IMPORT & EXPORT (CUSTOMS)

MCM711 Legal Framework of Construction

Prof. Rajiv Gupta, NICMAR

Objectives:
Introduction to laws pertaining to import

and export. Description of the powers of the authorities dealing with theses matters.

Prof. Rajiv Gupta, NICMAR

 The Constitution of India (Article 265) lays down that no tax shall be

levied or collected except by authority of law. The law for the levy and collection of Customs duties is the Customs Act, 1962. This legislation has been enacted by Parliament in exercise of the exclusive power vested in it under Article 246 read with Entry 83 of list-I of the Seventh Schedule of the Constitution. The Customs Duties are major tax revenue for the Union Govt. and constitute around 30% of its total tax revenues. Together with Central Excise duties, they contribute nearly threefourth of total tax revenue of the Union Govt.

Prof. Rajiv Gupta, NICMAR

 Customs duty is a duty or tax, which is levied by Central

Govt. on import of goods into, and export of goods from, India. It is collected from the importer or exporter of goods, but its incidence is actually borne by the consumer of the goods and not by the importer or the exporter who pay it.

Prof. Rajiv Gupta, NICMAR

Case Point
An inquiry/summons from DRI was made to J Kumar Infra

Projects Limited in connection with the import of certain machinery based on an exemption from payment of customs duty (Hydraulic Drilling Rig HR - 180 under notification under Cus.21/2002). Pursuant to these summons, a search was conducted at the Companys registered office and its adjoining premises Pursuant to the aforesaid, the Company has paid customs duty and interest amounting to Rs. 7,33,18,057/- (Rupees Seven Crores Thirty Three Lacs Eighteen Thousand Fifty Seven only) since the conditions applicable for availing duty exemption for import of the aforesaid machinery had allegedly not been met.
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Objects of Customs Duty

Customs duty is levied, primarily, for the following purpose: 1. To raise revenue. 2. To regulate imports of foreign goods into India. 3. To conserve foreign exchange, regulate supply of goods into domestic market. 4. To provide protection to the domestic industry from foreign competition by restricting import of selected goods and services, import licensing, import quotas, and outright import ban.

Prof. Rajiv Gupta, NICMAR

Scope and Coverage of Customs Law

There are two Acts, which form part of Customs Law in India, namely, the Customs

Act.1962 and Customs Tariff Act, 1975: 1. The Customs Act, 1962
The Customs Act. 1962 is the basic Act for levy and collection of customs duty in

India. It contains various provisions relating to imports and exports of goods and merchandize as well as baggage of persons arriving in India. The main purpose of Customs Act, 1962 is the prevention of illegal imports and exports of goods. The Act extends to the whole of the India. It was extended to Sikkim w.e.f. 1st October 1979. 2. The Customs Tariff Act, 1975
The Customs Duty is levied on goods imported or exported from India at the rates

specified under the Customs Tariff Act, 1975.The Act contains two schedules
Schedule 1 gives classification and rate of duties for imports, Schedule 2 gives classification and rates of duties for exports. In the present Act, the Tariff Schedule was replaced in 1986. The new Schedule is

based on Harmonised System of Nomenclature (HSN). the Internationally accepted Harmonised Commodity Description and Coding System
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Taxable Event
Goods become liable to import duty or export duty when

there is import into, or export from India Import, as defined in section 2(23), means bringing into India from a place outside India. Export, as defined in section 2(18), means taking out of India to a place outside India. India is defined in section 2(27) to include the territorial waters of India. The definition of India is an inclusive definition. Article I of the Constitution of India defines India as Union of States. General Clauses Act defines India to mean all territories for the time being comprised in India.
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Territorial Waters of India

Territorial waters mean that portion of sea, which is adjacent to the

shores of a country. As per section 3 of the Territorial waters, Continental Shelf, Exclusive Economic Zones and Maritime Zones Act, 1978, territorial waters of India extend upto 12 nautical miles from the baseline on the coast of India and includes any gulf, harbour, creek or tidal river. Earlier, the territorial waters of India extended upto the 6 nautical miles from the baseline, but it was extended upto 12 nautical miles (1 NM = 1.83 kms) in 1967. This definition is well in accordance with the Article 3 of the UN Convention on the Law of Sea, which defines territorial sea. The determination of territorial waters is important for determination of the Chargeabi1ity of the Customs duty, as the entry of goods into the territorial waters is a taxable event. Prof. Rajiv Gupta, NICMAR

