Import Mgmt l7

8/2/2019 Import Mgmt l7

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Import Management


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How to start Imports

TYPES OF EXPORT BUSINESSES Export-Traders (Merchant Exporters) Export-Manufacturers Service-Exporters

FORMS OF BUSINESS ORGANIZATION SOLE PROPRIETORSHIP

PARTNERSHIP Registration with State Government authority-Registrar

ofFirms

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How to start Imports

FORMS OF BUSINESS ORGANIZATION COMPANY/CORPORATION

Registration with Registrar of Companies (ROC)appointed under Section 609 of the Companies Act.

CO-OPERATIVE SOCIETY Registration under the Cooperative Societys Act

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Mandatory Registrations

PERMANENT ACCOUNT NUMBER:Permanent Account Number is to be obtained from Income TaxAuthorities.

[http://incometaxindia.gov.in/PAN/Overview.asp]

BANK ACCOUNT :An exporter/importer should necessarily have a current account witha bank. Only some branches are authorized to deal in foreignexchange transactions and therefore for a smooth working of export/ import business, it is necessary to have an account with a branchhaving a foreign exchange department. ( Authorized DealersBanks)

IMPORTER-EXPORTER CODE (I.EC) NUMBER:The Foreign Trade Policy lays down IEC number as basic eligibilitycriteria to become Exporter / Importer. It is allotted by RegionalLicensing Authority i.e. Joint Director General of Foreign Trade.

[www.dgft.gov.in] 4


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Registration-cum-Membership:Any person, applying for(i) a licence/ certificate/ permission/ Authorisation to import/ export,[except items listed as restricted items in ITC (HS)] or(ii) any other benefit or concession under this policy

are required to furnish Registration-cum-Membership Certificate (RCMC)granted by the competent authority [respective Export PromotionCouncil] unless specifically exempted under the Policy.

EXPORTERS / IMPORTERS PROFILEEach importer/exporter shall be required to file importer/exporterprofile with the licensing authority in Part 1 ofAayaat Niryaat Form

SSI:Small Scale and ancillary units (i.e. undertaking with investment in plantand machinery of less than Rs. 100 million) should seek registration withthe Director of Industries of the concerned State Governmenthttp://ssi.gov.inorhttp://www.laghu-udyog.com/howtosetup/grgxx01x.htm

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Industrial Licence:All industrial undertakings subject to compulsory industriallicensing are required to submit an application in the prescribedformat, i.e. Form FC-IL. Licenses are granted under theprovisions of the Industries (Development and Regulation) Act,1951. The form is available in the Entrepreneur Assistance Unit

(EAU) of the SIA and at all outlets dealing in GovernmentPublications, Indian Embassies, and can also be downloadedfrom the web site of the DIPP (http://dipp.nic.in).

Industrial Entrepreneurs Memorandum:Industrial undertakings exempt from industrial license, includingexisting units undertaking substantial expansion, are required tofile an Industrial Entrepreneur Memoranda (IEM) with theSecretariat of Industrial Assistance (SIA), Department of IndustrialPolicy and Promotion, Government of India. (http://dipp.nic.in)

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Excise Registration:Once the need for registration is established, before startingproduction or dealership to issue Cenvatable invoices, one needsto obtain registration by applying in Form A-1 in duplicate tothe Jurisdictional Deputy / Assistant Commissioner of CentralExcise or Customs in-charge .

Bond with Assistant Commissioner of Central Excise or MaritimeCommissioner of Central Excise:Any excisable goods can be exported without payment of duty fromthe factory or warehouse or any other premises as may be approvedby the Commissioner.

As per sub rule (2) of the said Rule 19, any premises from where anyinput is removed without payment of duty for use in themanufacture of export goods may also be approved by theCommissioner.

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Bond with Assistant Commissioner of Central Excise or MaritimeCommissioner of Central Excise:Goods manufactured from inputs obtained under bond, shouldbe exported only under bond.

The export under Bond is subject to the conditions safeguardsand procedures to be notified by the Board. In this respectfollowing Notifications have been issued :-(a) Notification No. 42/2001-C.E.(N.T.), dated 26-6-2001 forexport under bond of all excisable goods except to Nepal andBhutan.

(b) Notification No. 43/2001C.E.(N.T.), dated 26-6-2001 forexport under bond after procuring the inputs duty free underend-use exemption Rules.

(c) Notification No. 44/2001C.E.(N.T.).dated 26-6-2001 forexport under bond on removal of intermediate goods withoutpayment of duty, for manufacture and export by holder ofAdvance Licence.

(d) Notification No. 45/2001-C.E.(N.T), dated 26-6-2001 for8


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Customs Registration:The exporters have to obtain PAN based BusinessIdentification Number (BIN) from the DirectorateGeneral of Foreign Trade prior to filing of shipping

bill for clearance of export goods.

Under the EDI System, PAN based BIN is received bythe Customs System from the DGFT online.

The exporters are also required to registerauthorised foreign exchange dealer code (throughwhich export proceeds are expected to be realized)and open a current account in the designated bankfor credit of any drawback incentive.

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Commercial / Regulatory Documents

Commercial set of documents are mainly used for Commerce. In

other words these are documents normally exchanged between

buyer and seller.

Regulatory documents are required in dealing with various

regulatory authorities such as customs, RBI, Excise, Licencing

authorities Inspection and other Export Promotion bodies for

availing incentives etc.

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Commercial / Regulatory Documents

Referring to the Commercial set of documents, it may please beobserved that these set of documents are prepared from other set ofdocuments (some of these only). These are known as auxiliarydocuments.These documents may not be required by the foreign buyer, butthese are must for preparation of main export documents, known asPrinciple Commercial Documents.

Commercial DocumentsPrincipal Auxiliary

1. Commercial Invoice 1. Proforma Invoice2. Inspection Certificate 2. Intimation for

Inspection3. Insurance Certificate 3. Declaration forInsurance4. Certificate of Origin 4. Application forCertificate of Origin5. Bill of Lading 5. Mate Receipt6. Shipment Advice 6. Shipping order7. Packing List 7. Shipping Instructions 11


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Pre-shipment Documents

Documents at pre-shipment stage are those documents, whichare required to be made, till the consignment is presented to thecustoms department for clearance.

The following documents can, therefore, be treated as pre-

shipment documents:-Proforma Invoice

Confirmed order or contract

Letter of Credit

Pre-shipment Inspection Certificate

Packing listShipping Bill

Export Declaration Forms (GR/SDF)

ARE

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D t ti F E ti


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Documentation For Execution

Pre ShipmentPre shipment Document to Movement of CargoCHALoading at Port Stuffing of CargoObtaining B/L Insurance PolicyCopies of Documents Back toExporters

Preparation of Documents for Bank13


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Documentation For Export Benefits

Pre Shipment

Jt. DGFT Customs Excise

Appln for To be done Bond / AREAdvance By CHA FormalitiesAuthorisation/ (Stuffing

DFIA PermissionEtc. on the basis

Appln for of Shipping Bill)

EPCG Autho.

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Post Shipment

Documents at Post-shipment stage are naturally those whichare prepared after the shipment.

