Customs Clearance of imported goods

Custom Authorities
Under the ministry of finance(Department of Revenue), there are two independent Boards of
revenue viz., Central Board of Direct Taxes (for Income Tax, Wealth Tax etc) and Central Board
of Excise and Customs(CBEC)
The customs administration vests in CBEC for implementing the provisions of the Customs
Act.1962. There are two main wings of Customs House. In the 'Appraisement' wing the job of
collection of revenue is assigned, while the 'Preventive' one aims at prevention of smuggling.
The board is headed by a Chairman and assisted by Members.
Central Board of Excise & Customs (CBEC) in the MoF
Under which operates:Customs Commissionerates of Mumbai, Calcutta, Chennai, Kandla,
Bangalore, Cochin, Delhi, Vizag, Goa and Tuticorin.
Directorate of Drawback
Field Level:Principal Commissioners Customs ,Commissioners,Addl. Commissioners ,Dy.
Commissioners,Asst. Commissioners,Port of clearance.

Customs Clearance of imported goods

Customs Authorities and the Clearing agents play the key role in the import of goods. All goods
imported into India have to pass through the procedure of Customs clearance as they cross Indian
border. The goods are examined, appraised, assessed, evaluated and then allowed to be taken out
of charge of the Customs for use by the importer. The entire process of customs clearance is
complex and to carry out this procedure smoothly, the help of accredited customs clearing agents
has to be taken.
The importers need to present a Bill of Entry on receipt of the advise of the arrival of the vessel.
The B/E is noted in Import Department, with corresponding endorsement made against the
consignment entry in the IGM (Import General Manifest) along with the date. The B/E will then
be presented in the Appraising Department with all the relevant documents like invoice, Bill of
Lading, Import license and catalogue literature. The appraising procedure may be of two types.
The First Check Procedure-Applicable only when appraisers/assessing group finds it difficult to
complete the assessment on the basis of the documents made available.
The Scrutinising Appraiser in the group gives the examination order. The goods are then
examined in the docks and the B/E rerutned to the Scrutinising Appraiser for completion and
license debit. In this case the Customs 'out of charge' is given by the Accounts Department soon
after the recovery of duty.
The Second Check Procedure-Under this 80 to 90 percent of the consignments are cleared.
If the documents are adequate for determining the classification, value, ITC license, the form is
completed by the Appraiser and then countersigned by The Assistant Collector. It is then
forwarded to the License Department for licensing debit and audit. Then it is returned to the
importers for payment of duty in the Accounts/Cash department. After recovery of duty the
original B/E is retained in the Accounts Department and the duplicate and other copies are
returned to the importer for getting the goods examined in the docks.
In the docks, the Shed Appraiser/Examiner shall examine the goods and if in order, shall give the
out of charge for taking delivery from the custodian of the goods viz. Port Trust, after payment
of Port Trust charges.
Irrespective of the procedure, examination of cargo for assessment purpose is chiefly the
function of the Appraising Department having special staff of examiners in the docks/Air cargo
shed. The records of the examination and weighment should be declared, attested and dated at
the time of the examination. If the examination spreads over more than one day, the result on
each day's progress should be disclosed.
These apart some of the Customs house in India have introduced the simplified computer
procedure for speedy clearance of consignment through B/E.