Indian Customs Waters

Section 2(28) defines Indian customs waters to mean the waters extending into the

sea up to the limit of contiguous zone of India under section 5 of the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976 and includes any bay, gulf, harbour, creek or tidal river.
Contiguous zone of India comes immediately after the territorial waters of India (i.e.

after 12 nautical miles from the baseline) and extends upto 24 nautical miles.
Thus, Indian customs water extends upto 12 nautical miles beyond the territorial

waters of India.
The determination of Indian customs waters is necessary in view of certain provisions

of the Customs Act, which empower the Customs Officers: (a) To arrest a person in India or within the Indian customs water ;( section 1041) (b) To stop and search any vessel in India or within the Indian customs water; (section 1061) (c) To fire and/or confiscate the vessel, if it does not stop; (section 115) etc.

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Prof. Rajiv Gupta, NICMAR

Type of Customs Duties

While Customs Duties include both import and export duties, but as export duties contributed only nominal revenue, due to emphasis on raising competitiveness of exports, import duties alone constitute major part of the revenue from Customs Duties. The import duties are imposed under the Customs Act, 1962 and Customs Tariff

Act, 1975.
Basic Customs Duty Auxiliary Duty of Customs Protective Duties

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Prof. Rajiv Gupta, NICMAR

Basic Customs Duty

All goods imported into India are chargeable to a duty under

Customs Act, 1962 . The rates of this duty, popularly known as basic customs duty, are indicated in the First Schedule of the Customs Tariff Act, 1975as amended from time to time under Finance Acts. T The duty may be fixed on ad valorem basis or specific rate basis. The duty may be a percentage of the value of the goods or at a specific rate. The Central Government has the power to reduce or exempt any good from these duties.
Prof. Rajiv Gupta, NICMAR

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Auxiliary Duty of Customs

This duty is levied under the Finance Act and is

leviable on all goods imported into the country at the rate of 50 per cent of their value. However this statutory rate has been reduced in the case of certain types of goods into different slab rates based on the basic duty chargeable on them.

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Prof. Rajiv Gupta, NICMAR

Additional (Countervailing) Duty of Customs

This countervailing duty is leviable as additional duty on

goods imported into the country and the rate structure of this duty is equal to the excise duty on like articles produced in India. The base of this additional duty is c.i.f. value of imports plus the duty levied earlier. If the rate of this duty is on ad-valorem basis, the value for this purpose will be the total of the value of the imported article and the customs duty on it (both basic and auxiliary).

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Prof. Rajiv Gupta, NICMAR

Protective Duties
Tariff Commission has been established under Tariff Commission

Act, 1951. If the Tariff Commission recommends and Central Government is satisfied that immediate action is necessary to protect interests of Indian industry, protective customs duty at the rate recommended may be imposed under section 6 of Customs Tariff Act. The protective duty will be valid till the date prescribed in the notification. Countervailing duty on subsidised goods If a country pays any subsidy (directly or indirectly) to its exporters for exporting goods to India, Central Government can impose Countervailing duty up to the amount of such subsidy under section 9 of Customs Tariff Act.
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Anti Dumping Duty

Often, large a manufacturer from abroad may export goods at

very low prices compared to prices in his domestic market. Such dumping may be with an intention to cripple domestic industry or to dispose of their excess stock. This is called dumping'. In order to avoid such dumping, Central Government can impose, under section 9A of Customs Tariff Act, antidumping duty upto margin of dumping on such articles, if the goods are being sold at less than its normal value. Levy of such anti-dumping duty is permissible as per WTO (world trade organisation) agreement. Anti dumping action can be taken only when there is an Indian industry producing Prof. Rajiv Gupta, NICMAR 16 'like articles'.

Anti-dumping Duty
FLOAT GLASS (CHINA PR AND INDONESIA)
The product involved in this investigation is Float Glass of thickness 2 mm to 12 mm (both

thickness inclusive) of clear as well as tinted variety (other than green glass) but not including processed glass meant for decorative, industrial or automotive purposes.
The subject goods find major uses in construction, refrigeration, mirror and solar energy

industries etc.
The product is covered under Customs Heading 70.05 of Schedule I of Customs Tariff Act. The anti-dumping investigation was initiated based on an application filed by All India Flat

Glass Manufacturers Association (AIFGMA); hrough the member companies, viz., M/s. Saint Gobain Glass India Ltd., Kanchipuram, Tamil Nadu and M/s. Float Glass India Ltd., Mumbai.
Preliminary findings were notified on 20.11.2002. Provisional duty has been imposed by

Department of Revenue vide notification dated 7.1.2003.