These documents include the following:-

Mate Receipt

Bill of LadingAirway Bill

Roadway/Railway Bill

Post Parcel/ Courier Receipt

Invoices (including consular invoice)

Certificate of OriginInsurance Certificate or Policy

Bill of Exchange

BRC

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Documentation For Execution

Post Shipment

Submission of documents E.P. Copy of shipping billto bank A.R.E. / Bank CertificateNegotiation Claiming different

BenefitsRealisationObtaining Bank Certificate Maintenance ofstatutory records

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Documentation For Export Benefits

Post ShipmentJt. DGFT Customs ExciseAdv. Autho. Obtaining DBK Submission ofCompletion (All Ind. Rate or Proof of ExportsBrand Rate) against BondClosure of file

Release of Bond OREH Appln + BG incase of

Adv. Autho. Rebate of ExcisePost Export DutyDEPB (Post Exports)

Verification ofDEPB

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Important Documents

Commercial Invoice

Certificate of Origin

Insurance Policy

Bill of Lading/AWB

Shipping Bill, Bill of Entry

Letter of Credit

Bank Certificate of Export and Realisation

Quality/Inspection/Analysis Certificate

Licences / Authorisations

ARE

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Understanding Documents

All documents whether it is for export or import transactiongenerally contain following information

Name and address of the exporter and importer

Document No. and date.

Order No. and date

Port of dischargePlace of destination

Country of origin

Description of Goods

Marks and nos., model nos. [if any]

WeightITC HS Code No.

Value

Currency

Terms of payment

Terms of shipment etc.19


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Understanding Documents

However, depending upon the nature of the document, specific

information is to be mentioned.

For e.g. apart from the above details, Shipping Bill will include

what export benefit is being claimed against that particular

shipment, etc. Similarly, Packing List will give information about

how goods are packed.

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Importance and Need for Imports

Sourcing the Imports

Customs Organisation

Customs Rules and Regulations

Import of Technology

Project Import

Courier ImportsRe-import/Re-export

Warehousing

Import Management agenda


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Demands

Refunds

Customs Valuation

Assessment and Examination of Goods

Accredited Clients Programme [ACP]

Common Aspects between Customs and Excise

Settlement CommissionAdvance Ruling

Agenda


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To meet domestic demand.

To meet demand of inputs for exports.

Import of essential commodities like petrol, wheat,

fertilizers etc.

To import defense requirements including arms and

ammunitions.

Import if technology prototypes and samplesTo maintain Balance of Imports and Exports


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Import Tariff Structure


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Basic Customs DutyBased on the First schedule to the Customs TariffAct (CTA), 1975.

Additional Duty of Customs [CVD]Normally charged @10%

Levied under Section 3(1) of CTA, 1975


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Education CessCharged @ 2% on CVD and Aggregated CustomsDuty [BCD+ CVD+ Education Cess on CVD]

Levied under Section 91-94 of the Finance Bill

2004

Secondary and Higher Education cessCharged @ 1% on CVD and Aggregated Customs

DutyLevied under Section 126, 128 and 129 of theFinance Bill 2007 [Announced in Budget 2007-08]


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Special CVDCharged @ 4%

Levied under Section 3(5) of CTA, 1975

Preferential DutyApplicable on imports from Preferential areas

Seychelles, Mauritius and Tonga only are notified in thePreferential Areas category.

Exemption NotificationsThe scheduled rate of basic duty is exempted by anotification issued under Section 25(i) of the Customs act,1962.


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Anti-dumping and Safeguard DutiesLevied under Section 9A and 9B of CTA 1975.

A National Calamity Duty (NCD) on tobacco products, motor spirit,polyester filament yarn, motor vehicles and two wheelers.

MRP Based Countervailing DutyIn this the retail value marked on the package after standardabatement is used to arrive the value at which the duty is to becharged.

CVD (Countervailing duty) of Sales TaxUnder Section 3(5) of Customs Tariff Act (CTA), 1975

The new tax is currently applicable on zero duty items under 217lines of the ITA (Information Technology Agreement).


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Additional Duties under Section 3 of Customs TariffAct (CTA), 1975Duties apart from the main duty under Central Excise Act,1944 are also levied as additional duties of customs ongoods covered by the respective main Act. Some of them are

listed below The Agricultural Produce Cess Act, 1940.

The Coffee Act, 1942.

The Rubber Act, 1947.

The Industries (Development and Regulation) Act,

1951 The Salt Cess Act, 1953

The Tea Act, 1953

The Medicinal and Toilet Preparations (Excise Duties)Act, 1955.


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Calculation of Customs Duty


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Assessable value (A) 100.00

Basic Customs Duty @ 7.5% (B) 7.50

(A + B) = (C) 107.50

CVD @ 8% (CVD) (a) 8.60

Edu. Cess @ 2% on CVD (b) 0.17

Higher & Sec. Edu. Cess 1% on CVD (b1) 0.09

Total CVD incl. cess (a+b+b1) = (D) 8.86

(C + D) Total 116.36

Total Aggregated Customs Duty (E) = (116.36 - A) 16.36

Edu. Cess @ 2% on Aggtd. Customs duty (E1) 0.33

Higher & Sec. Edu. Cess @ 1% on Aggtd. Customs duty (E2) 0.16

Total Customs Duty (C+E+E1+E2) = F 116.85

ADDITIONAL CUSTOMS DUTY @ 4% (F x 4%) = (G) 4.67

GRAND TOTAL AFTER ADDING ADDL.CUS.DUTY @4% (H) 21.52


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PRELIMINARIES FOR STARTING IMPORT BUSINESSIt involves the following:

Selecting the commodities.

Selecting the Overseas supplier.Capability and credit-worthiness of the supplier.

Role of Overseas Suppliers agents in India.

Finalising the terms of import.

Mode of Pricing and INCO terms.

Mode of settlement of payment.

Currency of invoicing.


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SELECTING THE COMMODITIESProper selection of the commodity will depend upon variouscommercial and legal considerations such as

Importability of item according to ITC HS Book

SELECTING THE OVERSEAS SUPPLIERProduction capability

Reputation

Trade Barriers & Legal ComplicationsTrack record

Whether any indenting agent is available in India?


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GETTING INFORMATION ABOUT OVERSEAS SUPPLIERS:Sources :Trade directories and yellow pages

Consulate Generals and trade representatives of variouscountries in India and abroad.

International trade fairs and exhibitions for which youmay contact International Trade Promotion Organisation(ITPO)

Chambers of Commerce, trade associations

Indenting agents of foreign suppliers

Advertisement in foreign papers

Publications etc.

Internet

Friends and relatives in foreign countries.


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CAPABILITY AND CREDITWORTHINESS OF OVERSEASSUPPLIER

Confidential reports about the supplier may be obtainedthrough the banks and Indian embassies abroad or trade

information centers of the country concerned.The importer can also take the assistance of CreditInformation Agencies such as ECGC for specific commercialinformation on overseas suppliers.


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ROLE OF OVERSEAS SUPPLIERS AGENTS IN INDIAProcures orders from the Indian parties and arrange for thesupply of goods from their principal abroad.

Advisable as they can be readily contacted in case of anydifficulty with regard to quality of goods, payment anddocumentation etc.


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FINALISING THE TERMS OF IMPORTCall for samples, catalogues, literature, specification of the itemsbefore finalizing the terms of Import Order, if required.

The different aspects of an import contract are enumerated asunder:

Product, Standards and specifications.

Quantity.

Inspection.

Total value of the Contract.

