular supplies. In simple words, even when SEZs are located in the same country, they are considered to be located in a foreign territory, SEZs are not considered as a part of India Based of this it can be clearly said that under GST, any supply to or by a Special Economic Zone developer or Special Economic Zone unit is considered to be an Inter state supply and Integrated Goods and Service tax fiJGST) will be applicable , 2. Meaning of Export/ Import SEZ's are considered to be located in a foreign territory and thus the transactions with SEZ's can be classified as Exports and Imports. Here, Export means: « Taking goods or services out of India from a special economic zone by any mode of transport or 267+ Supply of goods or services from one unit/developer in the SEZ to another unit in the same SEZ or another SEZ. Import means: + Bringing goods or services into a special economic zone from a place located outside India, by any mode of transport or + Receiving goods or services from one unit/developer in the SEZ by another unit/developer located in the same SEZ or another SEZ. 3. GST and SEZ Being in a SEZ can be advantageous to a certain extent when it comes to taxes. Any supply of goods or services or both to a Special Economic Zone developer/unit will be considered to be a zero-rated supply. That means these supplies attract Zero tax rate under GST, In other words, supplies into SEZ are exempt from GST and are considered as exparts. Therefore, the suppliers supplying goods to SEZs can: + Supply under bond or LUT without payment of IGST and claim credit of ITC; or + Supply on payment of IGST and claim refund of taxes paid. When a SEZ supplies goods or services or both to any one, it will be considered to be a regular inter-state supply and will attract IGST. The exception to this is, when a SEZ supplies goods or services or both to a Domestic Tariff Area fiDTA), this will be considered as an export to DTA fiWhich is exempt for the SEZ) and customs duties and other Import duties will be payable by the person receiving these supplies in DTA. 4. E-Way Bill and SEZ Under GST, transporters should carry an E-Way Bill when moving goods from one place to another if the value of these goods are more than Rs. 50,000. SEZ supplies are treated how the other inter-state supplies are treated. The SEZ units or developers will have to follow the same EWB procedures as the others in the same industry follow. In case of supplies from SEZ to a DTA or any other place, the registered person who facilitates the movement of goods shall be responsible for the generation of e-Way bill. Let's understand this with an Example: * XYZ is and unit in an SEZ located in Karnataka + Ais the recipient of goods manufactured by the SEZ and is located in Bangalore, * The value of the goods being transported this time is Rs. 75000 FAQs How is GST applicable in this case? 268considered to be outside the customs territory of India. All supplies made to a unit operating in SEZ are considered as Export out of India. Goods and services rendered from SEZ to normal territory is considered as Import of such goods or services.