Final findings were notified on 22.8.2003 recommending duty @ US $ 71.16 to US $ 81.21 /

MT. The definitive duty was imposed vide Customs notification dated 12.11.2003.

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Prof. Rajiv Gupta, NICMAR

VITRIFIED/PORCELAIN TILES (CHINA PR AND UAE)

Vitrified/ Porcelain Tiles is Unglazed tiles in polished or unpolished finish and

Glazed Porcelain/Ceramic tiles both with less than 3% water absorption.

Vitrified/ Porcelain tiles is glazed and unglazed tiles are used primarily for covering

for floors as well as on walls. These tiles are used in buildings, homes, restaurants, cinema halls, airports, swimming pools, railway stations.
Anti-dumping investigation was initiated on the basis of an application filed by Ms.

Murdeshwar Ceramics Ltd. & Others on 6.8.2001 into the alleged dumping of Vitrified / Porcelain Tiles originating in or exported from China PR & UAE.
On 03.12.2001, preliminary findings were notified and anti-dumping duty @

difference between US $ 13.62 per Sq. meter and the landed value was recommended.
The provisional anti dumping duties was imposed by the Department of Revenue vide

Customs Notification dated 2nd May, 2002. On 4.2.2003 final findings were notified and anti-dumping duty @ US $ 0.74 to US $ 8.28 per Sq.m. was recommended.
Definitive duty has been imposed by the Department of Revenue vide notification
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dated Prof.1.5.2003. Rajiv Gupta, NICMAR

WHITE CEMENT (UAE AND IRAN)

White Portland cement is normally referred to as white cement. It

is a construction material and is used for nonstructural purposes such as flooring of tiles, cement based exteriors, paints and cement varnish etc. On the application filed by M/s Grasim Industries Ltd. and M/s JK Synthetics Ltd. the Designated Authority initiated antidumping investigation on 6.12.2000 into the imports of White Cement originating in or exported from United Arab Emirates (UAE) and Iran. In the preliminary findings notified on 22.2.2001, the Designated Authority recommended anti-dumping duty of US$ 30/MT on imports from UAE and of US$ 46/MT on imports from Iran. The final findings were notified on 30.08.2001 recommending imposition of anti-dumping duty @ US $ 32-38 per/MT.
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Safeguard Duty
Central Government is empowered to impose

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'safeguard duty' on specified imported goods if Central Government is satisfied that the goods are being imported in large quantities and under such conditions that they are causing or threatening to cause serious injury to domestic industry. Such duty is permissible under WTO agreement. Safeguard duty is a step in providing a need-based protection to domestic industry for a limited period, with ultimate objective of restoring free and fair Prof. Rajiv Gupta, NICMAR competition

National Calamity Contingent Duty

A National Calamity Contingent Duty (NCCD) of

customs has been imposed vide section 129 of Finance Act, 2001. This duty is imposed on pan masala, chewing tobacco and cigarettes. It varies from 10% to 45%. NCCD of customs of 1% was imposed on PFY, motor cars, multi utility vehicles and two wheelers and NCCD of Rs 50 per ton was imposed on domestic crude oil, vide section 134 of Finance Act, 2003.
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Rate of Duty Applicable

There are different rates of duty for different goods There are different rates of duty for goods imported from certain countries in terms

of bilateral or other agreement with such countries which are called preferential rate of duties. The duty may be percentage of the value of the goods or at specified rate.
Provisions in respect of rate of duty are as follows: Basic Customs duty - The rate of customs duty applicable will be as provided in

Customs Act, subject to exemption notifications, if any, applicable.