Terms of Delivery.Taxes, Duties and Charges.

Period of Delivery/Shipment.

Packing, Labelling and Marking.

Contd..


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Terms of Payment-Amount, Mode & Currency

Discounts and Commissions.

Licences and Permits.

Insurance.

Documentary Requirements.Guarantee.

Force Majeure or Excuse for Non- performance ofcontract.

Remedies

Arbitration


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MODE OF SETTLEMENT OF PAYMENTThe import transactions are generally settled by anyof the following payment modes-

Advance Payment.

Payment/Acceptance against Documentary collections.Payment under Letter of Credit.

Selection of mode will depend on the followingfactors

credit worthiness of the importer/exporter,demand for the commodity in the international market,

exchange control regulations prevailing in theimporting/exporting countries and other relevantfactors.


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CURRENCY OF INVOICINGDepending upon the relative strength of the foreigncurrency, one may choose to negotiate with the supplier toinvoice goods in foreign currency or in Indian rupees.

However, all foreign suppliers demand payment inconvertible currency only.


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The main functions/activities of the Customs

Organisation are:

Checking importability and exportability of items

Collection of duties of customs on import and export goods,

including cesses, if any.

Enforcement of prohibitions and restrictions, if any, in termsof various Law provisions.

Prevention of smuggling;

Collection of foreign trade and revenue statistics.


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ORGANIZATION CHARTMinister of FinanceSecretary Finance

Secretary Revenue SecretaryExpenditureCBDT Central Board of Excise & Customs

Central Excise Customs

Appraising Preventive

Air Sea Appealsand STRUCTURE OF CUSTOMS DEPARTMENT


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Minister of FinanceSecretary Revenue

Central Board of Excise & CustomsCommissionerates of Customs

Mumbai Kolkatta Chennai Bangalore Delhi, etc.

Principal Commissioner of CustomsCommissioner

Imp Prev.ppealsdj.Exp Admn.

Asst. CommissionerAppraiser Staff

Addl./ Jt. Commissioner /Dy. Commissioner


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Organisational SetupThe Customs Houses are directly controlled by the Secretary,Department of Revenue in the Ministry of Finance through aHeadquarters Organisation called Central Board of Exciseand Customs. Each major Custom House is divided broadly

into following departments :Appraising Department (both import and export andpostal appraising);

Prevention Department (including function of clearanceof passengers at the international airports);

Drawback department;Audit department;

Ancillary departments including Import Noting, Bond,Statistical, Establishment Department, PRO, etc.,

Chemical laboratory.


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Docks - The basic function of the Dock AppraisingStaff is to carry out necessary examination and

checks including checking the classification and

value.

Cargo Complex Import by Air


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List of main Acts, Rules and Regulations under CustomsCUSTOMS ACT, 1962

CUSTOMS TARIFF ACT, 1975

COMPUTERS (ADDITIONAL DUTY) RULES, 2004

CUSTOMS (IMPORT OF GOODS AT CONCESSIONAL RATE OF DUTYFOR MANUFACTURE OF EXCISABLE GOODS) RULES, 1996

RE-EXPORT OF IMPORTED GOODS (DRAWBACK OF CUSTOMS DUTIES)RULES, 1995

CUSTOMS (PROVISIONAL DUTY ASSESSMENT) REGULATIONS, 1963

CUSTOMS AND CENTRAL EXCISE DUTIES DRAWBACK RULES, 1995

CEGAT (COUNTERVAILING DUTY AND ANTI-DUMPING DUTY)PROCEDURE RULES, 1996

BILL OF ENTRY (FORMS) REGULATIONS, 1976

BILL OF ENTRY (ELECTRONIC DECLARATION) REGULATIONS, 1995

UNCLEARED GOODS (BILL OF ENTRY) REGULATIONS, 1972


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Determinants :Nature of Product - Whether the new technology will be easilyadaptable.

Price of TechnologyWhether the price paid for technology transfer is

justifiable or not,

whether it is worth and necessary to bring in newtechnology in the home market.

Contd.


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Cost of Technology What costs it will add to the operations,

whether such costs can be absorbed in the pricing of theproducts manufactured,

what impact it will have on the overall operations of thecompany, costs related to absorption of technology,additional training costs etc. are to be considered.

Contd.


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Level of TechnologyWhether technology is fully automated or semi-automatic,

whether it is of first generation or advanced technology,

whether the environment is conducive to accept higherlevel of technology,

is it going to replace old machineries and techniques and

whether it would be subject to becoming obsolete, if yes

then within which period .

Contd..


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Existing level of Technology - whether it impacts manpowerrequirement, compliance with IT needs, etc.

Local demand for the product - whether enhanced productionmatches with the local demand. Such mismatch would haveimplications on commercial viability.

Country of import of technology - Track record, technologydevelopment, emphasis on R&D, etc to determine quality oftechnology.


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Modes of Import of TechnologyDrawings and Design

Import of Drawings and Designs are used for transfer ofconcepts.

CustomsTariffHeading

Description Duty Structure

4906 00 00 PLANS AND DRAWINGS FOR

ARCHITECTURAL,

ENGINEERING,

INDUSTRIAL, COMMERCIAL,

TOPOGRAPHICAL ORSIMILAR PURPOSES, BEING

ORIGINALS DRAWN BY

HAND; HAND-WRITTEN

TEXTS; PHOTOGRAPHIC

REPRODUCTIONS ONSENSITISED PAPER AND

CARBON COPIES OF THE

FOREGOING

The duty structure is 10% BCD,

0% CVD and 4% Special CVD.

However, as per Exemption

Notification No. 21/2002 Dtd.01.03.2006, S.No. 162 exempts

these goods from payment of

BCD.

Hence there is no import dutypayable on importation of

Drawings and Designs. Since

both duties are exempted, 4%

Spl. CVD is not chargeable.


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Modes of Import of TechnologyForeign Collaboration AgreementForeign Collaboration on the other hand brings about foreigninvestment, capital goods, scientific technology and also

critical material.

Field for Foreign Collaboration:

Equity Investment

Import of Capital goods, Plant and Machinery,

Equipment and Raw Materials

Transfer of Scientific Technology

Import of Design and Drawings


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Project Import


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Project Imports

The Project Import Scheme is an Indian innovation to facilitatesetting up of and expansion of industrial projects.

The Project Import Scheme seeks to achieve the objective ofsimplifying the assessment in respect of import of capital goodsand all the related items required for setting up of a project bylevy of a flat rate of duty in respect of such goods.

This objective has been achieved by incorporating a heading98.01 under Chapter 98 of the Customs Tariff and prescribing a

uniform customs duty rate under this heading. All the goodsapproved for importation in connection with an industrial projectare classified under this heading. Goods classified under thisheading cannot be classified under any other heading which maycover the product more specifically.


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Project Imports

The different projects to which heading 98.01 applies are;irrigation project,power project,mining project, oil / mineral exploration projects, etc.

Such an assessment is also available for an industrial plantused in the process of manufacture of a commodity.

However this benefit is not available to hotels, hospitals,

photographic studios, photographic film processinglaboratories, photocopying studios, laundries, garages andworkshops. This benefit is also not available to a single orcomposite machine.


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Project Imports

The purposes for which such goods can be importedare for initial setting up or for substantial expansion[at least 25% increase in the existing capacity] of aunit of the project.

