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    Import

    clearance

    andcustom duty

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    Customs duties

    Types of customs duties

    Import of goods into India attracts customs duty.Customs duty consists of :

    Basic customs duty

    Additional duty/Counter Vailing Duty (CVD)

    levied under section 3 of Customs Tariff Act Special additional duty levied under section 3A

    of Customs Tariff Act

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    STEPS OF IMPORT CLEARANCE

    PURCHASE ORDER CONDITION

    L. C. CONDITIONS

    MODE OF DESPATCH

    ARRANGEMENT OF CARRIER COLLECTION OF DELIVERY ORDER

    CUSTOM CLEARANCE

    STORAGE AND ONWARD DESPATCH TOPROJECT SITE

    ARRANGEMENT OF RE EXPORT

    SETTLEMENT OF CUSTOM DISPUTE

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    Customs clearance processes

    Arrival of carrier - Cargo Arrival Notice Filing of Manifest - Cargo declaration

    Filing of Bill of Entry - Import declaration

    Assessment Appraisal

    Classification

    Valuation

    Payment of duty

    Examination

    Release of goods

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    Import processing - Steps involved

    Cargo Arrival Notice by shipping/Air lines tothe importer

    Along with IGM, an application for entryinwards has to be filed by the shipping/Air line

    Preparation of BOE ( BILL OF ENTRY )

    Submission of import documents and relevant

    supporting documents

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    Import processing - Steps involved

    Submission of BOE for home consumption

    Appraisal and Assessment

    Approval by the Assistant Commissioner(Customs) (AC) of the assessment and

    Payment of duty, examination and

    Out of Charge by Customs

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    Customs duties

    Types of customs duties

    Import of goods into India attracts customs duty.Customs duty consists of :

    Basic customs duty

    Additional duty/Counter Vailing Duty (CVD)levied under section 3 of Customs Tariff Act

    Add Cess (Education) on CVD, if any Special additional duty (SAD) levied under section

    3A of Customs Tariff Act

    Add Cess (Education) on Total Custom Duty

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    Customs duty Calculation

    (I)

    Value of goods (CIF) + 1% of CIF value as Landing chargespaid in India (A) 100.0

    Basic customs duty @ 25 % (B) 25.0

    Total = (A) + (B) =(C) 125.0 Additional duty/CVD @ 16 % of (C)=(D) 20.0

    Total = (C) + (D) =(E) 145.0

    Special additional duty @ 4 % of (E) = (F) 5.8

    Total landed cost = (E) + (F) =(G) 150.8

    Effective duty = (G) - (A) = 50.8 The table provides the method of calculating effective customs

    duty

    (Cess to be added on CVD & Total Custom Duty)

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    Customs duty Calculation

    (II) For ITA Items Value of goods (CIF) + 1% of CIF value as Landing charges paid

    in India (A) 100.0MEGA ITA

    Basic customs duty @ 0 % (B) NIL NIL

    Total = (A) + (B) =(C) 100.0 100.000

    Additional duty/CVD @ 0/16 % of (C)=(D) NIL 16.000

    Total = (C) + (D) =(E) 100.0 116.000

    Special additional duty @ 4 % of (E) = (F) 4.0 4.640

    Total landed cost = (E) + (F) =(G) 104.0 120.640

    Custom duty = (G) - (A) = 4.0 20.640

    Education Cess @ 2% => 0.08 0.413

    Effective Custom Duty => 4.08 21.053(The table provides the method of calculating effective customsduty)

    (Cess to be added after CVD & Total Custom Duty)

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    NEW TARIFF CALCULATION (III)EFECTIVE FROM 1.3.2005

    Value of goods (CIF) + 1% of CIF value as Landing charges paid in India(A) 100.000

    Basic customs duty @ 15 % (B) 15.000 Total = (A) + (B) = (C) 115.000 Additional duty/CVD @ 16 % of (C) =>(D) 18.400 Education Cess @ 2% (E) 0.368 Total CVD (D) + (E) = (F) 18.768 Total Custom Duty (B) + (F) 33.768 Education Cess @ 2% (G) 0.675 Effective duty (H) =(B) + (F) + (G) => 34.443 Total landed cost = (A) + (H) => (I) 134.443

    The table provides the method of calculating effective customs duty

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    Value of goods (CIF) + 1% of CIF value as Landing charges paid inIndia (A) 100.000

    Basic customs duty @ 12.5 % (B) 12.500Total = (A) + (B) = (C) 112.500Additional duty/CVD @ 16 % of (C) =>(D)

    18.000Education Cess @ 2% (E) 0.360Total CVD (D) + (E) = (F) 18.360Total Custom Duty (B) + (F) 30.860

    Education Cess @ 2% (G) 0.6172Effective duty (H) =(B) + (F) + (G) => 31.4772Special Add. Duty (J) @4% = 5.2591Total landed cost = (A) + (H) => (I) 136.7363

    The table provides the method of calculating effective customs duty(For Mega Power Stations BCD/CVD/EC/SAD all are NIL.)

    NEW TARIFF CALCULATION (IV)EFECTIVE FROM 1.3.2006

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    Value of goods (CIF) + 1% of CIF value as Landing charges paid inIndia (A) 100.000 Basic customs duty @ 10 % (B) 10.000 Total = (A) + (B) =(C) 110.000 Additional duty/CVD @ 16 % of (C) =>(D) 17.600

    Education Cess @ 2% (E1) 0.352/17.952H Education Cess @ 1% (E2) 0.176/18.128

    Total CVD (D) + (E) = (F) 18.128 Total Custom Duty (B) + (F) 28.128

    Education Cess @ 2% (G1) 0.56256/28.69 Education Cess @ 1% (G2) 0.28128/28.97

    Effective duty (H) =(B) + (F) + (G) => 28.97184 Special Add. Duty (J) @4% = 5.15887/34.13071 Total landed cost = (A) + (H) => (I) 134.13071

    The table provides the method of calculating effective customs duty

    (For Mega Power Stations BCD/CVD/EC/SAD all are NIL.)