In case of imports from preferential area, the preferential rate is applicable, if

mentioned in the Tariff. It is needless to mention that if partial or full exemption has been granted by a notification, the effective rate (as per notification) will apply and not the tariff rate (as mentioned in Customs Tariff).
Rate for additional duty - Rate for additional duty (CVD) will be as mentioned in

Central Excise Tariff Act, subject to any general exemption notification. Any specific exemption notification (e.g. exemption to goods
manufactured by SSI unit or goods manufactured without aid of power) is not

considered while calculating CVD

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Valuation of Goods
Customs duty is payable as a percentage of Value often called

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Assessable Value or Customs Value'. The Value may be either (a) Value as defined in section 14 (1) of Customs Act or (b) Tariff value prescribed under section 14 (2) of Customs Act. Tariff Value - Tariff Value can be fixed by CBE&C (Board) for any class of imported goods or export goods. Government should consider trend of value of such or like goods while fixing tariff value. Once so fixed, duty is payable as percentage of this value. (The percentage applicable is as prescribed in Customs Tariff Act). Customs value as per section 14 (1) - Customs Value fixed as per section 14 (1) is the Value normally used for calculating customs duty payable (often called customs value or Assessable Value'.) Prof. Rajiv Gupta, NICMAR

Value
Section 14 (1) provides following criteria for deciding Value for
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purpose of Customs Duty: Price at which such or like goods are ordinarily sold or offered for sale Price for delivery at the time and place of importation or exportation Price should be in course of International Trade Seller and buyer have no interest in the business of each other or one of them has no interest in the other Price should be sole consideration for sale or offer for sale Rate of exchange as on date of presentation of Bill of Entry as fixed by CBE&C (Board) by Notification should be considered This criterion is fully applicable for valuing export goods. However, in case of imported goods, valuation is required to be done according to valuation rules Prof. Rajiv Gupta, NICMAR

 The value of imported goods for purposes of assessment of duly is determined in accordance

with the provisions of Section 14 of 1962 and the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988, which were brought into force on 16th August, 1988
Rule 3(i) of the Valuation Rules provides that the value of imported goods shall be the.

Transaction value under Rule 4

Transaction value has been defined as the price actually paid or payable for the goods when

sold for export to India, adjusted in accordance with the provisions of Rule 9.
The adjustments under Rule 9 provide, inter alia, the addition in all cases, of freight and cost

of insurance to the transaction value if not already included and also for the addition of loading, unloading and handling charges for purposes of assessment.

In other words, the assessable value is the safe price of the imported goods plus the landing charges subject to any other adjustment which may be necessary under the provisions of Rule. 5 to 8, which are required to be in that order.

If the value cannot be determined under Rule 3(i), the value is to be determined under Rules The rate of exchange applicable for conversion of foreign currency in Indian currency is the

rate in force on the date of presentation of the Bill Entry under Section 46.
Such exchange rates are notified by the Govt. from time to time by notifications issued under

clause a (i) of Section 14(3).

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Customs Value Inclusions

Some costs, services and expenses are to be added to the price paid or payable, if these

are not already included in the invoice price. Rule 9 of Customs Valuation Rules provide that following cost and services are to be added
Commission and brokerage Cost of container, which are treated as being one with the goods for customs purposes Cost of packing whether labour or materials Materials, components, tools, dies etc. supplied by buyer Royalties and license fees Value of proceeds of subsequent sales Other payment as condition of sale of goods being valued Cost of transport up to place of importation Landing charges Cost of insurance.

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Prof. Rajiv Gupta, NICMAR

Exclusions from Assessable Value

Note to rule 4 provides that following charges shall be

excluded: Charges for construction, erection, assembly, maintenance or technical assistance undertaken after importation of plant, machinery or equipment Cost of transport after importation Duties and taxes in India

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Prof. Rajiv Gupta, NICMAR

Methods of Valuation for Customs

The Valuation Rules, 1988, based on WTO Valuation Agreement (earlier GATT

Valuation Code); consist of rules providing six methods of valuation.

The methods are:

(a) Transaction Value of Imported goods (b) Transaction Value of Identical Goods (c) Transaction Value of Similar Goods (d) Deductive Value, which is based on identical or similar imported goods, sold in India. (e) Computed value, which is based on cost of manufacture of goods plus profits (f) Residual method based on reasonable means and data available.
These are to be applied in sequential order, i.e. if method one cannot be applied, then

method two comes into force and when method two also cannot be applied, method three should be used and so on.
The only exception is that the computed value method may be used before

deductive value method, if the importer requests and Assessing Officer permits.
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CBEC Mission
To achieve excellence in the formulation and implementation

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of Customs and Excise initiatives aimed at: To realise the revenues in a fair, equitable and efficient manner To administer the Government's economic, tariff and trade policies with a practical and pragmatic approach To facilitate trade and industry by streamlining and simplifying Customs and Excise processes and helping Indian business to enhance its competitiveness To creating a climate for voluntary compliance by providing guidance and building mutual trust To combating revenue evasion, commercial frauds and social menace in an effective manner Prof. Rajiv Gupta, NICMAR

Important Functions of Customs Dept.