The Central Government has formulated the ProjectImport Regulations (PIR) prescribing the procedure foreffecting imports under this scheme.


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Courier Imports & Exports


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Courier Imports and Exports

Governed by Courier Imports and Exports (Clearance)

Regulations, 1998

Except for certain excluded categories [like animals,plants, perishables, etc.], all goods are allowed to be

imported through the courier mode.


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Export :All goods are allowed to be exported though courier except for certain

excluded categories.

The goods not allowed to be exported through courier mode are thosewhich attract any duty on exports or those exported under export

promotion schemes, such as Drawback, DEPB, DEEC, EPCG etc.

Other exclusions include goods where the value of the consignment is

above Rs. 25,000/- and transaction in foreign exchange is involved.

The limit of Rs. 25,000/- does not apply where the G.R. waiver or

specific permission has been obtained from the Reserve Bank of India.


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Classification of Goods

DocumentsDutiable

or commercialgoods

Samples& free gifts


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Documents include:any message,

information or data recorded on paper,

cards or photographs having no

commercial value,

which do not attract any duty or subject toany prohibition/ restriction on theirimport or export.

Documents


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Samples have been defined to mean anybonafide commercial samples and

prototypes of goods supplied free of

charge of a value not exceeding

Rs.50,000/- for exports

and

Rs.10,000/- for imports

which are not subject to any prohibitionor restriction on their import or exportand which do not involve transfer offoreign exchange.

Samples


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Free gifts means any bonafide gifts of articlesfor personal use of a value not exceeding

Rs. 25,000/- in case of exports and

Rs.10,000/- in case of imports

which are not subject to any prohibition orrestriction on their import or export and whichdo not involve transfer of foreign exchange.

Free Gifts


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Dutiable goods include all goods having

commercial value and are imported or

exported through courier

Dutiableor commercial

goods


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Re-import/Re-export


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Re-import

When goods are re-imported?Rejects

Replacement of defective goods

Cancellation of order

After exhibition/display etc.Returned after use in particular project/contract andcompletion of the contract etc.

When Goods are sent for repairs, re-conditioning etc.

Goods which may have to be sent for special processes likeelectroplating, polishing or coating and re-imported.


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Re-import

Import dutiesImport duties of Customs are leviable

No distinction is made whether

The goods being imported had discharged duties earlieror

They are being re-imported after exportation for particularpurposes.


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Re-import

Procedure for Re-importation is governed byrespective notifications issued by the Government.

These notifications normally include provisions related to

Duty component on re-importation

Time period of re-importation

Exemption allowed, if any

Procedural aspects


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Re-export

When goods are re-exported?Import goods found defective or not fit for use.

After completion of contract or projects.

Exhibition etc.

Important AspectsSection 74 of the Customs Act, 1962 provides for grant of98% of the Customs duties leviable at the time of importation,

by way of Drawback if it is re-exported by the importer,subject to laid down conditions in Cus. Ntfn No. 36/1995Dtd. 26.05.1995.


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Re-export

Goods have to be identified with the earlier import documents

and duty payments to the satisfaction of the Assistant

Commissioner at the time of export.

If such goods have been used in India after importation, refundis granted on a proportionate basis under Cus. Ntfn No.19/65-

Cus (NT) dated 6.2.1965 as amended by Cus. Ntfn No. 23/2008

Dtd. 01.03.2008. The table that prescribes rate of drawback is

under:

S Length of period between the date of Percentage of import


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S.

No.

Length of period between the date of

clearance for home consumption and

the date when the goods are placed

under Customs control for export

Percentage of import

duty to be paid as

Drawback

(1) (2) (3)

1. Not more than three months 95%

2. More than three months but not more

than six months

85%

3. More than six months but not more than

nine months

75%

4. More than nine months but not more

than twelve months

70%

5. More than twelve months but not morethan fifteen months 65%

6. More than fifteen months but not more

than eighteen months

60%

7. More than eighteen months Nil

Important Notifications


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CustomsNotification No.and Date

Subject

43/96-Cus.

Dtd. 23.07.1996

Exemption to specified goods exported from India

and re-imported after being subjected to specified

processes.

259/Cus.

Dtd.

11.10.1958.

Exemption to re-import of challenge cups, or

trophies, won by Defense Units.

271/Cus.

Dtd.

25.10.1958.

Exemption to re-import by Armed Forces returning

from service abroad.

117/Cus.

Dtd.

13.10.1961.

Exemption to re-import of engines and parts of

aircraft.




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26/Cus.

Dtd. 19.02.1962

Exemption to re-import of catering cabin

equipments, etc. by Indian Airlines.

174/cus.

Dtd. 24.09.1966

Exemption to re-import of private personal

property.

158/95-Cus.

Dtd. 14.11.1995

Exemption to re-import of Indian goods and

parts thereof (whether of Indian or foreign

manufacture) for repairs, reconditioning,remaking or similar other process.

241/cus.

Dtd. 04.11.1982

Exemption to re-import of goods sent for

execution of approved projects.

94/96-cus.Dtd. 16.12.1996

Exemption to re-import of goods exportedunder duty drawback rebate of duty or under

bond.

36/1995-Cus. (NT),

Dtd. 26.05.1995

RE-EXPORT OF IMPORTED GOODS (DRAWBACK

OF CUSTOMS DUTIES) RULES, 1995



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Warehousing

W h i


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Warehousing

The facility of warehousing of imported goods in

Customs Bonded Warehouses, without payment of

Customs duty otherwise leviable on import, is

permitted under the Customs Act, 1962.

Basically, goods after landing are permitted to be

removed to a warehouse without payment of duty and

duty is collected at the time of clearance of goods

from the warehouse.

Wareho sing


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Warehousing

Important ProvisionsWarehousing Station

Warehouses are to be appointed at particular places only.

Customs under Section 58 can licence Private BondedWarehouses

Bonding of imported goods

Filing of Into-Bond Bill of Entry

Execution of Bond

Storage Period

Generally One year.

In case of EOUs it is 5 years for Capital Goods and 3 Yearsfor others.

Warehousing


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Warehousing

Important ProvisionsRate of Interest

Payment of Interest @15% p.a. after expiry in case ofEOUs.

In other cases it is @15% p.a. after expiry of ninety days.

Manufacture-in-Bond Operations

Manufacturing in bond is permissible under Section 65 ofCustoms Act. 1962.

Manufacture-in-bond operations are to be carried outunder Customs supervision on cost-recovery basis.

Warehousing


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Warehousing

Important ProvisionsRate of Duty/ Value for Assessment

The rate of duty applicable is as per provisions of Section15 of the Customs Act i.e. on the date on which the goods

are actually removed from the warehouse.

However, when the warehousing period or the extendedwarehousing period has expired, the duty payable is withrespect to the date when the warehousing/extended

warehousing period expired and not the actual date ofremoval.

Warehousing


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Warehousing

Important ProvisionsExport of bonded goods:

Warehoused goods can be exported without payment ofduty except Nepal and Bhutan.


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Demands

Demands


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Demands

Section 28 of the Customs Act, 1962 provides for

recovery of any duty

which has not been levied or

has been short levied or

erroneously refunded or

if any interest payable has not been paid,

part paid or

erroneously refunded

provided a notice demanding such duties/interests isissued within the time limit specified in that Section.

