Customs Act, 1962 By: Brijesh Grover.

Customs Act, 1962 By: Brijesh Grover

Charging Section of Customs Act
As per Section 12 Customs Duty shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 on goods imported into or exported from India Imports mean bringing into India (including territorial water) from a place outside India Export means taking out of India to a place outside India

Pilferage (Sec 13) If any imported goods are pilfered after downloading but before the proper officer has made an order for: Clearance of home consumption Deposit in warehouse the importer shall not be liable to pay the duty on such pilfered goods except for in situation when such goods are restored to the importer after pilferage. Note: If duty has been paid it shall be refunded provided pilferage has taken place before clearance order

Loss other than Pilferage & Relinquishment Section 23
Loss or destruction - Section 23(1) Where it is shown to the satisfaction of the AC that any imported goods have been lost (otherwise than as result of pilferage), or destroyed at any time before clearance for home consumption, the AC shall remit the duty on such goods Relinquishment of title - Section 23(2) The owner of any imported goods may at any time before an order for clearance of goods for home consumption or permitting the deposit of goods in warehouse has been made, relinquish his title to the goods and thereupon he shall not be liable to pay the duty thereon.

Articles liable to different rate of duty - Section 19
Duty at Highest Rate Duty at different Rates Rates on accessories and spare parts basis Accessories (condition) Rules, 1963

Project Imports Meaning - A plethora of different machinery, raw material, components, auxiliary equipment, spares, etc when required for setting up or expanding an existing unit shall be called project import. Difficulty in Assessment Simplification under heading of Schedule to CTA, 1975

Eligible Projects Industrial Projects Irrigation Projects
Power Projects Mining Projects Project for oil or mineral exploration Other specified projects

Re-importation Section 20
If some goods which have been exported from India are imported back, such goods shall be liable to duty and be subject to all the conditions to which goods of the like kind and value are liable on the importation there of. However there are following exemptions: Re-import for Repairs, etc within 3 years of from export and must be re-exported within months from the date of import. Re-import by the same person

Refund of Export Duty-Section26
Export Duty, if any, shall be refunded to the person by whom it was paid if the goods are returned to such person otherwise than by way of re-sale the goods are re-imported within one year from the date of exportation an application for refund of such duty is made within 6 months from the date on which the proper officer makes an order for the clearance of goods for home consumption.

Derelict, Jetsam, Flotsam & wreck
All goods, derelict, jetsam, flotsam and wreck brought or coming into India, shall be dealt with as if they were imported into India Derelict means cargo or vessel abandoned in the sea with no hope of recovery Jetsam means goods thrown from the vessel to save it from sinking Flotsam are Jettisoned goods which keep floating Wreck are on account of storm at sea, the vessel is drifted to Indian water

Abatement on damaged or deteriorated goods- Sec 22
When any imported goods had been damaged or deteriorated at any time before or during the unloading of goods in India any imported goods other than warehoused goods had been damaged at any time after the unloading of goods but before their examination u/s 17 any warehoused goods had been damaged at any time before clearance for home consumption

Abatement on damaged or deteriorated goods- Sec 22
Damage should not be on account of any accident due to any willful act, negligence or default of the owner, his employee or agent Duty payable on damaged goods shall be: Value of goods * Duty Payable before Dam after damage Value of goods before dam

Determination of value after Damage
The value of damaged goods may be ascertained by either of the following methods at the option of the owner: the value of such goods may be ascertained by the proper officer such goods may be sold by the proper officer by public auction / tender or with consent of the owner in any other manner and the gross sales proceed shall be deemed to be the value of such goods

Types of Duty Basic Custom Duty (Sec 2 of Customs Tariff Act)- The rates at which duties of custom shall be levied under the Customs Act, are specified in I & II Schedules There are 2 rates in the I Schedule Standard Rate Preferential rate Lower Customs duty under Trade Agreement(Section 5)

Types of Duty Additional Duty of customs (CVD) Section 3. Duty in addition to BCD Equal to Excise duty leviable on a like article if produced or manufactured in India Duty leviable on the class of articles to which imported goods belong and in such case if article is liable to different rates of duty, then the highest of such rates shall be considered. No duty if no manufacturing process involved

Types of Duty Rate of Duty for Liquor Duty on Components
Determination of value Valuation of Pre-packed articles Special Additional Duty (section 3A) Govt has exempted all the goods covered in the I Schedule to Customs Tariff Act, from the whole of the Special Addl duty leviable u/s 3A.

