Cus

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Pro
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Power to Levy
As per

Entry 83 -list I of Indian

Constitution
Customs duty is an indirect tax and
levied on import into India and
export out of India

Customs is Governed by

Customs Act
Customs tariff Act
Customs Rules
Notification & Circulars
Customs manual

Customs Act, 1962

to regulate imports and exports
To protect Indian Industry from dumping
To collect revenue

Customs Tariff Act, 1975

Consists

of Two Schedules
Sch I for import & Sch II for Export

Some Important Definition

Goods :- includes
Vessels, aircrafts & vehicles
Stores , baggage , currency and negotiable
instruments and other kinds of movable properties

Dutiable Goods:- goods on which duty payable

before custom clearance. Following is not dutiable
goods
If any goods assessed at Nil
If duty rate is free

Some Important Definition

Imported Goods:- goods brought in India from a
place outside India.
Export Goods: Any goods which are to be taken out of India to
a place outside India
Goods at port for export purpose export goods
Crossing of territorial water by goods result in to
loss of control by India law so Indian provisions
cannot confiscate the same

Duty Levied
Basic customs duty u/s 12
Additional customs duty Counter balance the
excise duty
Special Additional Duty Counter balance the
VAT
Productive duty
Safeguard duty
Anti Dumping duty
Cess

Example
Goods Value = 200000, Basic Customs Duty= 10%,
Additional Duty = 8%, CVD = 4%, Educational Cess
Payable, Calculate the duty
Answer:
A

Value

Basic duty 10%

Additional duty 8% on (A+B)

Cess for AD (2+1) 3% on C

Cess (2+1) 3% on (B+C+D)

1144

CVD 4% on (A+B+C+D+E)

9571

Total duty payable

200000
20000
17600
528

18128

48843

Classification
The Customs Tariff Act, 1975

First Schedule

Liable to import duty

Second Schedule

Liable to export duty

Specific
duty

Ad
valorem

Valuation

Value of Imported good

Rule 3(1)- Value shall be the
transaction Value of Imported
goods adjusted with rule 10 (sub
to Rule 12)

Rule 3(2) Transaction Value is

acceptable if
1.There are no restriction to use
2.No condition on Sale or price
3. No benefit to seller after sale
4.Buyer & Seller Not Related

Rule 3(3) Even where the buyer &

seller are related the transaction
value is accepted if the relationship
did not influence the price
Rule 3(4)Transaction Value
is not Accepted

Value of Imported good

Rule 4 Transaction
Value Of Identical
goods

Rule 5 Transaction
Value Of Similar goods

Rule 6 Value not

determined in Rule3,4
& 5 Go rule 7 or 8

-Goods

Same in all respect including

physical Characteristics, quality and
reputation (except minor difference
that do not affect the Value)
-Should be produced the country in
which the goods being imported
-should be produced by the same
manufacturer
-Difference in Quantity/ Commercial
factors to be adjusted

Value of Imported good

Rule 7
Deductive value

Rule 8
Computed Value

Re-Sale price in India, Deductions for

commission, transport, insurance and
associated costs in India, duties and taxes
on import / sale. Where there is
manufacture and sale, deduction for
value addition shall be given. Sale must
happen within 90 days
Value shall consist of the sum of
(a)cost or value of materials and
fabrication or other processing
employed in producing the imported
goods.
(b) profit and general expenses in respect
of goods of same class.
(c) transportation, loading and insurance

Value of Imported good

RULE 9 RESIDUAL METHOD
Where value cannot be determined under the preceding rules, it shall
be determined using reasonable means consistently the principles and
general provisions of these rules and on the basis of data available.
RULE 10 COST AND SERVICES
Shall be added to price paid or payable
-Commissions and brokerage other than buying commission
- Cost of packing
- Cost of containers Goods and services supplied free of costs by the
buyer or at a concessional rate.
-Royalties & License fees
-Cost of transport, Loading, unloading and handling charges &
Insurance

Value of Exported good

Format similar to that of import valuation rules
Rule 2 provides definition for Goods of like kind and quality
Transaction Value and Related Persons.
Rule 3 Transaction Value Method subject to Rule 8 (Rejection
of Declared Value)
Rule 4, 5 & 6 are alternative methods of valuation.
Rule 4 - Comparison Method - Main Elements.
Comparison with Transaction Value of goods of like kind and
quality.
Exported at or about the same time.
To other buyer in same destination country.
To other buyer in another destination subject to certain
adjustments

Value of Exported good

Rule 5 - Computed Value Method
Cost of Production / processing.
Charge for the Design or Brand & Profit
Rule 6 - Residual Method using reasonable means
Rule 7 - Format of Declaration.
Rule 8 - Rejection of Declared Value.
Counterpart of Rule 10A.