(a) Collection of Customs duties on imports and exports as per

the Customs Act, 1962 and the Customs Tariff Act, 1975; (b) Enforcement of various provisions of the Customs Act, 1962 governing imports and exports of cargo, baggage, postal articles and arrival and departure of vessels,aircrafts etc.; (c) Discharge of agency functions and enforcing prohibitions and restrictions on imports and exports under various legal enactments; (d) Prevention of smuggling including interdiction of narcotics drug trafficking; and (e) International passenger clearance.
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 Entry No. 83 of List 1 to Schedule VII of the Constitution

empowers the Union Government to legislate and collect duties on imports and exports. Accordingly, the Customs Act, 1962, effective from 1-21963 provides vide its Section 12 for the levy of duties on goods imported into or exported from India. The items and the rates of duties leviable thereon are specified in two Schedules to the Customs Tariff Act, 1975.

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Prof. Rajiv Gupta, NICMAR

 The First Schedule specifies the various import items in

systematic and well considered categories, in accordance with an international scheme of classification of internationally traded goods known as Harmonized System of Commodity Classification and specifies the rates of import duties thereon, as prescribed by the legislature. The duties on imported items are usually levied either on specific or ad-valorem basis, but in few cases specific-cum-ad valorem duties are also levied. The Second Schedule incorporates items that are subject to exports duties and the rates of duties thereof.

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Prof. Rajiv Gupta, NICMAR

 Levy of duties on ad-valorem (i.e., with reference to value) basis is

the predominant mode of levy. For this purpose the value of the imported goods is required to be determined as per provisions of Section 14 of the Customs Act, 1962 read with the Customs Valuation (Determination of Prices of Imported Goods) Rules, 2007. These provisions are essentially the adoption of GATT based valuation system (now termed WTO Valuation Agreement) that is followed internationally. Likewise, in respect of export goods the value is to be determined as per provisions of Section 14 of the Customs Act, 1962 read with the Customs Valuation (Determination of Value of Export Goods) Rules, 2007.
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Regulated Entry/Exit
In tune with international practice the entry/exit of

carriers/passengers etc. into and out of the country is regulated by law. The Customs Act, 1962 is the basic statute which governs/regulates entry/exit of different categories of vessels/crafts/goods/passengers etc., into or outside the country.

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Prof. Rajiv Gupta, NICMAR

Obligations of Carriers
To regulate and have effective control on imports and exports the Customs Act, 1962 enjoins

certain liabilities on the carriers. i) They have to bring in the cargo imported into the country for unloading only at notified ports/airports/Land Customs Stations;
They have to furnish detailed information to Customs about goods brought in for unloading at

that particular port/international airport as also those which would be carried further to other ports/airports.
They have to file Declaration of such cargo in terms of an Import General Manifest (IGM) prior

to arrival of the vessel/aircraft at the Customs station.

In the case of imports through Land Custom Stations the person in charge of the vehicle has to

give similar import report within 12 hours of its arrival.

Since the cargo clearance formalities are linked generally with the availability of information

about cargo being brought by a vessel for unloading at any port, provisions is also made for prior filing of an IGM if all details of relevant cargo for any port are available even before the vessel arrives.
The final IGM can be filed after arrival of the vessel.