Demands


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Demands

Causes and Time Limits for issuance of Demand Notice

Causes of issuance of DemandNotice

Actions taken

If the short levy is by reason ofcollusion or any willful

misstatements or suppression of

facts

Demand notice is to be issuedwithin 5 years from the relevant

date specified in Section 28.

Short levy is pointed out by Audit Show Cause Notice is issued and

15 days are given to show causewhy payment is not made

Audit objection, arising out of

assessment

To be finalized 6 months from the

date of issue of the demands

Demands


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Demands

Upon receipt of the reply from the Noticee the matter

is examined in detail and the Noticee is offered an

opportunity of Personal Hearing to explain his case

before the adjudicating authority.

On the basis of the facts and personal hearing, the

adjudicating authority come to the conclusion after

taking into consideration the provisions of Law.


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Refunds

Refunds


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Refunds

The case of refund arises where duty has been paid inexcess of what was actually leviable on the goods.

Excess payment may bedue to lack of information on the part of importer/exporter or

non-submission of documents required for claim of lowervalue or

rate of duty.

due to shortage/short landing, pilferage of goods or evenincorrect assessment of duty by Customs.

Refunds


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Refunds

In such cases, refund of excess amount of duty paid can beclaimed by the importer or exporter.

If any excess interest has been paid by the importer/exporter onthe amount of duty paid in excess, its refund can also beclaimed.

Any person claiming refund of any duty or interest, has to makean application in duplicate in the form as prescribed in theCustoms Refund Application (Form) Regulations, 1995, to thejurisdictional Deputy/Assistant Commissioner of Customs.Such application is to be made before the expiry of six monthsfrom the date of payment of duty and interest.

Refunds


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Refunds

However, in case of any import made by anyindividual for his personal use or by Government or

by any educational, research or charitable institution

or hospital, application for refund can be made before

the expiry of one year from the date of payment of

duty and interest.


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Valuation and Assessment


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Valuation and Assessment

Valuation refers to the true value of consignment

Assessment refers to the basis for charging importduties.

Why it is necessary to establish standard practices forvaluation and assessment of goods

In international Trade Values are different and based oninternal-external factors.

To ensure that there is uniformity in approach at differentCustoms formations.

To avoid any ambiguity.

To assure that goods are not undervalued and appropriateduty is paid on importation.


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Customs Valuation

Statutory Provisions that determine


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ValuationCustoms Act, 1962 [CA, 1962]

Section 2 (41)-Defines the term Value

Section 14-Valuation of goods for purpose of assessment

Customs Valuation (Determination of Price of Imported Goods)Rules, 2007. Notified vide Cus. Ntfn No. 94 (NT) Dtd.13.09.2007.

Customs Valuation (Determination of Value of Export Goods)Rules, 2007, Notified vide Cus. Ntfn No. 95 (NT) Dtd. 13.09.2007

Statutory Provisions that determine


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ValuationThe term value is defined in Section 2 (41) of theCustoms Act, 1962, the same reads as under:

Value in relation to any goods to mean the valuethereof determined in accordance with the provisionsof sub-section (1) or sub-section (3) of Section 14thereof.

[as amended in the Finance Act, 2007]

Customs Valuation


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Customs Valuation

Whereas Section 14 of the Customs Act, 1962 lays down thebasis for valuation of import & export goods in the country.The rates of customs duties leviable on imported goods (&

export items in certain cases) are either

specific (fixed) or

ad valorem basis or

at times specific cum ad valorem.

When customs duties are levied at ad valorem rates, i.e.,

depending upon its value, it becomes essential to lay down in

the law itself the broad guidelines for such valuation to avoid

arbitrariness.

Valuation where Tariff Value is fixed


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u/s. 14 (2) of the Customs Act, 1962.

Section 14 (2) of CA, 1962 speaks of fixation of tariffvalues for imported or export goods:

CBEC may fix tariff values for any class of importedgoods or export goods, having regard to the trend ofvalue of such or like goods, and where any such tariffvalues are fixed, the duty shall be chargeable with

reference to such tariff value.

Customs Valuation Transaction Value


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Customs Valuation-Transaction Value

Section 14 (1) and (3) forms basis of application of transactionvalue for the purposes of assessment of duty.

These sections specifically state that value of the Importedgoods and Export goods is the transaction value of such goods,as determined in accordance with the rules, i.e. Valuation Rulesfor Imported goods and Export goods.

Customs Valuation


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Customs Valuation

The provisions of sub-section (1) of Section 14 followthe provisions contained in Article VII of GATT.

The Customs Valuation Rules closely follow the WTOCustoms Valuation Agreement to implement ArticleVII of GATT.

The importer is required totruthfully declare the value in the B/E

provide a copy of the invoicefile a valuation declaration in the prescribed form to facilitatecorrect and expeditious determination of value forassessment purposes.


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CUSTOMS VALUATION (DETERMINATION OF

PRICE OF IMPORTED GOODS) RULES, 2007



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Rule 1 - Short title, commencement and application.

Rule 2 - Definitions.

Rule 3 - Determination of the method of valuation.

Rule 4 - Transaction value of identical goods.Rule 5 - Transaction value of similar goods.

Rule 6 - Determination of value where value can not

be determined under rules 3, 4 and 5.

Rule 7 - Deductive value.

Rule 8 - Computed value.



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Rule 9 - Residual method.

Rule 10 - Cost and services.

Rule 11 - Declaration by the importer.

Rule 12 - Rejection of declared value.Rule 13 - Interpretative notes.



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Important Provisions of Customs Valuation(Determination of Price of Imported Goods) Rules,2007:

Rule 2 prescribes definition of terms such asidentical goods, similar goods, related partiesetc., etc. Following definitions are important

(a) computed value" means the value of importedgoods determined in accordance with rule 8.

(b) "deductive value" means the value determined inaccordance with rule 7.



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(d) "identical goods" means imported goods which are same in all respects, including physical characteristics, quality

and reputation as the goods being valued except for minor differences

in appearance that do not affect the value of the goods;

(e) produced" includes grown, manufactured and mined(f) "similar goods" means imported goods which although not alike in all respects, have like characteristics and

like component materials which enable them to perform the same

functions and to be commercially interchangeable with the goods beingvalued having regard to the quality, reputation and the existence of

trade mark;

[all other conditions are similar to identical goods]



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(g) (1) "transaction value" means the value referred to in sub-section (1) of section 14 of the Customs Act, 1962;

(2) For the purpose of these rules, persons shall be deemed to be"related" only if(i) they are officers or directors of one another's businesses;

(ii) they are legally recognised partners in business;

(iii) they are employer and employee;



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(iv) any person directly or indirectly owns, controls or holds fiveper cent or more of the outstanding voting stock or shares ofboth of them;

(v) one of them directly or indirectly controls the other;

(vi) both of them are directly or indirectly controlled by a thirdperson;

(vii) together they directly or indirectly control a third person; or

(viii) they are members of the same family.

Contd.



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Explanation I. - The term "person" also includes legal persons.

Explanation II. - Persons who are associated in the business of

one another in that one is the sole agent or sole distributor,

howsoever described, of the other shall be deemed to be relatedperson.



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Rule 3. Determination of the method ofvaluation.-The value of imported goods shall be the transactionvalue. [as declared on the Invoice]

Which will be accepted in normal circumstances,except for relatedparty transactions.

