UNIVERSITY OF PETROLEUM & ENERGY STUDIES

SCHOOL OF LAW

B.COM LLB (HONS.)

SEMESTER-VIII

ACADEMIC YEAR: 2019-2020 SESSIONS: FEBRUARY-MAY

CUSTOMS & GST II

ASSIGNMENT- 2

Submitted By:

Harshit Dhandhia (Batch-2)

SAP ID - 500055993

Roll No 106
Q.1. Explain the different kinds of Duties levied under the Customs Act.

The different kinds of duties under customs act are:

a) Basic Customs Duty:

Basic custom duty is the duty imposed on the value of the goods at a specific rate. The duty is
fixed at a specified rate of ad-valorem basis. This duty has been imposed from 1962 and was
amended from time to time and today is regulated by the Customs Tariff Act of 1975. The
Central Government has the right to exempt any goods from the tax.

b) Countervailing Duty (CVD):

This duty is imposed by the Central Government when a country is paying the subsidy to the
exporters who are exporting goods to India. This amount of duty is equivalent to the subsidy paid
by them. This duty is applicable under Sec 9 of the Customs Tariff Act.

c) Additional Customs Duty or Special CVD:

In order to equalize imports with locals taxes like service tax, VAT and other domestic taxes
which are imposed from time to time, a special countervailing duty is imposed on imported
goods. Hence, is imposed to bring imports on an equal track with the goods produced or
manufactured in India. This is to promote fair trade & competition practices irn our country.

d) Safeguard Duty:

In order to make sure that no harm is caused to the domestic industries of India, a safeguard duty
is imposed to safeguard the interest of our local domestic industries. It is calculated on the basis
of loss suffered by our local industries.

e) Anti Dumping Duty:

Often, large manufacturer from abroad may export goods at very low prices compared to prices
in the domestic market. Such dumping may be with intention to cripple domestic industry or to
dispose of their excess stock. This is called ‘dumping’. In order to avoid such dumping, Central
Government can impose, under section 9A of Customs Tariff Act, anti-dumping duty up to
margin of dumping on such articles, if the goods are being sold at less than its normal value.
Levy of such anti dumping duty is permissible as per WTO agreement. Anti dumping action can
be taken only when there is an Indian industry producing ‘like articles’.

f) National Calamity Contingent Duty:

This duty is imposed by Sec 129 of the Finance Act. The duty is levied on goods like tobacco,
pan masala or any items that are harmful for health. The rate of the tax varies from 10% to 45%
and different rates are applied for different reasons.

g) Protective Duties:

Tariff Commission has been established under Tariff Commission Act, 1951. If the Tariff
Commission recommends and Central Government is satisfied that immediate action is
necessary to protect interests of Indian industry, protective customs duty at the rate
recommended may be imposed under section 6 of Customs Tariff Act. The protective duty will
be valid till the date prescribed in the notification.

Q.2. State the provisions for ‘Clearance of goods for home consumption’ under the
Customs Law.

As per Section 47 of Customs Act, Clearance of Goods for Home Consumption means, Where
the proper officer is satisfied that any goods entered for home consumption are not prohibited
goods and the importer has paid the import duty, if any, assessed thereon and any charges
payable under this Act in respect of the same, the proper officer may make an order permitting
clearance of the goods for home consumption.

Where the importer fails to pay the import duty under sub-section (1) within two days, excluding
holidays the date on which the bill of entry is returned to him for payment of duty, he shall pay
interest at such rate, not below ten per cent and not exceeding thirty per cent per annum, as is for
the time being fixed by the Board, on such duty till the date of payment of the said duty:

Provided that where the bill of entry is returned for payment of duty before the commencement
of the Customs (Amendment) Act, 1991 and the importer has not paid such duty before such
commencement, the date of return of such bill of entry to him shall be deemed to be the date of
such commencement for the purpose of this section.
Provided further that if the Board is satisfied that it is necessary in the public interest so to do, it
may, by order for reasons to be recorded, waive the whole or part of any interest payable under
this section.

Q.3. Explain the Deductive Value Method for Computation of Transaction value in case of
Imported Goods.

As per Rule 7 of Customs the Deductive value is to be calculated in this way it states that -

(1) Subject to the provisions of rule 3, if the goods being valued or identical or similar imported
goods are sold in India, in the condition as imported at or about the time at which the declaration
for determination of value is presented, the value of imported goods shall be based on the unit
price at which the imported goods or identical or similar imported goods are sold in the greatest
aggregate quantity to persons who are not related to the sellers in India, subject to the following
deductions : -

i. either the commission usually paid or agreed to be paid or the additions usually made for
profits and general expenses in connection with sales in India of imported goods of the
same class or kind;
ii. the usual costs of transport and insurance and associated costs incurred within India;
iii. the customs duties and other taxes payable in India by reason of importation or sale of the
goods.