Classification of Customs tariff

The basic legislation is the Indian Customs Act, 1962 read with Customs Tariff Act, 1975.
Section 12 of the Customs Act,'62 empowers levy of duties on goods imported into or exported
from India.
However, the rates at which the different import export duties shall be leviable have been
respectively specified in the First and Second Schedule to the Customs Tariff Act, 1975-called
the import Tariff and Export Tariff respectively.
With effect from Feb. 28, 1986, the new tariff import schedule based on international convention
of Harmonised Commodity and Coding system, commonly known as Harmonised Coding
System came into being. The basic features of the Import Tariff
Mode of Levy of Customs duties:-
Customs duties are levied in three ways-
• Specific rate - at the rate prescribed per unit of item i.e. weight or number of length;
• Ad-valorem duty - levied on the value of the item;
• Specific and advalorem - levied in both ways.
Types & Levy of Customs duties:-
• Basic duty: all goods imported into India are chargeable to duty as prescribed in the 1st
Schedule of Customs Tariff Act. This Schedule is amended from time to time of Customs
Tariff Act. This duty can be levied either as a percentage of value of goods or at a
specified rate.
• Surcharge: It is levied at the rate of 10% of the basic rate on all commodities except
crude oil and petroleum products, GATT-bound items, gold and silver.
• Additional Duty: Also known as countervailing duty, is levied on the cost of imported
goods and is equal to excise duty levied on like goods when manufactured in India. The
objective is to ensure that the protection provided by the import duty to domestic industry
is not eroded.
• Special Additional Duty: It is levied at the rate of 4%. Anti-dumping Duty: This is levied
on specified goods imported from specified countries to protect indigenous industry from
injury resulting from USA, Korea and so on.
Customs Duty Assessment: The assessment of goods to duty is done on the basis Whether the
goods covered by the B/E are such as are regularly imported, or are required to be tested by the
customs house laboratory for fulfilment of license conditions, or The appeaiser desires to see the
representative sample before completing the bill of entry for the purpose of verification of the
value/description, etc. or The required document is not forthcoming.
Customs Duty Rates: When the import invoice is in any currency other than Indian rupees,
customs fix the exchange rate for conversion into the Indian rupees at a predetermined rate
which is published in customs houses on a daily basis.
Imports from specified countries enjoy preferential duty. This is generally the result of special
status accepted under bilateral trade agreements or otherwise. However, the incidence of customs
duties on various goods imported are obtained as follows:
Total duty payable=(Landed cost including CIF of the item concerned + Basic customs duty
under the Customs Tariff Act + Surcharge thereon + Additional duty + Special Additional duty
as per Finance Act).
Example:-
Landed cost including CIF of Hinges of Brass Rs. 1, 00,000
Basic customs duty under the Customs Tariff Act, say 30% Rs.30, 000
Rs. 1, 30,000
+ Additional duty as per Finance Act, say 16% Rs. 20,800
Rs.1, 50,800
+Special Additional Duty @4% Rs. 6,032
Rs. 1, 56,832
Total duty payable = 1, 56,832 - 1, 00, 00 i.e., Rs. 56,832

Getting Import License checked-The appraising official checks the license for their description,
value, validity period, importers name, etc. It is for the importer to establish that the goods
satisfied the description in the license unless he is able to establish the fact he would not be
entitled to lawful import thereof. If the appraising official is satisfied that the license is in order,
he will send the license with B/E to license section for registration and audit. The department
maintains a register for every license accepted and debited showing the last balance on the
license.
The importer is likely to know the term of license, the type of goods and whether they can be
lawfully imported as per the terms of the license. In case there is any error on the part of the
appraising authority then possession of even a valid license will not confer any right upon the
importers to import such goods again on the basis of similar licenses.
Bill of Entry-
This is a document on the strength of which clearance of imported goods can be effected. Its
form has been standardised by the Central Board of Excise and Customs. All goods discharrged
from a vessel, from foreign or coastal Ports, are cleared on this prescribed forms presented under
the B/E Regulations, 1971.
Types of Bill of Entry:
1. Goods entered for home consumption are cleared on ‘White’ Bill of Entry.
2. Goods entered for warehousing are removed into bond on ‘Into Bond’ Bill of Entry
(Yellow Bill of Entry)
3. Goods cleared ex-bond for home consumption on payment of duty on ‘Ex-Bond’ Bill of
Entry (Green Bill of Entry)
It should be presented for 'noting' in the import dept. of the customs house after the import
General Manifest which gives a detailed description item wise of the goods brought by the
concerned vessel is filed by the steamer Agent.