    NEW TARIFF CALCULATION (IV)

    EFECTIVE FROM 1.3.2007

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    CALCULATION OF ASSESIBLE VALUE

    INVOICE VALUE : (A) FREIGHT : (B)

    OTHER CHARGES : (C)

    ( P&F, IAC, Etc.)

    INSURANCE @ % Of A + C : ( D )

    HANDLING CHARGES @ 1% of A+B+C+D : (E)

    TOTAL ASSESSABLE VALUE : A+B+C+D+E

    CONVERSION RATE TO INR

    FORMULA FOR CALCULATING ITEM WISE ASSESSABLEVALUE :-

    Value Of Items as per Invoice x Gross Assessable valueTotal Invoice value

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    EXAMPLE:

    FREIGHT : 1927.00 INVOICE VALUE : 34008.10 OTHER CHARGES : 3159.90

    ( P&F, IAC, Etc.) 39095.00

    INSURANCE @ 0.04 % Of (A+ C) 37168 : 14.866 HANDLING CHARGES @ 1% of 39109.866 391.100 TOTAL ASSESSABLE VALUE : in DM 32500.966 CONVERSION RATE -- 1DM = 21.20 INR 8347420.48 Rs.

    123482.10

    X 837420.48 = 304898.66 Rs34008.10

    Basic Duty @ 20% on Value 304898.66 = 60979.73CVD @ 16% on value 365878.39 = 58540.54

    Total Duty 1,19,510.27Rs

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    Classification

    The rate of customs duty applicable isgoverned by the sub-heading in whichclassification of the goods is covered under

    the Customs Tariff Act, 1975 (Tariff Act)

    The Schedule to the Tariff Act consist of 99Chapters arranged under 21 Sections and 6digit classification code in each Chapter

    Each Chapter and Section has notes that

    facilitate the classification of goods therein

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    84 - Machinery & Mechanical Appliances .

    85 - Electrical / Electronic Machinery &

    Equipment

    90 - Photographic, Medical, Measuring & etc.

    Instruments

    (These Chapters are subjects to certain

    inclusions/exclusions in line with chapters notes )

    CUSTOMS TARIFF -CHAPTERS eg.

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    CODES :

    XX XX XX XX

    First 2 digits indicates Chapter No.

    Next 2 digits indicates broad category of items

    Next 2 digits indicates sub heading of the broadcategory

    Next 2 digits indicates item covered .

    eg. Torch Code8513 10 1013 Portable electric lamps ; 10 Lamps ; 10Torch

    Miners Safety Lamps - 8513 10 30

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    Basic principles of classification

    Dictionary meaning

    Technical literature

    Common parlance test

    The Harmonised System of Nomenclature(HSN) is an international system ofclassification and coding of goods

    Trade/commercial understanding/usage

    HSN explanatory notes have persuasivevalue

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    Valuation - Sec 14

    As per the Rules, the value of goods shall bethe transaction value

    Transaction value is the price actually paid orpayable for the imported goods when sold forexport to India

    Such price would include the following:

    cost of transportation, Loading, unloading andhandling charges, Cost of insurance

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    Relevant date for rate of duty-S.15 of

    Customs Act

    In case of home consumption, date on whichBOE is presented

    In case of warehoused goods, date on whichgoods are actually removed from warehouse

    In case of any other goods, date of payment ofduty

    If BOE presented before entry inwards ofvessel, then it shall deemed to have beenpresented on the date of such entry inwardsor the arrival, as the case may be

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    Warehousing

    Section 49 of the Customs Act

    In case the goods entered for homeconsumption are not cleared within areasonable time may with thepermission from the concernedofficer, be permitted to be stored ina warehouse.

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    Drawback provisions

    Section 74 of the Customs Act deals with

    drawback of duty on re-export of duty paid goods The availability of drawback is subject to the

    following conditions:

    at the time of import, customs duty musthave been paid on the imported goods;

    the goods imported must be identifiable as

    the goods exported; where the goods are used in India, such

    usage must be for the prescribed period

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    Where the goods are used in Indiasubsequent to their import, thedrawback rate is determined on the

    basis of the duration of use of thegoods in India (i.e., the length ofperiod from the date of clearance for

    home consumption and the dategoods are placed under customscontrol for export)

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    Drawback provisions (contd.)

    Where imported goods are re-exportedwithout use, a refund of 98 percent ofthe customs duty paid on import ofsuch goods is available. The rates of

    duty drawback where the goods areput to use in India are set out below:

    Length of period between the date ofclearance for home consumption andthe date when the goods are placedunder customs control for export

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    Percentage of customs duty be paid as drawback

    Not more than 6 months 85%

    More than 6 months but not more than 12 months

    70%

    More than 12 months but not more than 18 months60%

    More than 18 months but not more than 24 months50%

    More than 24 months but not more than 30 months40%

    More than 30 months but not more than 36 months30%

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    Drawback provisions (contd.)

    Section 75 of the Customs Act read with section

    37 of the Central Excise Act and the Customs

    and Central Excise Duties Drawback Rules, 1995,

    deals with drawback on imported materials used

    in the manufacture of goods which are exported The drawback is allowed for the duties of

    customs and excise, subject to specified

    conditions and procedure Drawback is of two types

    all Industry rate

    brand rate


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