(2) If neither the imported goods nor identical nor similar imported goods are sold at or about
the same time of importation of the goods being valued, the value of imported goods shall,
subject otherwise to the provisions of sub-rule (1), be based on the unit price at which the
imported goods or identical or similar imported goods are sold in India, at the earliest date after
importation but before the expiry of ninety days after such importation.

(3) (a) If neither the imported goods nor identical nor similar imported goods are sold in India in
the condition as imported, then, the value shall be based on the unit price at which the imported
goods, after further processing, are sold in the greatest aggregate quantity to persons who are not
related to the seller in India.
(b) In such determination, due allowance shall be made for the value added by processing and
the deductions provided for in items (i) to (iii) of sub-rule (1)

.Q.4. Explain the Computed Value Method for Computation of Transaction value in case of
Imported Goods.

As per Rule 8 the value of imported goods shall be based on a computed value, which shall
consist of the sum of:-

a) the cost or value of materials and fabrication or other processing employed in producing
the imported goods;
b) an amount for profit and general expenses equal to that usually reflected in sales of goods
of the same class or kind as the goods being valued which are made by producers in the
country of exportation for export to India;
c) the cost or value of all other expenses under sub-rule (2) of rule 10

Q.5. State the rules regarding Determination of Transaction Value by Comparison in case
of export goods.

As per Rule 4, the value of the export goods shall be based on the transaction value of goods of
the kind and quality (means export goods which are identical or similar in physical
characteristics, quality and reputation as the goods being valued, and perform the same functions
or the commercially interchangeable with the goods being valued, produced by the same person
or a different person) exported at or about the same time to other buyers in the same destination
country of importation or in its absence another destination country of importation adjusted in
accordance with the following procedure:

The proper Officer shall make such adjustments as appear to him reasonable, taking into
consideration the relevant factors, including

 Difference in the dates of exportation;

 Difference in commercial levels and quantity levels;
 Difference in composition, quality and design between the goods to be assessed and the
goods with which they are being compared;
  Difference in domestic freight and insurance charges depending on the place of
exportation.

Q.6. Write a detailed note on Procedure for Import of cargo through Sea Route.

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

Q.7. Write a detailed note on Procedure for Export of cargo through Sea Route.

The detailed Customs Procedure for Export are:

Generation of Shipping Bills

In India custom clearance is a complex and time taking procedure that every export face in his
export business. Physical control is still the basis of custom clearance in India where each
consignment is manually examined in order to impose various types of export duties. High
import tariffs and multiplicity of exemptions and export promotion schemes also contribute in
complicating the documentation and procedures. So, a proper knowledge of the custom rules and
regulation becomes important for the exporter. For clearance of export goods, the exporter or
export agent has to undertake the following formalities:

Registration

Any exporter who wants to export his good need to obtain PAN based Business Identification
Number (BIN) from the Directorate General of Foreign Trade prior to filing of shipping bill for
clearance of export goods. The exporters must also register themselves to the authorised foreign
exchange dealer code and open a current account in the designated bank for credit of any
drawback incentive.
Registration in the case of export under export promotion schemes:

All the exporters intending to export under the export promotion scheme need to get their
licences / DEEC book etc.

Processing of Shipping Bill - Non-EDI:

In case of Non-EDI, the shipping bills or bills of export are required to be filled in the format as
prescribed in the Shipping Bill and Bill of Export (Form) regulations, 1991. An exporter need to
apply different forms of shipping bill/ bill of export for export of duty free goods, export of
dutiable goods and export under drawback etc.

Processing of Shipping Bill - EDI:

Under EDI System, declarations in prescribed format are to be filed through the Service Centers
of Customs. A checklist is generated for verification of data by the exporter/CHA. After
verification, the data is submitted to the System by the Service Center operator and the System
generates a Shipping Bill Number, which is endorsed on the printed checklist and returned to the
exporter/CHA. For export items which are subject to export cess, the TR-6 challans for cess is
printed and given by the Service Center to the exporter/CHA immediately after submission of
shipping bill. The cess can be paid on the strength of the challan at the designated bank. No copy
of shipping bill is made available to exporter/CHA at this stage.