Relevant Date for Rate & Valuation

Goods Entered for Home Consumption under 46
On the Date on which the Bill of entry for home
consumption is presented
Goods cleared for warehouse under Section 68
On the Date on which the Bill of entry for home
consumption is presented
Other Cases
On the date of payment of Duty

Relevant Date for Rate & Valuation

Goods Entered for Export Section 50
Date on permitting the clearance & Loading of Goods
Clearance of baggage Section 78
Date on which the declaration is made in respect of
such baggage u/s 77
Import Through Post Section 83
Date on which the postal authorities present to the
customs

Relevant Date for Rate & Valuation

Foreign Exchange Rate

Rate of Exchange notified by CBEC

Export Procedures
An

export of a good occurs when there is a change of

ownership

exporter

has to submit shipping bill for export by

sea or air and bill of export for export by road.
Relevant documents i.e. copies of packing list,
invoices, export contract, letter of credit etc. are
also to be submitted.

Export Procedures
DECLARATION
Declaration in

case of export of goods under claim

for drawback.
Declaration in

case of export of goods under

scheme.
Declaration in

case of export of goods in

anticipation of issue of advance license.

Export Procedures
DOCUMENTS
- Four copies of commercial invoice.
- Four copies of packing list.
- Certificate of origin.
- Insurance policy
- Letter of credit.
- Declaration of value.
- GR/SDF form prescribed by RBI in duplicate

Export Procedures
BILL OF LADING
- As a document of title, it is a certificate of
ownership that allows a holder or consignee
to claim the merchandise described.
- As a receipt of goods, it is issued by the
carrier to the shipper for goods entrusted to
the carriers care for transportation.

Import Procedures

Goods are imported in India through sea,

air or land.
Goods can come through post parcel or as
baggage with passengers.

Import Procedures
IMPORT PROCEDURE :
Introduction
Bill of Entry
Amendment of Bill of Entry
Payment of Duty
Prior Entry for Shipping Bill or Bill of Entry
Specialized Schemes
Bill of Entry for Bond/Warehousing

Import Procedures
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 doesnt have the IEC number
issued by the DFGT.

Import Procedures
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 custom house.
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.

Import Procedures
Required Documents :
- Signed invoice
- Packing list
- Bill of Lading or Delivery Order/Airway Bill
- Letter of Credit/Bank Draft/wherever necessary
- Insurance document
- Import license, Industrial License, if required
- Test report in case of chemicals
- Adhoc exemption order
- 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

Import Procedures
Payment of Customs Duty :
The duty can be debited to such current
account, or it can be paid in cash/DD through
TR-6 challan in designated banks.
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.

Import Procedures

Specialized Schemes :
Import of goods under specialized scheme,
DEEC, EOU etc , required to execute bonds
with the custom authorities.

Bill of Entry for Bond/Warehousing:

A separate form of bill of entry is used for
clearance of goods for warehousing.

Import Procedures
ASSESSMENT OF IMPORT DUTY AND CLEARANCE :
Noting of Bill of Entry :Bill of Entry submitted by importer or Customs House
Agent is cross-checked with Import Manifest
submitted by person in charge of vessel / carrier.
Appraising The Goods :Appraiser has to (a) correctly classify the goods (b)
decide the Value for purpose of Customs duty (c) find
out rate of duty applicable as per any exemption
notification and, (d)verify that goods are not imported
in violation of any law.

Import Procedures
VALUATION OF GOODS :As per rule 10 of Customs Valuation Rules,
the importer has to file declaration about
full value of goods.
APPROVAL OF ASSESSMENT :The assessment has to be approved by
Assistant Commissioner,

Import Procedures
EXAMINATION OF GOODS :Examiners carry out physical examination and
quantitative checking like weighing, measuring
etc. Selected packages are opened and
examined on sample basis in Customs
Examination Yard.
Out of Customs Charge Order :After goods are examined, it is verified that
import is not prohibited and after customs duty
is paid, Customs Officer will clear the goods for
home consumption.

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