Contd.


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In other words, if the invoice value is accepted by Customswithout any reservation then there is no question of Valuation atall.

When invoice value is not acceptable by Customs then thequestion of valuation comes into picture. Under thesecircumstances, Customs have to follow the valuation rules fordetermining the value.



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Sub-rule (4): If transaction value is not accepted by Customs forany reason then the value shall be determined by proceeding

sequentially through rule 4 to 9.

Rule 4. Transaction value of identical goods.The value of imported goods shall be the transaction value of

identical goods sold for export to India and imported at or about

the same time as the goods being valued;

Provided that it shall not be the value of the goods provisionallyassessed.

Contd.



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For application of this rule, the transaction value ofidentical goods should be same commercial level and

in substantially the same quantity

In applying this rule, if more than one transaction

value of identical goods is found, the lowest such

value shall be used to determine the value of

imported goods.

Contd.


C O O GOO S S 200


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Rule 5: Transaction value of similar goods..

The value of imported goods shall be the transaction

value of similar goods sold for export to India and

imported at or about the same time..Provided that such transaction value shall not be the

value of the goods provisionally assessed.

All other conditions as applicable to identicalgoods

apply mutatis mutandis to similargoods


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PRICE OF IMPORTED GOODS) RULES 2007


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Rule 7. Deductive value. .The value of imported goods shall be based on the unit price at whichthe imported goods or identical or similar imported goods are sold inthe greatest aggregate quantity to persons who are not related to thesellers in India, subject to the following deductions :

(i) Commissions paid or payable or the additions usually made forprofits and general expenses in connection with sales in India ofimported goods.

(ii) the usual costs of transport and insurance and associated costs

incurred within India;

(iii) the customs duties and other taxes payable in India by reason ofimportation or sale of the goods.

Contd.




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(iv) If neither the imported goods nor identical nor similarimported goods are sold in India 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 in the greatest

aggregate quantity to persons who are not related to the seller in

India.

(v) In such determination, due allowance shall be made for the

value added by processing.




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Rule 8: Computed value:.

The value of imported goods shall be based on a computed

value, which shall consist of the sum of:-.

(a) the cost or value of materials and fabrication or other

processing employed in producing the imported goods;

(b) an amount for profit and general expenses equal to that

usually reflected in sales of goods

(c) the cost or value of all other expenses under sub-rule (2) of

rule 10.




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Rule 9: Residual method: .Where the value of imported goods cannot be determined under

the provisions of any of the preceding rules, the value shall be

determined using reasonable means consistent with the

principles and general provisions of these rules and on the basisof data available in India;

.

Provided that the value so determined shall not exceed the price

at which such or like goods are ordinarily sold or offered for sale

for delivery at the time and place of importation in the course ofinternational trade, when the seller or buyer has no interest in

the business of other and price is the sole consideration for the

sale or offer for sale.

Contd.




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PRICE OF IMPORTED GOODS) RULES, 2007No value shall be determined under the provisions of' this rule on thebasis of

(i) the selling price in India of the goods produced in India;

(ii) a system which provides for the acceptance for customs purposes ofthe highest of the two alternative values;

(iii) the price of the goods on the domestic market of the country ofexportation;

(iv) the price of the goods for the export to a country other than India;

(v) minimum customs values; or

(vi) arbitrary or fictitious values.Contd.




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Rule 10: Cost and services [Includibles]:In determining the transaction value, the following shall beadded to the price actually paid or payable for the importedgoods,

.

(a) the following to the extent they are incurred by the buyer butare not included in the price actually paid or payable for the

imported goods, namely:-.

(i) commissions and brokerage, except buying commissions;.

(ii) the cost of containers which are treated as being one for

customs purposes with the goods in question;.

(iii) the cost of packing whether for labour or materials;Contd.




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(b) The value, apportioned as appropriate, of the following goodsand services where supplied directly or indirectly by the buyer

free of charge or at reduced cost for use in connection with the

production and sale for export of imported goods, to the extent

that such value has not been included in the price actually paid

or payable, namely:-.

(i) materials, components, parts and similar items incorporated

in the imported goods;.

(ii) tools, dies, moulds and similar items used in the productionof the imported goods;

.

Contd.




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(iii) materials consumed in the production of the importedgoods;

(iv) engineering, development, art work, design work, and plans

and sketches undertaken elsewhere than in India and necessary

for the production of the imported goods;.

(c) royalties and licence fees related to the imported goods that

the buyer is required to pay, directly or indirectly, as a condition

of the sale of the goods being valued, to the extent that such

royalties and fees are not included in the price actually paid or

payable;.

(d) The value of any part of the proceeds of any subsequent

resale, disposal or use of the imported goods that accrues,

directly or indirectly, to the seller; Contd.




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(e) all other payments actually made or to be made as acondition of sale of the imported goods, by the buyer to the

seller, or by the buyer to a third party to satisfy an obligation of

the seller to the extent that such payments are not included in

the price actually paid or payable.

Explanation.- Where the royalty, licence fee or any other

payment for a process, whether patented or otherwise, is

includible referred to in clauses (c) and (e), such charges shall be

added to the price actually paid or payable for the importedgoods, notwithstanding the fact that such goods may be

subjected to the said process after importation of such goods.

Contd.


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Provided that (i) where the cost of transport referred to in clause (a) is not

ascertainable, such cost shall be twenty per cent of the free on

board value of the goods;

(ii) the charges referred to in clause (b) shall be one per cent of

the free on board value of the goods plus the cost of transportreferred to in clause (a) plus the cost of insurance referred to in

clause;

(iii) where the cost referred to in clause (c) is not ascertainable,

such cost shall be 1.125% of free on board value of the goods;

In the case of goods imported by air, the freight value shall not

exceed twenty per cent of FOB value of the goods and insurance

value would be 1.125%. Contd.




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Provided also that in case of goods imported by sea stuffed in acontainer for clearance at an Inland Container Depot or Container

Freight Station, the cost of freight incurred in the movement of

container from the port of entry to the Inland Container Depot or

Container Freight Station shall not be included in the cost of

transport referred to in clause (a).

Explanation.- 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.

Contd.




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Sub-rule (3): Additions to the price actually paid or payable shallbe made under this rule on the basis of objective and

quantifiable data.

Sub-rule (4): No addition shall be made to the price actually paidor payable in determining the value of the imported goods

except as provided for in this rule.

Contd.




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Excludibles:The value of imported goods shall not include the following charges orcosts, provided that they are distinguished from the price actually paidor payable for the imported goods:

(a) Charges for construction, erection, assembly, maintenance or

technical assistance, undertaken after importation on imported goodssuch as industrial plant, machinery or equipment;

(b) The cost of transport after importation;

(c) Duties and taxes in India.

The price actually paid or payable refers to the price for the importedgoods. Thus the flow of dividends or other payments from the buyer tothe seller that do not relate to the imported goods are not part of thecustoms value.

Contd




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Rule 11:Declaration by the importer..Sub-rule (1): The importer or his agent shall furnish (a) a declaration disclosing full and accurate details relating to

the value of imported goods; and

(b) any other statement, information or document including 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 Customs officer.

Contd.