Quota Allocation

The quota allocation label is required to be pasted on the export invoice. The allocation number
of AEPC (Apparel Export Promotion Council) is to be entered in the system at the time of
shipping bill entry. The quota certification of export invoice needs to be submitted to Customs
along-with other original documents at the time of examination of the export cargo. For
determining the validity date of the quota, the relevant date needs to be the date on which the full
consignment is presented to the Customs for examination and duly recorded in the Computer
System.

Arrival of Goods at Docks:

On the basis of examination and inspection goods are allowed enter into the Dock. At this stage
the port authorities check the quantity of the goods with the documents.

System Appraisal of Shipping Bills:

In most of the cases, a Shipping Bill is processed by the system on the basis of declarations made
by the exporters without any human intervention. Sometimes the Shipping Bill is also processed
on screen by the Customs Officer.

Customs Examination of Export Cargo:

Customs Officer may verify the quantity of the goods actually received and enter into the system
and thereafter mark the Electronic Shipping Bill and also hand over all original documents to the
Dock Appraiser of the Dock who many assign a Customs Officer for the examination and
intimate the officers’ name and the packages to be examined, if any, on the check list and return
it to the exporter or his agent.

The Customs Officer may inspect/examine the shipment along with the Dock Appraiser. The
Customs Officer enters the examination report in the system. He then marks the Electronic Bill
along with all original documents and check list to the Dock Appraiser. If the Dock Appraiser is
satisfied that the particulars entered in the system conform to the description given in the original
documents and as seen in the physical examination, he may proceed to allow "let export" for the
shipment and inform the exporter or his agent.

Stuffing / Loading of Goods in Containers:

The exporter or export agent hand over the exporter’s copy of the shipping bill signed by the
Appraiser “Let Export" to the steamer agent. The agent then approaches the proper officer for
allowing the shipment. The Customs Preventive Officer supervising the loading of container and
general cargo in to the vessel may give "Shipped on Board" approval on the exporter’s copy of
the shipping bill.

Drawal of Samples:

Where the Appraiser Dock (export) orders for samples to be drawn and tested, the Customs
Officer may proceed to draw two samples from the consignment and enter the particulars thereof
along with details of the testing agency in the ICES/E system. There is no separate register for
recording dates of samples drawn. Three copies of the test memo are prepared by the Customs
Officer and are signed by the Customs Officer and Appraising Officer on behalf of Customs and
the exporter or his agent. The disposal of the three copies of the test memo is as follows:-

Original – to be sent along with the sample to the test agency.

Duplicate – Customs copy to be retained with the 2nd sample.

Triplicate – Exporter’s copy.

The Assistant Commissioner/Deputy Commissioner if he considers necessary, may also order for
sample to be drawn for purpose other than testing such as visual inspection and verification of
description, market value inquiry, etc.

Amendments:

Any correction/amendments in the check list generated after filing of declaration can be made at
the service center, if the documents have not yet been submitted in the system and the shipping
bill number has not been generated. In situations, where corrections are required to be made after
the generation of the shipping bill number or after the goods have been brought into the Export
Dock, amendments is carried out in the following manners.

The goods have not yet been allowed "let export" amendments may be permitted by the Assistant
Commissioner (Exports).

Where the "Let Export" order has already been given, amendments may be permitted only by the
Additional/Joint Commissioner, Custom House, in charge of export section.

In both the cases, after the permission for amendments has been granted, the Assistant
Commissioner / Deputy Commissioner (Export) may approve the amendments on the system on
behalf of the Additional /Joint Commissioner. Where the print out of the Shipping Bill has
already been generated, the exporter may first surrender all copies of the shipping bill to the
Dock Appraiser for cancellation before amendment is approved on the system.

Export of Goods under Claim for Drawback:

After actual export of the goods, the Drawback claim is processed through EDI system by the
officers of Drawback Branch on first come first served basis without feeling any separate form.

Generation of Shipping Bills:

The Shipping Bill is generated by the system in two copies- one as Custom copy and one as
exporter copy. Both the copies are then signed by the Custom officer and the Custom House
Agent.

Q.8. State the provisions regarding Goods Imported or to be Exported by Post.

As per Section 83 of Customs Act, 1962 : Rate of duty and tariff valuation in respect of goods
imported or exported by post :

The rate of duty and tariff value, if any, applicable to any goods imported by post shall be the
rate and valuation in force on the date on which the postal authorities present to the proper
officer a list containing the particulars of such goods for the purpose of assessing the duty
thereon :

Provided that if such goods are imported by a vessel and the list of the goods containing the
particulars was presented before the date of the arrival of the vessel, it shall be deemed to have
been presented on the date of such arrival.

