The Customs Act, 1962

It is a duty or tariff imposed by law on imports or exports It is levied and collected by the Central Government It is levied under the Customs Act 1962 It is charged at rates specified in the Customs Tariff Act 1975 It extends to the whole of India The Act was introduced in the year 1962 and it came into force on 1.02.1963

The Customs Tariff Act, 1975

Customs duty is imposed under The Customs Act 1962, but levied under Customs Tariff Act 1975 The Customs Act 1962 stops with charging duty The rates of duty are left to the Customs Tariff Act 1975 and the Customs Tariff Act 1975 came into force on 2.8.1976

Features of Customs Duty

The levy is on import & export only Customs duty is levied on goods belonging to and not belonging to Government The transaction need not be a sale or purchase Customs duty is attracted even in the case of baggage brought by the passenger The Customs Act consist of 161 sections and 17 chapters

Objectives of Customs Duties

To safeguard domestic trade by imposing duty on imported goods To discourage imports To levy and collect adequate revenue resources for the economic development of India To protect Indian industries in the interest of Trade, commerce and economy To provide for necessary powers to the Central Government to prevent smuggling activities To ensure that the home markets do not become a dumping ground for foreign goods To raise revenue

Objectives of Imposing Export Duties Export duties For Revenue purposes For anti-inflationary condition To stabilize price of essential commodities To protect home industries To control of export of raw materials

Types of Customs Tariff Import Tariff

I schedule of Customs Tariff Act 1975 21 sections, 91 chapters

Export Tariff
II schedule of Customs Tariff Act 1975 Duty is charged on advalorem and specific rate basis

Types of Import Duties Basic Customs Duty

Standard rates of duty Preferential rates of duty

Countervailing duty or Additional Customs Duty Special additional duty Protective duty Anti Dumping duty Safeguard duty

Levy of Customs Duty Dutiable goods- Sec 12 Duty on pilfered goods- Sec 13 Duty on damaged or deteriorated goods Remission of duty on lost, destroyed or abandoned goods

Assessment of Duty Sec 17 Assessment means quantification of the amount of duty payable Assessment includes provisional assessment, reassessment and any order of assessment in which the duty assessed is nil

Procedure for Assessment

The importer files a Bill of Entry u/s 46 (or) The exporter files a Shipping Bill u/s 50 The imported or exported goods may be examined and tested by proper officer for the purpose of levying duties on such goods The exporter/importer must furnish all information and produce all documents like Bill of Lading, Insurance Document, Contract, Shipping Bill etc

Valuation of goods for the purpose of Assessment

Customs duty is imposed on the basis of value of goods Value- Sec 14 (1)
The price at which such or like goods ordinarily sold or offered for sale Such price should be for the delivery at the time and place of import or export Such price in the course of International Trade The price should be sole consideration of sale

Value
Value includes Commission & Brokerage Packing costs Royalties Licence fees Transport cost up to port Insurance Landing cost Value excludes Transport Charges After Importation Payment to seller not connected with imported goods Taxes paid in India Art work, Design work expenses incurred in India

Methods of Determining Value

Transaction value of same goods based method- Rule 3 Transaction value of identical goods based method- Rule 5 Transaction value of similar goods based method- Rule 6 Deductive value method- Rule 7 Assessable value = Selling Price (-) Post Importation Cost Computed Value Method- Rule 7A Assessable Value = Cost of Production + Profit & General Expenses + Transportation cost, Landing & Insurance Residual Method- Rule 8 When the value cannot be assessed as per the above methods

Exemption from Customs Duty Sec 25

Exemption by General Notification- Sec 25 (1) Published in Official Gazette Issued in public interest Exemption may be absolute or conditional Exempted Exports Coffee, Tea, Cardamom, Turmeric etc Exempted Imports Life saving drugs, trophies received by specified Indian reputed players Exemption by Special Order- Sec 25 (2) Ad Hoc Exemptions Issued in public interest 100% exemption Goods of strategic nature Goods of secret nature Goods of charitable purpose