Protective Duties (Section 6)
Reason for imposition Recommendation of tariff commission to protect domestic industry By notification of Central Government Amount of duty Maximum upto the amount proposed in recommendation Every such duty shall be deemed to have been specified in First Schedule

Protective Duties Period of duty Central Government may specify the period up to which protective duty shall be in force, it can reduce or extend such period, it can also reduce or increase the effective rates. Emergency power to impose or enhance - Power with Central Government

Safeguard duty (Section 8B)
Reason for imposition Any article is imported into India in increased quantity such increase import is causing or threatening to cause serious injury to domestic industry Provisional Duty Provisional duty may be imposed till completion of inquiry for <=200 days subject to refund if decided against the duty

Safeguard duty Period of Duty No duty in certain cases
Valid for 4 Years unless invoked Period can be extended max up to 10 years from the date of first imposition No duty in certain cases Import from developing countries Imported from only one developing country Imported from more than one developing company Import by EOU or unit in SEZ Import of small quantities

Safeguard duty on import from China - Section 8C
Reason for imposition (Market Disruption) Central govt, however may exempt such quantity of any article as it may specify in the notification, from payment of whole or part of safeguard duty leviable. Provisional duty Period of duty It will be additional duty which shall be over and above any other duty imposed

Countervailing Duty on Subsidized Articles (Section 9 of Customs Tariff Act, 1975)
Central Government has the power to levy duty on any imported article When any country is giving subsidy to the manufacturer for production/manufacturing or transportation or export of such article to India. Such subsidy may be direct or indirect. Such duty levied which is termed as CVD can’t exceed the amount of such subsidy Such duty is also known as anti-subsidy duty.

Countervailing Duty on Subsidized Articles
Central Government may impose a provisional CVD as provisionally estimated pending the final determination of the amount of subsidy involved. If the provisional CVD exceeds the final subsidy determined later, then the Central government shall: Reduce such CVD as soon as possible; and Refund the CVD collected in excess of such reduced CVD. Central Government can levy anti-subsidy duty with retrospective effect also If massive imports in short period have caused injury to the domestic industry. (duty can be made effective for up to 90 days prior to notification of provisional duty).

Countervailing Duty on Subsidized Articles
No CVD shall be imposed unless it is determined that – The subsidy relates to export performance; The subsidy relates to use of domestic goods over imported goods in the export article The subsidy is being provided to a limited number of persons engaged in manufacture, production or export. No CVD shall be imposed if such subsidy relates to research activities, or is being given as assistance to disadvantaged regions or because of subsidy being advanced for adaptation to new environment requirements

Anti-Dumping Duty (Section 9A of CTA)
Dumping When the exporter sells the product to an importing country at a price less than the price prevailing in its local markets it is a case of dumping. The Central Government has the power to levy anti-dumping duty on dumped articles, however the anti-dumping duty can’t exceed the margin of dumping (Export price – Normal value). Provisional Duty There can be a duty levied retrospectively (90 days) Duration can be of 5 Years + 5 Years No anti-dumping in case of 100% EOU, FTZ or SEZ Anti-dumping and Anti Subsidy duty not to be imposed simultaneously

Valuation in Customs As per Section 14(1) of Customs Act if Customs duty is chargeable on the basis of value, The value of such goods shall be deemed to be the price at which such or like goods are ordinarily sold for delivery at the time and place of importation or exportation, in the course of international trade The seller & / or the buyer have no interest in the business of the other Price is the sole consideration for the sale

Customs Valuation Rules, 1988
For the purpose of these rules Subject to Rule 9 & 10A, the value of imported goods shall be the transaction value If the transaction value can’t be determined, the value shall be determined by proceeding sequentially through Rules 5 to 8 Transaction Value of imported goods shall be the price actually paid or payable, for the goods adjusted in accordance with the provisions of Rule 9 (discussed in succeeding slide)

Cost and Services (Rule 9)
Addition of Freight, insurance and landing charges For the purpose of Sec. 14 the value of the imported goods shall include: The cost of transport of the imported goods up to the place of importation The cost of insurance Landing Charges (Loading, unloading & handling charges associated with delivery of the imported goods at the place of importation) Notional Amounts Where the cost of transport is not ascertainable such cost shall be 20% of the FOB value of the goods Where cost of insurance is not ascertainable, such cost shall be 1.125% of FOB value of goods Landing Charges shall be 1% of CIF value

Cost and Services (Rule 9)
Maximum Transportation for import by Air In the case of goods imported by air where transportation cost is ascertainable such cost shall not exceed 20% of the FOB value of goods Clearance from ICD In case of goods imported by sea, the cost of freight incurred in the movement of container from the port of entry to the Inland Container Depot or Container Freight Station shall not be included in the cost of transport Barging / Lighterage Charges