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Rule 12: Rejection of declared value.When the Customs officer has reason to doubt the truth or

accuracy of the value declared in 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 still has reasonable

doubt about the truth or accuracy of the value so declared, it

shall be deemed that the transaction value of such imported

goods cannot be determined under the provisions of rule 3.

Contd.




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At the request of an importer, the proper officer, shall intimatethe 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.-(1) For the removal of doubts, it is hereby declared

that:

Contd.




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(i) This rule by itself does not provide a method fordetermination of value, it provides a mechanism and procedure

for rejection of declared value. Where the declared value is

rejected, the value shall be determined by proceeding

sequentially in accordance with rules 4 to 9..

(ii) The declared value shall be accepted where the proper officer

is satisfied about the truth and accuracy of the declared value

after the said enquiry in consultation with the importers..

(iii) The proper officer shall have the powers to raise doubts onthe truth or accuracy of the declared value based on certain

reasons which may include

Contd.




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(a) the significantly higher value at which identical or similargoods imported.

(b) the sale involves an abnormal discount or abnormal reduction

from the ordinary competitive price;

(c) the sale involves special discounts limited to exclusive agents;

(d) the misdeclaration of goods in parameters such asdescription, quality, quantity, country of origin, year of

manufacture or production;

Contd.




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(e) the non declaration of parameters such as brand, grade,specifications that have relevance to value;

(f) the fraudulent or manipulated documents.

Rule 13:Interpretative notes.The interpretative notes specified in the Schedule to these rules

shall apply for the interpretation of these rules.

Date of Determination of Rate of Duty


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The rate of duty and tariff valuation to any imported goods willbe the rate and valuation in force:

This is because the Exchange Rates, Rates of Duty and Tariff

value keep changing.

In the case of goods entered

for home consumption

the date of presentation of Bill

of Entry under Sec. 46

In the case of goods cleared

from warehouse [bond]

the date of presentation of Bill

of Entry under Sec. 68

In other cases the date of payment of duty



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Two exceptions so far as rate of duty and tariff valueare concerned1. In case the bill of entry has been filed in advance of entry

inwards of the vessel or the arrival of the aircraft, the crucialdate will be the date of entry inwards of the vessel or thedate of arrival of the aircraft.

2. In the case of clearance of goods from a bonded warehouse,the date of presentation of the ex-bond bill of entry for

home consumption is the crucial date provided the goodsare removed during the permitted warehousing period(including extension allowed, if any).



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As regards exchange rate, the rate notified by theBoard and as in force on the date of presentation of

the bill of entry (for home consumption or for

warehousing) will be applicable.


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CUSTOMS VALUATION ( DETERMINATION OF

VALUE OF EXPORT GOODS ) RULES, 2007


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Rule 1 - Short title, commencement and application.Rule 2 - Definitions.

Rule 3 - Determination of the method of valuation.

Rule 4 - Determination of export value bycomparison.

Rule 5 - Computed value method.

Rule 6 - Residual method.

Rule 7 - Declaration by the exporter.

Rule 8 - Rejection of declared value.


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CUSTOMS VALUATION ( DETERMINATION OF VALUE OF

EXPORT GOODS ) RULES, 2007


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Rule 4: Determination of export value bycomparison. The value of the export goods shall be based on the

transaction value of goods of like kind and quality

exported at or about the same time to other buyers

in the same destination country of importation or in

its absence another destination country.

Contd.




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Rule 5: Computed value method. If the value cannot be determined under rule 4, it shall be based

on a computed value, which shall include the following:-

(a) cost of production , manufacture or processing of export

goods;

(b) charges, if any, for the design or brand;

(c) an amount towards profit.




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Rule 6: Residual method. (1) Subject to the provisions of rule 3, where the value of the

export goods cannot be determined under the provisions of

rules 4 and 5, the value shall be determined using reasonable

means consistent with the principles and general provisions of

these rules provided that local market price of the export goodsmay not be the only basis for determining the value of export

goods.

Rule 7: Declaration by the exporter.-The exporter shall furnish a declaration relating to the value of

export goods in a specified manner.

Contd.




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Rule 8: Rejection of declared value.The Customs officer has powers to reject the value on the basis

of reasonable doubt about the truth or accuracy of the value

declared.

Main reasons for rejecting the declared value:(a) the significant variation in value at which goods of like kind

and quality exported at or about the same time

(b) the significantly higher value compared to the market value

of goods of like kind and quality at the time of export.(c) the mis-declaration of goods in parameters such as

description, quality, quantity, year of manufacture or

production.


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Assessment


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Assessment is necessarily done for determiningthe value of cargo for the purpose of calculating duty

and

checking classification of product from the point ofpermissibility of import.

For the purpose of assessment normally following

documents are submitted for clearance of goods

through customs:-

Assessment


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A.R.E.-1/2 Form of Central

Excise

Bill of Lading or Delivery

Order

vi.

G.R.I. Form/SDF/ PP

declaration

Insurance Memo/Policyv.

Export Inspection Agencys

Certificate

Country of Origin

Certificate

iv.

Export Lic./ Quota Certificate,where necessary; PAN based

Business Identification Number

(BIN)

Import Licence, wherenecessary

iii.

Invoice and Packing ListInvoice and Packing Listii.

Shipping BillBill of Entryi.

For ExportFor ImportSr. No.

A.R.E.-1/2 Form of Central

Excise

Bill of Lading or Delivery

Order

vi.

G.R.I. Form/SDF/ PP

declaration

Insurance Memo/Policyv.

Export Inspection Agencys

Certificate

Country of Origin

Certificate

iv.

Export Lic./ Quota Certificate,where necessary; PAN based

Business Identification Number

(BIN)

Import Licence, wherenecessary

iii.

Invoice and Packing ListInvoice and Packing Listii.

Shipping BillBill of Entryi.

For ExportFor ImportSr. No.

Assessment


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Tips for quicker assessment:-Where some goods are imported for the first time or theirtariff classification is not well established, or their prices havegone down considerably, importers are advised to keepcatalogue/literature regarding composition and functions of

the goods and their prices ready with them before hand.Customs Officer may ask for it.

Examination of Goods


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Government of India has signed revised KYOTOconventions on 4th of Nov. 2005. Under this the

examination would be based on risk involved and cargoes

are divided into 3 categories :-

1) Low risk,2) Medium risk and

3) High risk

Similarly Govt. has introduced the Risk Management

System (RMS) of which Accredited Clients Programme

(ACP) is a major component.

Examination of Goods


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The objective of the programme is to grant assuredfacilitation to importers.

With the implementation of the Risk Management System,

this programme will replace all existing schemes forfacilitation in the sites where RMS is implemented.

The goal of the Risk Management System (RMS) is to

enable the department to strike an appropriate balance

between trade facilitation and enforcement.



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ACP is a major element of the risk management strategy [RMS].

Clients who are assessed as highly compliant would be given assuredfacilitation by the RMS.

Under the RMS, Bills of Entry (B/E) filed by importers in the IndianCustoms EDI System will be processed for risk and a larger number ofconsignments will be allowed clearance based on the importers selfassessment without examination, after checking the marks andnumbers on the packages or in the case of Full Container Load (FCLCargo), the container numbers and seals, and after taking over therelevant documents from the importers.

Other consignments would be selected for Appraisement or Examinationor both depending on the evaluation of risk by the RMS.



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Importers registered by the department as AccreditedClients under the Accredited Clients Programme will

form a separate category to which assured facilitationwould be provided.