Transportation of Imported/Exported GoodsSec 29-43

Landing at approved places- Sec 29 Port/Air port etc Delivery Document- Sec 30 Vessel Import Manifest- 24 hours Air Craft Import Manifest- 12 hours Vehicle Import Report- 12 hours Getting Entry Inward- Sec 31 Loading & unloading at approved places-Sec 33 Loading & unloading under the supervision of customs- Sec 34

Transportation of Imported/Exported GoodsSec 29-43- Contd

Accompanying Boat Note- Sec 35 Avoiding loading & unloading on holidays Answering questions and producing documents Getting entry outwards- Sec 39 Getting departure permission- Sec 42 Searches, Seizure & Arrest Power to search suspected persons entering or leaving India- Sec 100 Power to search suspected persons in certain other cases- Sec 101

Transportation of Imported/Exported GoodsSec 29-43- Contd

Power to screen or X-Ray bodies of suspected persons for detecting secret goods- Sec 103 Power to arrest- Sec 104 Power to search premises- Sec 105 Power to stop & search conveyances- Sec 106 Power to examine person Power to summon persons to give evidence & produce documents Seizure of goods, documents and things- Sec 110 (Ayyan & Nayagan)

Warehousing of Imported Goods- Sec 57-73

When the goods arrive in the port, an importer may not immediately require the goods on account of surplus stock on hand There is also a possibility that the importer may not be having adequate cash for payment of customs duty Importers may prefer to warehouse the goods and clear the same subsequently on payment of duty The basic condition is that the goods must be dutiable

Appointment of Warehouses
Public Warehouse Sec 57 Private Warehouse Sec 58 Warehousing Bond Sec 59 Control over warehoused goods Sec 62 Payment of rent & warehouse charges Sec 63 Owners right to deal with warehoused goods 64 Removal of goods from one warehouse to another 67 Clearance of warehoused goods for home consumption 68 Clearance of warehoused goods for exportation 69 Goods improperly removed from warehouse 72

Customs Duty Drawback

Drawback means the refund of duty of Customs & duty of Central Excise that are chargeable on imported and indigenous materials used in manufacture of exported goods Drawback is equal to
Customs duty paid on imported inputs Excise duty paid on indigenous inputs

Drawback allowable on re-export of duty paid goods Sec 74

The goods must have been originally imported into India and import duty must have been paid thereon The goods must be capable of being easily identified The proper officer must make on order permitting clearance of the goods for exportation 98% of duty be repaid as drawback Goods imported by a person for his persoanl and private use

Drawback on imported materials used in the manufacture of goods which are exported u/s 75 Such goods have to be notified by the Central Government in the official Gazette Goods must be either be manufactured, processed or any operation on them must have been carried out of India If the export value of goods is less than the value of the imported materials used in the manufacturing, processing, no drawback shall be allowed

Prohibition and Regulation of Drawback in certain cases Sec 76

No duty drawback will be allowed In respect of any goods the market price of which is less than the amount of drawback due thereon Where the drawback due in respect of any goods is less than fifty rupees

Clearance of Goods

Restrictions on custody and removal of imported goods- Sec 45 All imported goods unloaded in a customs area, will remain in the custody of a person approved by the Commissioner of Customs He will keep a record of such goods and send a copy thereof to the proper officer He will not permit the goods to be removed from customs area except with the permission in writing of the proper officer

Offences & Penalties

Imprisonment & Fine False declarations/ documents Obstruction of Officer of Customs Refusal to be X-rayed Evasion of duty or prohibitions Illegal export of goods Offences by Officers of Customs Offences by Companies

Appellate Machinery- Revision & Appeal

Power of Board of Commissioner of Customs to pass orders- 129D Revision by Central Government 129DD Appeals to Commissioner 128 Appeals to Customs, Excise and Service Tax Appellate Tribunal (CESAT) 129A Appeal to High Court 130 Appeal to Supreme Court 130E