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PRESENTATION PRESENTATION
ON ON
The Customs Act, 1962, AndThe Customs Act, 1962, And
The Customs Tariff Act, 1975The Customs Tariff Act, 1975
Presented By
Mr. Suresh S Bhalerao
12.09.2009
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Concept:
It was an ancient Custom that whenever a merchant
entered a Kingdom with his merchandise, he had to
make a suitable offering of gifts to the king. In
course of time, the modern state formalized this
custom into customs duty which the states collect
on goods Imported.
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Structure of the Act.
Customs Act is divided into 17 Chapters.
Which all together consists of 161 Sections.
Customs Tariff Act is divided in to 7 parts.
This provides rate of customs duty applicable.
Rates are given in the First & Second Schedule of the Act.
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Customs Administrative set up
Chief Commissioner, Customs & Central Excise (Head of Zone)
Commissioner (Head of Department)
Additional/Joint Commissioner (Administrative Head of Divisions)
Deputy/ Assistant Commissioner (Head of Division)
Superintendent (Range Officer)
Inspector (Sector Officer)
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Types of Custom Duty Leviable :
1) Basic Duty: it may be at the standard rate or in the case of
Import from some countries, at a preferential rate.
2) Additional Customs Duty (CVD): it is equal to central
Excise Duty is leviable on like goods produced or manufactured
in India.
3) Special Additional Duty (SAD) of Custom: Additional
Duty of Custom not exceeding 4% was levied U/s 3(5) of Custom
Tariff Act, 1975, in the budget 2005, in order to counter balance
various internal taxes like Sales tax & VAT to provide a level
playing field to indigenous goods, which have to bear these
taxes.
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Types of Custom Duty Leviable :
4) Additional Duty of Custom: is leviable at the rate of Rs. 2 per liter on imported petrol & high-speed diesel oil.
5) National Calamity Contingent Duty: it is Imposed at present @ Rs. 50 per MT on imported crude oil & 1% on mobile phones, two-wheelers, Motor Cars & MUVs
6) Anti Dumping DutyWhere any article is exported from any country or territory to India at less than its normal value then upon the importation of such article to India the central Govt. may by notification in the official gazette impose an anti dumping duty not exceeding the margin of dumping in relation to such article. For purpose of identification, assessment and collection of Anti Dumping Duty on dumped articles and for determination of injury, the Govt. has appointed Additional Secretary to the Govt. of India Ministry of Commerce as designated Authority for purpose of above rules.
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It is to be understood that imposition of Anti Dumping Duty is based on Commodity to Commodity, country to country and suppliers in Exporting countries.
e.g. Ferro Silicon – Ukraine
Seamless Tubes/ Pipes – Austria, Russia, Romania, Ukraine.
7) Education Cess / Secondary & Higher Education Cess: Education Cess @2% & further Secondary & Higher Education cess @1% of aggregate duties of Customs (including CVD) is leviable
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Loading & Unloading of Goods:
An incoming ship or aircraft has to submit before arrival an application for entry inwards and an import manifest called Import General Manifest (IGM) listing the goods to be unloaded.
Similarly an Export Manifest called EGM shall be filed before the departure of the vessel.
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Transshipment of Containers from gateway ports to ICDs/CFSs and consolidation of cargo:
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Tips for Expeditious Clearance of Goods:
Filing of Bill of Entry up to 30 days in Advance
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Exchange Rate:
Rate of exchange applicable will be the rate prevailing on the date of submission of bill of entry.
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Assessment:
The work of examination of goods (usually done on percentage basis), classification, valuation, checking from import license point of view & assessment of duty is attended to in Custom House by Appraisers & Examiners of Customs.
The Work is divided among different commodity group on functional basis & each group is placed under the charge of an Assistant Commissioner.
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Documents required to be Submitted By Importer for Clearance of Goods:
Bill of Entry
Invoice & Packing List
Import License, wherever necessary
Country of Origin Certificate, (where preferential rate is claimed).
Insurance memo/policy
Bill of Lading (BL)
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Documents required to be Submitted By Exporter for Clearance of Goods:
Shipping Bill
Invoice & Packing List
Export License, if Required
Export Inspection Agency’s Certificate, where necessary
GRI Form (not required in respect of goods exported does not exceed USD 25000 or its equivalent)
ARE 1 form of Central Excise
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Examination of Goods:
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Provisional Assessment:
Goods required to be tested or
Dispute regarding
1) Valuation
2) Classification
3) Import License etc.
Testing of Samples:
e.g. import of Textile items.
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Export Oriented Units (EOUs)
Export Oriented Units (EOUs) are set up under the provisions of Foreign Trade Policy, but in view of their location in India, of they procure their inputs/capital goods from Domestic Tariff Area, all Excise formalities will have to be followed including Registration. They are also allowed to take CENVAT Credit and clear the goods to Domestic Tariff Area on payment of appropriate amount of Excise Duty and submit a monthly return ER-2.
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Special Economic Zone (SEZ)
This is a latest concept coined by Ministry of Commerce and for the purpose of Trade, SEZ will be treated as a unit located outside India and any supplies made to SEZ will be treated as exports. Any supplies received by DTA is treated as imports and a Separate Act, viz. Special Economic Zones Act, 2005 and Special Economic Zones Rules, 2006 contain the procedural aspects pertaining to functioning and administration of SEZs.
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Effect of Treaty with other countries , on Custom Duty .