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Prof. Rajiv Gupta, NICMAR

 The person in charge of the vessel/aircraft is required to

furnish details of all the goods loaded on a vessel/aircraft in a prescribed form, which is termed Export General Manifest (EGM). The person in charge of a vehicle must furnish a similar report called Export Report. The EGM/Export Report is to be furnished before the vessel/aircraft/ vehicle departs and is essentially taken as the proof of shipment/export.
Prof. Rajiv Gupta, NICMAR

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Customs Clearance of Cargo

Before any goods imported can be cleared for home consumption in

the country or for warehousing for subsequent Customs clearances as and when needed etc., the importers have to comply with prescribed Customs clearance formalities. Essentially, these involve presentation of certain documents along with a prescribed application normally termed Bill of Entry, which gives essential particulars in relation to imported goods, country of origin, particulars of vessel/aircraft etc. seeking clearance of goods for home consumption/warehousing etc. The importer either himself handles the import clearance documents or appoints Custom House Agents (CHAs) who are trained and experienced in Customs clearance work and are licensed by Customs for such work in terms of the CHA Licensing Regulations, 2004.
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 The import clearance documentation, presentation, and processing is handled in

the Custom Houses by Appraising staff trained in assessment matters. After a tally has been made with related IGM to ensure the goods sought for clearance have arrived and declared in the particular IGM of the vessel/aircraft mentioned in the Bill of Entry (or even where the prior manifest is filed) the scrutiny of documents manually or through EDI system is taken up. The main function of the Appraising staff in the Custom Houses is the careful scrutiny of the Bill of Entry and related particulars / information with a view to checking the import permissibility in terms of the Foreign Trade Policy and any other laws regulating import and to determine value, classification and duties leviable on the goods on import (Basic, Additional, Anti-dumping, Safeguards etc.). Permissibility of various benefits of duty free clearances under different schemes or applicability of any exemption notification benefits is also checked and decided.
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 Normally, the import declarations made are scrutinized without prior

examination of the goods with reference to documents made available and other information about the values/classification available with Customs and duties chargeable on the goods are assessed and paid up by the importer or his authorized representative. t is only at the time of clearance of the goods from the custody of the port trusts/international airport authority or other custodians that these are examined on percentage basis by separate staff posted in the premises where the goods are stored pending Customs clearance. These officers undertake checking of nature of goods, valuation and other part of declaration, or draw samples as may be ordered by the Appraising officers of the Custom House/Cargo Complexes/ICDs. If no discrepancies in relation to the nature of goods, quantity, value etc., are observed at the time of examination of the cargo, Out of Customs Charge orders are issued, and thereafter goods can be cleared after discharging any Prof. fees/charges Rajiv Gupta, NICMAR 39 other etc., of the custodians.

 At times, for determining the duty liability and permissibility of import it

may become necessary to examine the goods in advance. Such goods are got examined after filing of Bill of Entry and other documents and based upon the report of the examining staff, duties etc. are assessed and if there is no prohibition etc., the goods are taken clearance from the custodian without the need for further examination. Where disputes arise in the matter of classification/valuation or any violations of any provisions of law are observed, where the goods cannot be allowed clearance finally without further investigations and following adjudication proceedings, the law provides for provisional clearances subject to suitable bond/security. Only where the goods are of prohibited nature or in certain other exceptional cases, where provisional release is not considered advisable, the final decision may be taken after results of enquiries etc. are known and adjudication proceedings completed, where necessary.
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Assessment
First and second system of assessment -There are two

systems of assessment. Section 17(2) provides for assessment after examination of goods. Goods are examined first and then these are assessed. Section 17(4) provides for assessment on basis of documents, followed by inspection and testing of goods. First appraisement system or 'first check procedure' is followed if the appraiser is not able to make assessment on the basis of documents submitted and deems that inspection is necessary.
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First Appraisement
First appraisement is generally carried out in following
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cases If complete documents are not submitted Goods are to be tested for correct classification Goods are re-imported Goods are damaged or deteriorated and abatement is claimed Goods are abandoned and remission of duty is applied for When goods are provisionally assessed When importer himself requests for examination of goods before payment Prof. Rajiv Gupta, NICMAR of duty.

Second Appraisement
In Second Appraisement System or 'second check procedure', which

is normally followed, assessment is done on basis of documents and then goods are examined. Such examination is not mandatory. It is done on selective basis on the basis of risk assessment or specific intelligence report. Section 17(4) of Customs Act specifically provides that if initially assessment is done on basis of documents, re-assessment can be done after examination or testing of goods or otherwise. If it is found subsequent to examination or testing or otherwise, that any statement made on Bill of Entry or any information supplied is not true in respect of matter relevant to assessment of duty.