The rate of duty and tariff value, if any, applicable to any goods exported by post shall be the
rate and valuation in force on the date on which the exporter delivers such goods to the postal
authorities for exportation.

As per Section 84 of Customs Act, 1962 Regulations regarding goods imported or to be exported
by post. - The Board may make regulations providing for –

a) the form and manner in which an entry may be made in respect of goods imported or to
be exported by post;
b) the examination, assessment to duty, and clearance of goods imported or to be exported
by post;
c) the transit or transhipment of goods imported by post, from one customs station to
another or to a place outside India.
Q.9. Determine the customs duty payable including the safeguard duty of 20% under
section 8B of the said Act with the following details given below: Import of Sodium N from
a developing country from 25th September, 2016 to 24th September, 2017 (both days
inclusive)- Rs. 80,00,000

Share of imports of Sodium N from the developing country against total imports of Sodium
N to India - 4%

Basic Customs Duty - 10%

IGST payable on such goods in India - 18%

Education Cess - 2%

Secondary & Higher Education Cess - 1%

Q.10. Write short notes on the following:

a) FOB and CIF - FOB means the cost of delivering the goods to the nearest port is
included but YOU, as the buyer, are responsible for the shipping from there and all other
fees associated with getting the goods to your country/address.
CIF – Cost, Insurance and Freight. In this case, the price also includes sea freight charges
and insurance to deliver the goods to YOUR nearest port. But only to port – from that
point onwards, you take the shipment into your hands.
b) Differences between transit and transshipment - Transhipment is the act of off-loading
a container from one ship (generally at a hub port) and loading it onto another ship to be
further carried to the final port of discharge. Cargoes that have been off-loaded at a port
for transhipment are NOT allowed to exit the port by land or rail across international
borders to a land locked country unless they are declared as Cargo in Transit.
Whereas, Transit is the movement of cargo that is discharged at a gateway seaport or
originating from a country within a union across international borders to another country
where the final destination is (generally) a landlocked country.
c) Anti-dumping duty - Often, large manufacturer from abroad may export goods at very
low prices compared to prices in the domestic market. Such dumping may be with
intention to cripple domestic industry or to dispose of their excess stock. This is called
 ‘dumping’. In order to avoid such dumping, Central Government can impose, under
section 9A of Customs Tariff Act, anti-dumping duty up to margin of dumping on such
articles, if the goods are being sold at less than its normal value. Levy of such anti
dumping duty is permissible as per WTO agreement. Anti dumping action can be taken
only when there is an Indian industry producing ‘like articles’.
d) Duty Drawback - The term drawback is applied to a certain amount of duties of
Customs/central excise, sometimes the whole, sometimes only a part remitted or paid by
Government on the exportation of the commodities on which they were levied. To entitle
goods to drawback, they must be exported to a foreign port, the object of the relief
afforded by the Drawback being to enable the goods to be disposed of in the foreign
market as if they had never been taxed at all. There are two types of drawback:
1. One is called drawback under Section 74 of the Customs Act, 1962 which allows
drawback of duty paid on goods originally imported on payment of duty and
subsequently re-exported.
2. The other scheme is payment of drawback under Section 75 and Rules made
thereunder at specified rated on export of goods manufactured in India. The manner
and time limit for filing the claims are prescribed under the Customs and Central
Excise Duties Drawback Rules 1995 as amended from time to time.
The Central government notifies the Drawback rates for various products either on a
general basis (all industry rates) or for individual exporters( brand rates) as the case may
be. Drawback sanctioned under section 75 has a two tier system involving (i) fixation of
rates by the Directorate of Drawback in the Central Board of Excise and Customs and (ii)
disbursement of drawback amount by the Customs Houses and/ Central Excise
Commissionerate
e) Duty on Pilfered Goods - Section 13 states that, If any imported goods are pilfered after
the unloading thereof and before the proper officer has made an order for clearance for
home consumption or deposit in a warehouse, the importer shall not be liable to pay the
duty leviable on such goods except where such goods are restored to the importer after
pilferage.
f) Derelict - It is a property whether a ship vessel cargo are been abandoned at the sea by
those who are in charge of it without hope or intention of returning to it.
g) Jetsam - This refers to good jettisoned from the vessel to saver her from sinking jetsam
has been voluntarily cast into sea by crew of a ship in order to lighten it during the state
of emergency.
h) Flotsam - Jettisoned goods which are floating in the sea are called flotsam.
i) Wreck - This refers to cargo or vessel or any property which are cast ashore by tides
after ship wreck.