In case if we have treaty with other countries, we can import goods at a concessional rate of duty, or even without payment of duty !
e.g. India has treaty with Nepal & because of which we can import goods from Nepal at Zero rate of Duty.
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Some of the important schemes under Customs , promoted by DGFT .
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What is DEPB scheme?
Duty entitlement pass book scheme (DEPB) was introduced by the EXIM policy 1997-2002 for duty free imports. This apart the Quantity based advance license scheme (QABAL) introduced in the policy 92-97 continues to be available.
The idea is to compensate the exporter for the duty paid by him on the inputs used for manufacturing the goods exported by him,
In other words, exporters can claim DEPB credit based on the goods exported by them. This credit can be set-off against any customs duty payable by them on any goods imported by them. Otherwise, they can sell this credit in the market to interested importers and make money.
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DEPB
The DEPB duty credit rates under the scheme have been specified by the central government. This is done by taking into account the deemed import content of the goods exported as per certain standard input – output norms and determining the basic customs duty and surcharge payable on such deemed imports. The rates are expressed as a % of f.o.b value of exports in freely convertible currency.
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TARGET PLUS SCHEME
OBJECTIVE
The object of the scheme is to accelerate growth in exports by rewarding Star Export Houses who have achieved the quantum growth in exports. High performing Star Export Houses shall be entitled for a duty credit based on incremental exports substantially higher than the general annual export target fixed (since the target fixed for 2004-05 was 16%, the lower limit of performance for qualifying for rewards was pegged at 20% for the subsequent year.)
Eligibility Criteria
All Star Export Houses ( Including Status Holders as defined in EXIM Policy 2002-07) which have achieved a minimum export turnover in free foreign exchange of Rs. 10 Crores in the previous licensing year are eligible for consideration under Target Plus Scheme.
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TARGET PLUS SCHEME - Entitlement
The entitlement under this scheme would be contingent on the percentage incremental growth in FOB value of export in the current year over the previous year, as under :
% Incremental Growth Duty Credit Entitlement. (as a % of the incremental growth)
20% < >25% 5%
25% < >100% 10%
100% & above 15% (of 100%)
Note: (1) Incremental growth beyond 100% will not qualify for computation of duty credit entitlement. (2) Not Transferable (3) All exports including exports under free shipping bill verified and authenticated by customs but excluding exports specified shall be eligible for the benefits under the Target Plus Scheme.
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- EPCG (Export Promotion Capital Goods)
o The scheme allows import of capital goods at 3% custom duty subject to an export obligation equivalent to 8 times of duty saved on capital goods imported under EPCG Scheme to be fulfilled over a period of 8 years from the date of issuance of license.
o Capital Goods would be allowed at 0% duty for exporters of agriculture products.
o If duty saved is Rs. 100 crores or more the obligation shall be fulfilled over a period of 12 years.
o Second hand capital goods without any restriction on age may also be imported under the EPCG Scheme.
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EPCG
o Spares, tools, refractories, catalyst and consumable for the existing and new plant and machinery may also be imported under the EPCG scheme .
o However, import of motor cars, sports utility vehicles/ all purpose vehicles shall be allowed only to hotels, travel agents, tour operators or tour transport operators whose total foreign exchange earning in current and preceding three licensing years is Rs 1.5 crores. However, the parts of motor cars, sports utility vehicles/ all purpose vehicles such as chassis etc cannot be imported under the EPCG Scheme.
o Import of capital goods shall be subject to Actual User condition till the export obligation is completed.
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Status Category
The Applicant shall be Categorized depending on his total FOB performance during the previous 3 years.
Category Performance In Rs.
One Star Export House 15 Crores
Two Star Export House 100 Crores
Three Star Export House 500 Crores
Four Star Export House 1500 Crores
Five Star Export House 5000 Crores
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Privileges Available for Star Houses -
1) License/Certificate/permissions and customs clearances for both imports & Exports on Self Declaration basis,
2) Fixation of Input-Output norms on priority within 60 days,
3) Exemption from compulsory negotiation of documents through banks. The remittance, however, would continue to be received through banking channels,
4) 100 % retention of foreign exchange in EEFC Account,
5) Enhancement in norms repatriation period from 180 days to 360 days,
6)Entitlement for consideration under the Target Plus Scheme,
7) Exemption from furnishing of Bank Guarantee in Schemes under this Policy.
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- Different Agencies Involved in Exports
o CHA (Clearing House Agent)
o Transporter- By Lorry / Rail
o Forwarder
o Shipping Line
o Fumigation Agency
o Bank
o Insurance Company
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Different Agencies Involved in Imports
o CHA (Clearing House Agent)
o Transporter- By Lorry / Rail
o Forwarder
o Shipping Line
o Bank
o Insurance Company
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Warehouse For Export Goods
o This concept started in the new millennium to encourage exports of goods from India. Now the entire procedure of export warehousing along with conditions and procedures is laid down in Board circular No. 581/18/2001-CX dtd 29.06.2001, as amended by circular No. 852/10/2007-CX dtd 31.05.2007
the important features of export warehouse concept are contained in the above referred circular & Notification No. 46/2001(NT) dtd. 26.06.2001 which specifies that warehousing procedure under Rule 20 of Central Excise Rules, 2002 is extended for removal of any excisable goods from the factory or approved premises without payment of duty for storage and the export therefrom by following the provisions of Rule 19 by exporters.
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THANK YOU