Additional Consideration
In determining the transaction value, the following shall be added to the price actually paid or payable for the imported goods. – The costs and services, to the extent they are incurred by the buyer but are not included in the price actually paid or payable for the imported goods Commissions and brokerage except buying commission Cost of containers Cost of packing whether for labour or materials

The value of the following goods and services, apportioned appropriately, supplied by the buyer free of charge or at reduced cost for use in connections with the production Materials components parts and similar items incorporated in the imported goods Tools, dies moulds and similar items used in the production of imported goods Engineering, development artwork, design work etc. undertaken out of India and necessary for the production of imported goods

Apportionment of Value
Once a value has been determined for the element it is necessary to apportion that value to the imported goods The value might be apportioned to the first shipment The importer may request that the value be apportioned over the number of units produced up to the time of first shipment The value may be apportioned over the entire anticipated production (where contracts or firm commitments exist for that production)

Royalties and license fees related to the imported goods that the buyer is required to pay as a condition of the sale of the goods being valued The value of any part of the proceeds of any subsequent resale, disposal or use of the imported goods that accrues directly or indirectly to the seller All other payments actually made or to be made, as a condition of sale of imported goods, by the buyer to the seller or to the third party to satisfy an obligation of the seller

Durable Packing Interest on delayed payments Post Importation Charges Charges for construction, erection, assembly, maintenance or technical assistance undertaken after importation on imported goods such as industrial plant, machinery or equipment The cost of transportation after importation Duties and taxes paid in India

Conditions for accepting Transaction Value [Rule 4(2)]
The transaction value of imported goods shall be accepted provided that The sale is in ordinary course of trade under fully competitive conditions The sale doesn’t involve any abnormal discount or reduction from ordinary competitive price The sale doesn’t involve special discounts limited to exclusive agents The transaction value shall be accepted if there are no restrictions as to the disposal or use of the goods by the buyer other than restrictions which Are imposed under any law in India Limit the geographical area in which the goods may be resold Do not substantially affect the value of the goods.

Conditions for accepting Transaction Value [Rule 4(2)]
The sale price is not subject to a condition for which value can’t be determined Objective and quantifiable data exist with regard to the adjustments required to be made to the transaction value No part of the proceeds of any subsequent sale by the buyer, will accrue directly or indirectly to the seller unless appropriate adjustments can be made under Rule 9 The buyer and seller are not related or where they are related, the transaction value is acceptable under sub-rule 3.

Transaction value between related person [Rule 4(3) ]
If buyer and seller are related person, price shall be acceptable if it is shown that the relationship did not influence the price In a sale between related parties, the transaction value shall be accepted, if the importer demonstrates that the declared value of goods being valued, closely approximates to one of the following values ascertained at or about the same time Transaction value for identical goods or similar goods Deductive value for identical goods or similar goods Computed value for identical goods or similar goods

Related Person [Rule 2(2)]
A person shall be deemed be related only if They are officers or directors of one another’s business They are employer and employee They are legally recognized partners in business They are members of the same family One of them directly or indirectly controls the other Both of them are directly or indirectly controlled by a third person Together they directly or indirectly control a third person Any person directly or indirectly owns or controls 5% or more of the outstanding voting stocks or shares

Declaration by the importer [Rule 10]
The importer or his agent shall furnish a declaration disclosing full and accurate details of the value of imported goods, along with any other statement, information, etc as considered necessary by the proper officer The proper officer has right to satisfy himself as to the truth or accuracy of any statement, information, etc. The provisions of the Customs Act, 1962 relating to confiscation, penalty and prosecution shall apply to cases where wrong declaration, information, statement or documents are furnished

Rejection of Declared value [Rule 10A]
When the proper officer has reason to doubt the truth or accuracy of the value declared in relation to any imported goods, he may ask the importer of such goods To furnish further information To furnish documents or other evidence If, after receiving such further information, or in the absence of a response of such importer, the proper officer still has reasonable doubt about the truth or accuracy of the value so declared, it shall be deemed that the value of such imported goods can’t be determined under the provisions of Rule 4(1)

Rejection of Declared value [Rule 10A]
At the request of importer The proper officer shall intimate the importer in writing the grounds for doubting the truth or accuracy of the value declared by such importer and provide a reasonable opportunity of being heard, before taking a final decision

Identical Goods [Rule 2 (1)(c)]
Identical goods mean imported goods Which are same in respects, including physical characteristics, quality and reputation as the goods being valued except for minor differences in appearance that do not affect the value of goods Produced in the same country in which the goods being valued were produced Produced by the same person who produced the goods, or where no such goods are available, goods produced by a different person The goods for which engineering, development work etc was undertaken in India by the buyer free of charge or at a reduced cost shall not be treated as identical goods

