PRESENTATION

ON

The Customs Act, 1962, And

The 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 Duty
Where 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

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