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CUSTOMS & EXCISE
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Background of customs law
Customs duty is on import into India and export out of India. The rateof duty is as prescribed in Customs Tariff Act,1975. Import duty islevied on almost all items, while export duty is levied only on a fewlimited products, where Indian goods are in commanding position.
Import and export duty is a union subject and is power to levy isderived from constitution
Customs duty is levied in the following cases: On free replacements and free supplies
In the case of warehoused goods, the goods continue to be in
customs bond. Import takes place only when goods are cleared fromthe warehouse.
In case of export, tax is levied is complete only when goods crossterritorial waters of India.
Territorial waters of India means that portion of sea which is up to 12
nautical miles from the base line on the coast of India.
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Goods under customs act
Customs duty is on goods as per section 12 of
customs act. The duty is payable on goods
belonging to Government as well as goods not
belonging to the government
Section 2(22) gives inclusive definition of goods as
follows: Goods include (a)vessels, aircrafts and
vehicles (b) stores (c ) baggage (d) currency andnegotiable instruments and (e)any other kind of
movable property
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Valuation of goods
The value of the imported goods and export goods shallbe the transaction value of such goods, the price actuallypaid or payable for the goods when sold for export toIndia for delivery at the time and place of importation, oras the case may be, for export from India for delivery at
the time and place of exportation, where the buyer andseller of the goods are not related and price is the soleconsideration for the sale subject to such other conditionsas may be specified in the rules made in this behalf :
Provided such transaction value in the case of importedgoods shall include, in addition to the price, any amount paidor payable for costs and services
Provided also that such price shall be calculated withreference to the rate of exchange as in force on the date onwhich a bill of entry is presented
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Valuation of goods The Board has the authority to fix tariff values for any
class of imported goods or export goods if it issatisfied that it is necessary to do so, it may, bynotification in the Official Gazette, having regard tothe trend of value of such or like goods, and where
any such tariff values are fixed, the duty shall bechargeable with reference to such tariff value
For the purpose of this section rateof exchange
means the rate of exchange determined by the Board, or
ascertained in such manner as the Board may direct, forthe conversion of Indian currency into foreign currencyor foreign currency into Indian currency;
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Date for determination of rate of duty
and tariff valuation of imported goods
The rate of duty and tariff valuation, if any, applicable to any imported
goods, shall be the rate and valuation in force, -
in the case of goods entered for home consumption under section
46, on the date on which a bill of entry in respect of such goods ispresented under that section;
in the case of goods cleared from a warehouse under section 68,
on the date on which a bill of entry for home consumption in
respect of such goods is presented under that section;
in the case of any other goods, on the date of payment ofduty, Provided that if a bill of entry has been presented before the
date of entry inwards of the vessel or the arrival of the aircraft by
which the goods are imported
The provisions of this section shall not apply to baggage and goodsim orted b ost.
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Date for determination of rate of duty
and tariff valuation of export goods
The rate of duty and tariff valuation, if any, applicable
to any export goods, shall be the rate and valuation
in force
The provisions of this section shall not apply to
baggage and goods exported by post
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Assessment of duty An importer entering any imported goods , or an exporter entering any
export goods, shall, self-assess the duty, if any, leviable on such goods
The proper officer may verify the self-
assessment of such goods and for this purpose, examine or test any
imported goods or export goods or such part thereof as may be necessary
For verification of self-assessment , the proper officer may require the
importer, exporter or any other person to produce any contract, brokers
note, insurance policy, catalogue or other document, whereby the duty
leviable on the imported goods or export goods, as the case may be,
can be ascertained, and to furnish any information required for such
ascertainment which is in his power to produce or furnish
Where it is found on verification, examination or testing of the goods that th
e self-assessment is not done correctly, the proper officer may,
without prejudice to any other action which may be taken under this
Act, re-assess the duty leviable on such goods
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Provisional assessment of duty
When the duty leviable on such goods is assessed finally orreassessed by the proper officer in accordance with theprovisions of this Act, then
(a) in the case of goods cleared for home consumption orexportation, the amount paid shall be adjusted against theduty finally assessed and if the amount so paid falls short of,or is in excess of the duty finally assessed, the importer or theexporter of the goods shall pay the deficiency or be entitled toa refund, as the case may be
(b) in the case of warehoused goods, the proper officer may,where the duty finally assessed or re-assessed, as the casemay be, is in excess of the duty provisionally assessed,
require the importer to execute a bond, binding himself in asum equal to twice the amount of the excess duty
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Provisional assessment of duty
The amount of duty refundable under sub-section (2) and the interest undersub-section (4), if any, shall, instead of being credited to the Fund, be paid tothe importer or the exporter, as the case may be, if such amount is relatableto
(a) the duty and interest, if any, paid on such duty paid by the importer, or the
exporter, as the case may be, if he had not passed on the incidence of suchduty and interest, if any, paid on such duty to any other person
(b) the duty and interest, if any, paid on such duty on imports made by anindividual for his personal use
(c) the duty and interest, if any, paid on such duty borne by the buyer, if hehad not passed on the incidence of such duty and interest, if any, paid onsuch duty to any other person
(d) the export duty as specified in section 26