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Prof. Rajiv Gupta, NICMAR

 Customs clearance formalities for goods meant for export have to be fulfilled by

presenting a Shipping Bill and other related documents to the Export Section of the Custom Houses or EDI Service Centres.
The Appraising staff checks the declarations to assess the duties/cess, if leviable,

propriety of export incentives, where claimed under different schemes like Duty Drawback or duty free exemption schemes etc.
Appropriate orders for examination before shipments are allowed export are given on

the Shipping Bill.

The staff in the docks/cargo complexes/ICDs examines the goods meant for export on

percentage basis, and allows shipment if there are no discrepancies/ mis-declarations etc., and no prohibitions/violations come to light.
Appropriate penal action as per law is initiated where any fraudulent practices get

detected during initial stage of scrutiny or at the time of examination etc.

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Prof. Rajiv Gupta, NICMAR

DUTY DRAWBACK PROVISIONS

Drawback means the rebate of duty chargeable on any imported materials or

excisable materials used in manufacture or processing of goods which are manufactured in India and exported.
Export means taking out of India. Supply of stores for use in vessel or aircraft proceeding to foreign port is also

covered, since it is treated as export as per section 89 of Customs Act.

Duty Drawback is equal to: (a) customs duty paid on imported inputs including SAD plus (b) excise duty paid on indigenous inputs. Duty paid on packing material is also eligible. However, if inputs are obtained without payment of customs/excise duty, no

drawback will be paid.

If customs/excise duty is paid on part of inputs or rebate/refund is obtained, only

that part on which duty is paid and on which rebate/refund is not obtained will be eligible for drawback.
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NoProf. drawback is NICMAR available on other taxes like sales tax and octroi. Rajiv Gupta,

 Processing work is also eligible for Drawback Drawback is allowable if any manufacture; process or any

operation is carried out in India [section 75(1) of Customs Act]. Thus, drawback is available not only on manufacture, but also on processing and job work, where goods may not change its identity and no manufacture has taken place.

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Prof. Rajiv Gupta, NICMAR

ICEGATE

ICEGATE stands for the Indian Customs Electronic Commerce/Electronic Data Interchange (EC/EDI) Gateway. ICEGATE is a portal that provides e-filing services to the trade and cargo carriers and other clients of Customs Department (collectively called Trading Partner). At present, about 8500 users are registered with ICEGATE who are serving about 6.72 lacs importer/exporter. ICEGATE links about 15/broad types partners with Customs EDI through message exchanges enabling faster Customs clearance and in turn facilitating EXIM Trade. This facility offers a host of services, including electronic filing of the Bill of Entry( import goods declaration), Shipping Bills (export goods declaration) and related electronic messages between Customs and the Trading Partners using the internet. The airlines and shipping agents can file manifests through the internet using this facility, while the custodians and cargo logistics operators interact with Customs EDI through ICEGATE for cargo and logistics and related information. Data is also exchanged between Customs and the various regulatory and licensing agencies such as DGFT, RBI, etc. The National Import Database (NIDB) and Export Commodity Database (ECDB) for Directorate of valuation are also being serviced through ICEGATE. The Indian Customs EDI System (ICES), is running at 103 customs locations. In addition to e-filing, ICEGATE also provides host of other services like e-payment, on-line registration etc.
Prof. Rajiv Gupta, NICMAR

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Customs EDI Trading Partners

DGCIS Directorate General of Commercial Intelligence and Statistics

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Prof. Rajiv Gupta, NICMAR

Appellate Remedies
Any concerned person aggrieved with the departmental adjudication is

given the right to appeal against the said order. The first level of appeal is to Commissioner (Appeal) and thereafter to an independent Tribunal (CESTAT- Customs, Excise and Service Tax Appellate Tribunal) unless the adjudication order is originally passed by the Commissioner of Customs in which case the first level of appeal is to the CESTAT. On questions of law, the orders of CESTAT could also be considered for reference to the High Court and certain categories of decisions involving classification or valuation can be appealed even before the Supreme Court.

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Prof. Rajiv Gupta, NICMAR

Import/Export by post/courier
Customs is charged with coordination with Postal authorities for giving Customs

clearances after appropriate checks on selective basis of various goods coming as post parcels, etc.
Customs also ensure that these postal mail/packets/parcels enter into the country in

accordance with the provisions of the Customs Act, 1962.