The importers desirous of availing the facility as

Accredited Clients are required to apply for

registration using the Application form Annex 1given in Cus. Cir. No. 42/2005.

Exemption under Notifications


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For variety of reasons Government decides to grant exemptionsfrom payment of duties subject to certain conditions.

These exemption could be product specific (end use), generalpurpose (R & D) or for export promotion (Advance

Authorisation, DFIA, etc.).

All these exemptions are granted in public interest keeping inmind the development of trade, modernization, upgradation oftechnology, promoting exports, facilitation, etc, etc.

The general exemptions are many in number.

Exemption Notifications


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The basic benefit against exemption notification isexemption against payment of customs duty. The

exemption could be only of Basic Customs Duty or a

percentage of Basic Customs Duty or Basic Customs

Duty + Countervailing Duty etc.

Import Against Different Schemes


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Served from India Scheme:Duty credit scrip to eligible service export.CUS NTF NO. 92/2004 DATE 10/09/2004

Focus Market Scheme:Duty credit scrip to notified markets.

CUS NTF NO. 90/2006 DATE 01/09/2006

Focus Product Scheme:Duty credit scrip to notified products.

CUS NTF NO. 91/2006 DATE 01/09/2006

Vishesh Krishi and Gram Udyog Yojana:Duty credit scrip for agricultural and gram udyog products as notifiedby DGFT.

CUS NTF NO. 41/2005 DATE 09/05/2005



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Advance Authorisation:Exempts duty on inputs for export production.

CUS NTF NO. 91/2004 DATE 10/09/2004

CUS NTF NO. 93/2004 DATE 10/09/2004

CUS NTF NO. 94/2004 DATE 10/09/2004

Duty Free Import Authorisation:Transferable instrument, allows exemption from payment of

dutiesCUS NTF NO. 40/2006 DATE 01/05/2006



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Duty Entitlement Passbook Scheme:Neutralization of basic customs duty on the inputs, transferableinstrument.

CUS NTF NO. 89/2005 DATE 04/10/2005

Drawback of Customs/Excise Duties:Refund of duties paid on inputs.CUS NTF NO. 103/2008 (NT) DATE 29/08/2008

Export Promotion Capital Goods Scheme:Import of capital goods for pre production, production and post

production at 3% Customs duty subject to fulfillment of exportobligation.

CUS NTF NO. 97/2004 DATE 17/09/2004

CUS NTF NO. 64/2008 DATE 09/05/2008



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Setting up of units as EOUs/EHTPs/STPs/BTPs:Units undertaking to export their entire production of goods and

services except permissible sales in Domestic Tariff Area (DTA) are

known as Export Oriented Units (EOUs). Permits import of capital goodsand inputs without payment of duty.CUS NTF NO. 52/2003 DATE 31/03/2003


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Common Aspects between

Customs and Excise

Common aspects between Customs &

Excise


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The first common aspect is administration of both the laws by

one Ministry, i.e. Ministry of Finance.

Whenever there is an amendment to Excise Law or Customs Law,

it is ensured that similar provisions are incorporated or amended

in the other Law .

Customs Tariff and Excise Tariff are complied based on

Harmonised System of Nomenclature [HSN]


Excise


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Classification of goods with 8 digit code under Excise and

Customs Tariff Act.

With regard to valuation aspect, the concept of transaction value

is already in existence under Section 14 of the Customs Act,

1962 which is adopted under Section 4 of the Central Excise Act,

1944.

The concept of related person for the purpose of determinationof value of imported goods or the value of excisable goods

manufactured / removed is almost on similar basis under both

the laws.


Excise


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Export of excisable goods are examined by Customs before

export.

Procedure for refund and payment of interest on delayedrefunds.

Provisions relating to search, seizure and confiscation of goods.

Issue of Show Cause Notice, granting of Personal Hearing and

passing of adjudication order.


Excise


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The procedure for Appeal is similar both under Customs & Excise

Law.

Procedure for Settlement Commission.

The procedure for Advance Ruling.

Settlement Commission


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An alternative channel for resolution of dispute for assesseesfinally- without going into the prolonged litigation in

adjudication/appeals/revisions etc., has been created by

constituting Customs & Central Excise Settlement Commission.

Presently, three Benches in the Settlement Commission have

been constituted and they are functioning at Delhi, Mumbai and

Chennai, etc.

Section 127B of the Customs Act, 1962 provides filing of application by

the assessee for settlement of cases before the Settlement Commission.

Settlement Commission


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Settlement Commission cannot entertain the cases which arepending with the Appellate Tribunal or in a Court.

Similarly, the matters relating to classification cannot be raisedbefore the Commission.

It is also specified that no application can be made unless theappellant has filed a bill of entry, or a shipping bill etc., or ashow cause notice issued by proper Officer

The settlement provision will apply in cases where the additionalduty liability accepted by the applicant exceeds three lakh rupeesand accepted amount has been paid with interest beforeapplication to the commission.

Advance Ruling


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To facilitate the non-resident and specified resident investor inascertaining his tax liabilities in terms of Customs, Central

Excise duties and Service Tax.

As the name suggests, it is sought and given before the

commencement of a particular activity and it is a Ruling i.e. it is

in the nature of an order binding the parties involved.

A scheme of Advance Ruling has been incorporated in the

Customs Act, 1962, the Central Excise Act, 1944 and in the

Finance Act, 1994.

Advance Ruling


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Activity / services on which Advance Rulings can be sought:Activity means import or export of goods under Customs Act, 1962,and production or manufacture of goods under the Central ExciseAct, 1944.

Service refers to a taxable service, specified in Chapter V of theFinance Act, 1994 under the Service Tax provisions.

Benefit of Advance Ruling:

Helps planning customs/excise activities or providing of a servicewell in advance.

Certainty in determining the indirect tax liability.Avoids long drawn and expensive litigation at a later date.

Advance Ruling


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Who can seek an Advance Ruling?Any person who is a non-resident setting up a joint venture in Indiain collaboration with a non-resident or a resident;

Any person who is a resident setting up a joint venture in India incollaboration with a non-resident;

A wholly owned subsidiary Indian Company of which the holdingcompany is a foreign company;

A joint venture in India;

A resident falling within any such class or category of persons as theCentral Government may, by notification in the official gazettespecify in this behalf.

While dealing with Customs remember:


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To keep all applicable documents ready (the list islong, however, can not be avoided).

There are 13 INCOTERMS, however, by practice we

understand only three FOB, CFR and CIF.

The software designed by Customs for operational

use does not include terms like DDU or FAS. Henceyou can not get quick result if you use these terms.



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Explaining these terms to Government Officer wouldbe a difficult task and even if he understands it would

not result in quick action as the software provided by

Government can not be altered.

Things wont move as expected, particularly, with

reference to time. Some times you may require more

than that.

We have good number of HOLIDAYS as well.



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All related party transactions are scrutinised seriouslydue to the belief that the relationship must have

influenced the price. Hence understand SVBs working

thoroughly.

Always explain, dont argue - [if you know well]

Seek Guidance, dont explain - [if you dont know]

Conclusion


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Ignorance of Law is not an excuse.

You should therefore know the Law while transacting

any business with Customs.

Wrong procedures/shortcuts or ignorance ultimately

lead to financial losses.


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