Custom Duty & Custom Clearance
Custom Import Duty on Importing Goods
• Introduction
• Import through Sea
• Basic duty
• Additional customs
• Special additional duty
• Anti-Dumping Duty
Introduction
The concept of import duty is very wide and is almost applicable to every product or item imported to India barring a few goods like food grains, fertilizer, life saving drugs and equipment etc. Import duties form a significant source of revenue for the country and are levied on the goods and at the rates specified in the Schedules to the Customs Tariff Act, 1975.
Import through Sea
Territorial water extends up to 12 nautical miles into the sea from the coast of India and so the liability to pay import duty commences as soon as goods enter the territorial waters of India. No duty is livable on goods which are in transit in the same ship or if goods are in transit from one ship to another.
Basic duty
Basic Duty is a type of duty or tax imposed under the Customs Act (1962). Basic Customs Duty varies for different items from 5% to 40%. The duty rates are mentioned in the First Schedule of the Customs Tariff Act, 1975 and have been amended from time to time under the Finance Act. The duty may be fixed on ad –valorem basis or specific rate basis. The Central Government has the power to reduce or exempt any good from these duties.
Additional customs
Additional duty also known as countervailing duty or C.V.D is equal to excise duty imposed on a like product manufactured or produced in India. It is implemented under the Section 3 (1) of the Indian Custom Tariff Act. The Government has exempted all goods, when imported into India for subsequent sale, from the whole of the additional duty of customs leviable thereon under Sub-Section (5) of Section 3 of the Customs Tariff Act vide Customs Tariff Notification No. 102/2007 dated 14th September 2007. However, the importers will be first required to pay the said duty and thereafter required to claim the refund.
Special additional duty
Special Additional Duty of Customs is imposed at the rate of 4% in order to provide a level playing field to indigenous goods which have to bear sales tax. This duty is to computed on the aggregate of –
• assessable value
• basic duty of Customs
• surcharge and
• additional duty of Customs leviable under section 3 of the Customs Tariff Act, 1975 (c.v.d.)
Anti-Dumping Duty
Dumping means exporting goods in a foreign market at a price which is less than their cost of production or below their "fair" market value. Dumping gives a hard competition to a domestic goods manufacturer. So, to counteract this dumping, the Indian government has formulated certain guidelines and policies. Imposing duty on imported goods is also one of them and is known as Anti-Dumping Duty.
All the laws related to anti-dumping duties are mention in the sections 9A, 9B and 9C of the Indian Customs Tariff Act (1975), and the Indian Customs Tariff Rules (1995). These laws are based on the Agreement on Anti-Dumping which is in pursuance of Article VI of GATT 1994.
Custom Clearance of Imported Goods
• Introduction
• Bill of Entry
• Amendment of Bill of Entry
• Green Channel facility
• Payment of Duty
• Prior Entry for Shipping Bill or Bill of Entry
• Specialized Schemes
• Bill of Entry for Bond/Warehousing
Introduction
All goods imported into India have to pass through the procedure of customs for proper examination, appraisal, assessment and evaluation. This helps the custom authorities to charge the proper tax and also check the goods against the illegal import. Also it is important to note that no import is allowed in India if the importer doesn’t have the IEC number issued by the DFGT. There is no requirement of IEC number if the goods are imported for the personal use.
Bill of Entry
A Bill of Entry also known as Shipment Bill is a statement of the nature and value of goods to be imported or exported, prepared by the shipper and presented to a customhouse. The importer clearing the goods for domestic consumption has to file bill of entry in four copies; original and duplicate are meant for customs, third copy for the importer and the fourth copy is meant for the bank for making remittances.
If the goods are cleared through the EDI system, no formal Bill of Entry is filed as it is generated in the computer system, but the importer is required to file a cargo declaration having prescribed particulars required for processing of the entry for customs clearance.
In the non-EDI system along with the bill of entry filed by the importer or his representative the following documents are also generally required:-
• Signed invoice
• Packing list
• Bill of Lading or Delivery Order / Airway Bill
• GATT declaration form duly filled in
• Importers / CHA’s declaration
• License wherever necessary
• Letter of Credit / Bank Draft / wherever necessary
• Insurance document
• Import license
• Industrial License, if required
• Test report in case of chemicals
• Adhoc exemption order
• DEEC Book / DEPB in original
• Catalogue, Technical write up, Literature in case of machineries, spares or chemicals as may be applicable
• Separately split up value of spares, components machineries
• Certificate of Origin, if preferential rate of duty is claimed
• No Commission declaration
Amendment of Bill of Entry
Whenever mistakes are noticed after submission of documents, amendments to the bill of entry is carried out with the approval of Deputy/Assistant Commissioner.
Green Channel facility
Some major importers have been given the green channel clearance facility. It means clearance of goods is done without routine examination of the goods. They have to make a declaration in the declaration form at the time of filing of bill of entry. The appraisement is done as per normal procedure except that there would be no physical examination of the goods.
Payment of Duty
Import duty may be paid in the designated banks or through TR-6 challans. Different Custom Houses have authorised different banks for payment of duty and is necessary to check the name of the bank and the branch before depositing the duty.
Prior Entry for Shipping Bill or Bill of Entry
For faster clearance of the goods, provision has been made in section 46 of the Act, to allow filing of bill of entry prior to arrival of goods. This bill of entry is valid if vessel/aircraft carrying the goods arrive within 30 days from the date of presentation of bill of entry.
Specialized Schemes
Import of goods under specialized scheme such as DEEC and EOU etc is required to execute bonds with the custom authorities. In case failure of bond, importer is required to pay the duty livable on those goods. The amount of bond would be equal to the amount of duty livable on the imported goods. The bank guarantee is also required along with the bond. However, the amount of bank guarantee depends upon the status of the importer like Super Star Trading House/Trading House etc.
Bill of Entry for Bond / Warehousing
A separate form of bill of entry is used for clearance of goods for warehousing. Assessment of this bill of entry is done in the same manner as the normal bill of entry and then the duty payable is determined.
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