Unless the goods brought by post are within the value limits prescribed for free gift

or free samples these have to be assessed to duties by Customs and the same indicated to Postal authorities. The duties are collected before the Postal authorities deliver the goods to addressees.
Imports/exports through couriers are governed by the Courier Imports and Exports

(Clearance) Regulations, 1998 and the Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010.
These Regulations facilitate such goods in terms of quick Customs clearance, after

discharge of duties, if any, for delivery to the consignees.

At few places dedicated Courier terminals manned by Customs officers (akin to Air

Cargo Complexes) are established to handle courier cargo.

50 Prof. Rajiv Gupta, NICMAR

Delivery of Import Manifest

In accordance with Section 30 of the Customs Act, 1962 the

person in charge (Master / Agent) of the vessel or an aircraft has to deliver an import manifest (an import report in case of a vehicle), prior to arrival in the case of a vessel and an aircraft or within 12 hours of arrival in case of a vehicle in the prescribed form. The time limit for filing the manifest is extendable on showing sufficient cause, but otherwise a penalty not exceeding Rs.50,000/- can be imposed on account of any delay. A person filing the manifest/report declarations under this section has to declare the truthfulness of contents, which has legal consequences.
51 Prof. Rajiv Gupta, NICMAR

Citizen's Charter
Standards: CBEC shall:

Acknowledge declarations, intimations, applications, returns and all communications on the spot and in any case within 7 days of their receipt. Respond to all communication within 15 working days of its receipt. Settle any disputes relating to declarations or assessments within 10 working days of receipt of written or oral explanation. Refund amounts due within 30 working days of receiving a valid claim. Pay any duty drawback due within 48 hours of the export of the goods in case of electronic declarations and 15 days in case of paper declarations. Release goods where declaration relating to any consignment is complete and correct In case of exports, within 8 hours of filing an electronic declaration or within 24 hours of filing a paper declaration. In case of imports, within 24 hours of filing an electronic declaration or within 72 hours of filing a paper declaration. Complete excise registration formalities within 48 hours of receiving the application. Return the input duty documents on which CENVAT credit has been availed of within 7 days of submission. Complete examination and clearance of export consignment at factory premises, whenever such a facility is required, within 8 hours of receiving intimation. Give 15 days advance intimation before undertaking audit of records. In case of likely or inevitable delay in decision making or when an issue is disputed, it shall promptly communicate the reasons on its own initiative. Prof. Rajiv Gupta, NICMAR

52

CBEC Commitment
All uniformed officers who deal with the public will wear name badges and carry an

Identity Card
Personal and business information disclosed to us will be kept confidential. Clearance of consignments will be withheld only after explaining the reasons for the

same and we will give you full opportunity to explain before passing any final order.
Assessees in the small scale sector will be visited only with proper authority from

senior officers.
Your tax compliance record will be recognised and security/ surety will not be

insisted upon.
Passengers can walk through customs expecting courtesy, fairness and consideration. Baggage of international passengers will be opened only after explaining the reasons

and in their presence.

We will help in repacking baggage if we have made you unpack them. We will explain the reasons if we need to search you and offer our own search before

it.
53 Prof. Rajiv Gupta, NICMAR

CBEC Commitment contd.

Investigations and penalty proceedings will be initiated only after senior officers of the

Department are satisfied that prima facie evidence exists.

The investigating officer will :-

- Explain the legal provisions and your rights and obligations. - Seek confirmatory information by personal contact. No seized document will be withheld beyond 60 days except where they are to be relied upon in departmental proceedings.
We will provide full information about appeal procedures and the authorities with whom appeals

can be filed.
We will continually consult all commercial interests while reviewing our policies and procedures

and provide timely publicity of all changes in the law or procedures.

Every possible assistance will be rendered by the Public Relations Officer in the Divisional

Office/Commissionerate Office/Custom House (the name and telephone number of the Public Relations Officer will be prominently displayed at such offices) by providing all relevant information and details of procedures as may be required.
Our performance will be measured against these standards and independent surveys of clients'

perception and assessment of our performance and the results will be publicised through the media.
54 Prof. Rajiv Gupta, NICMAR

Thank You for Your Attention

55

Prof. Rajiv Gupta, NICMAR

 http://www.du.ac.in/fileadmin/DU/Academics/course_m

aterial/TM_09.pdf

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Prof. Rajiv Gupta, NICMAR