(e) drawback of duty payable under sections 74 and 75
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e erm na on o u y w ere goo sconsist of articles liable to different rates
of duty
Except as otherwise provided in any law for the time being inforce, where goods consist of a set of articles, duty shall becalculated as follows
(a) articles liable to duty with reference to quantity shall bechargeable to that duty
(b) articles liable to duty with reference to value shall, if theyare liable to duty at the same rate, be chargeable to duty at
that rate, and if they are liable to duty at different rates, bechargeable to duty at the highest of such rates
(c) articles not liable to duty shall be chargeable to duty atthe rate at which articles liable to duty with reference to valueare liable under clause (b)
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Abatement of duty on damaged or
deteriorated goods
The duty to be charged on the damaged or deteriorated goodsshall bear the same proportion to the duty chargeable on thegoods before the damage or deterioration which the value ofthe damaged or deteriorated goods bears to the value of the
goods before the damage or deterioration
For the purposes of this section, the value of damaged ordeteriorated goods may be ascertained by either of thefollowing methods at the option of the owner
(a) the value of such goods may be ascertained by theproper officer, or
(b) such goods may be sold by the proper officer by publicauction or by tender, or with the consent of the owner in any
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Remission of duty on lost, destroyed
or abandoned goods
(1) Without prejudice to the provisions of section 13,where it is shown to the satisfaction of the AssistantCommissioner of Customs or Deputy Commissioner of
Customs that any imported goods have been lost(otherwise than as a result of pilferage) or destroyed, atany time before clearance for home consumption, the
Assistant Commissioner of Customs or DeputyCommissioner of Customs shall remit the duty on such
goods
(2) The owner of any imported goods may, at any timebefore an order for clearance of goods for home
consumption under section 47 or an order for permittingthe deposit of goods in a warehouse under section 60
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Refund of export duty in certain
cases
Where on the exportation of any goods any duty hasbeen paid, such duty shall be refunded to the personby whom or on whose behalf it was paid, if
(a) the goods are returned to such personotherwise than by way of re-sale
(b) the goods are re-imported within one year fromthe date of exportation
(c) an application for refund of such duty is madebefore the expiry of six months from the date onwhich the proper officer makes an order for theclearance of the goods
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Claim for refund of duty
Any person claiming refund of any duty or interest
(a) paid by him or
(b) borne by him
May make an application in such form and manner as
may be prescribed for such refund to the Assistant
Commissioner of Customs or Deputy Commissioner
of Customs before the expiry of one year, from thedate of payment of such duty or interest
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Excise Duty
Excise is the duty levied on goods produced ormanufactured in India for sale in India
Usually not applicable to goods that are exported
Indirect Tax Levied on the manufacturer, butusually incidence is transferred over to the buyer
Central Govt. is responsible for levy & collection ofexcise in India
Few Exceptions (Liquor, narcotics state govt.)
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Administration of Excise
The tax / duty is administered by the Central Govt.under the authority of Entry 84 of the Union List (List
1) under the 7th Schedule read with the Article 246 of
the Constitution of India
The Laws are administered by the CBEC through its
Central Excise Commissionerates
India 23 Zones 93 Commissionerates (each
zone headed by a Chief Commissioner) Divisions
headed by Deputy / asst commissioners Ranges
headed by Superintendents
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Administration of Excise
The Central Excise Duty is levied in terms of theCentral Excise Act, 1944
The rates of duty are prescribed under the Section I
and II of the Central Excise Tariff Act, 1985
Taxable Event Manufacture
Liability of Central Excise duty arises as soon as thegoods are manufactured
Howerver, manufacturer has the flexibility to pay the
duty at the time of clearance of goods from the factory
premises
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Bases of Excise Duty
Specific Duty
Duty is charged at a particular ratefixed per unit or number, weight, volume or area
Slabs The rate of duty levied varies depending on
the total volume or value during a given period
Compounded duty Levied on the productioncapacity irrespective of the actual production
Ad valorem duty The amount of duty leviable isfixed as a percentage of the assessable value of theproduct (where assessable value refers to the priceat which the product being assessed for excise dutyis sold ordinarily at the place and time of removal of
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Kinds of Excise Duty
Basic Excise Duty :- Charged under section 3 of the Central Excise Act,
1944 on all excisable goods other than salt which are
produced or manufactured in India at the rates set forth
in the Schedule I to the Central Excise Tariff Act, 1985
Special Excise Duty :-
As per the Section 37 of the Finance Act,1978 Special
excise Duty was attracted on all excisable goods onwhich there is a levy of Basic excise Duty under the
Central Excises and Salt Act,1944
Charged under section 3 of the Central Excise Act,
1944 on all excisable goods, and at the rates set forthin the Schedule II to the Central Excise Tariff Act, 1985
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Kinds of Excise Duty
Additional Duty :-
Section 3 of the Additional duties of Excise (goods
of special importance) Act,1957 authorises the levy
and collection in respect of the goods described inthe Schedule to this Act.
This is levied in lieu of sales Tax and shared
between Central and State Governments.
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CENVAT Credit
This gives provision for allowing credit of the duty paidon inputs & capital goods and the service tax paid oninput services used for the manufacture of the finalproducts / services
The credit so obtained can be utilized for payment of theduty leviable on the final product
The scheme was introduced for avoiding multi level
taxation on same product or service (also calledcascading effect)
The definitions for Input goods, input service and capitalgoods (for which credit can be allowed) are as specified
in the Rule 2 of the CENVAT Credit Rules, 2004
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