Transaction Value of Identical goods (Rule 5)
Subject to Rule 3, the value of imported goods shall be transaction value of identical goods imported at or about the same time as the goods being valued Sale at the same commercial level as the goods being value shall be used to determine the value of imported goods Where no such sale is found the value of identical goods sold at a different commercial level after apt adjustment

Transaction Value of Identical goods (Rule 5)
If the costs and charges referred in Rule 9 are included in the transaction value of identical goods An adjustment shall be made if there are significant differences in costs and charges arising on account of Transportation means and distances between the goods being valued and the identical goods in question If more than one transaction value of identical goods is found, the lowest of such value shall be used to determine the value of imported goods

Similar Goods [Rule 2(1)(e)]
Similar goods mean imported goods Which although not alike in all respects, have like characteristics, and like material which enable them to perform the same function and to be commercially interchangeable with the goods being valued Produced in the same country in which the goods being valued were produced Produced by the same person who produced the goods, or where no such goods are available, goods produced by a different person Transaction Value of Similar Goods (Rule 6) The provisions of Rule 5 shall apply mutatis mutandis

Deductive Value (Rule 7)
Sale at the time of Valuation and in the same condition If the goods being valued or identical or similar goods are sold in India, in the condition as imported at or about the time at which valuation of imported goods is being made, The value of imported goods shall be based on unit price at which imported or identical or similar goods are sold in the greatest aggregate quantity Some deductions shall be provided in order to arrive at the final value, which are discussed in following slide

Deductive Value (Deductions)
Either commission usually paid or agreed to be paid or the additions usually made for products General expenses in connection with sales in India of imported goods of same class or kind The usual costs of transportation and insurance and associated costs incurred within India The customs duties and taxes payable in India

Deductive Value (If no sale at the time of Valuation)
If neither the imported goods nor identical goods nor similar imported goods are sold at the same time of importation of goods being valued The value shall be based on unit price at which the imported goods or identical or similar imported goods are sold in India at the earliest date after importation but within 90 days after such import (subject to adjustment of deductions)

Deductive Value (No sale in the same condition)
The values shall be based on unit price at which the imported goods are sold in the greatest aggregate quantity after further processing Due allowance shall be made for Value added by processing Deductions referred to in sub rule 1 i.e., incidental sale expenses

Computed Value (Rule 7A)
If the importer requests and Customs officer approves, Rule 7A can be used before Rule 7 (as per rule 6A) The value of imported goods as per rule 7A shall be The cost of material and other processing charges Profit and general expenses equal to that usually made by producers in the country of exportation All other expenses in rule 9(2)

Residual Method (Rule 8)
Best Judgment Assessment Subject to Rule 3, if the value can’t be determined under the preceding rules, the value shall be determined using reasonable means consistent with the principles of any of the preceding Rules, and Section 14 Methods not acceptable Value shall never be calculated on the following basis Minimum customs value A system, which provides for the acceptance of the highest of two alternative values Arbitrary or fictitious values Selling price of goods produced in India The price of the goods for export to a country other than India The price of goods in domestic market of the country of export The cost of production except as per Rule 7A Internet Prices cannot determine Transaction Value, Several Judgements are available to the effect that the prices or data on the internet cannot be taken to compare transaction value in customs or excise. H.T. Company vs. Commissioner of Customs, Hyderabad – 2006 (201) ELT 311 (T) The main reason why the Internet prices are not acceptable as an authentic evidence is that these are mere quotations and there is no knowing whether any actual imports has taken place on the basis of these quotations. It is only actual importations which are comparable and not quotations. Exhaustive Data relating to actual importation is available in Directorate of Valuations in the Mumbai Customs House.

Tariff Value (Section 4(2))
The Board may by notification fix tariff value for any class of imported or export goods Where any such tariff value is fixed, duty shall be chargeable with reference to such tariff value

Rate of duty and tariff valuation (Section 15)
Imported Goods Rate of duty and tariff valuation (Section 15) In the case of goods entered for home consumption u/s 46 Of the date on which a bill of entry in respect of such goods is presented. However if a bill of entry has been presented before the date of entry inwards, the bill of entry shall be deemed to have been presented on the date of such entry inwards In the case of goods cleared from a warehouse u/s 68 Of the date on which a bill of entry for home consumption is presented u/s 68 In the case of any other goods Of the date of payment of duty

Export Goods Rate of duty and tariff valuation (Section 16) In the case of goods entered for export Of the date on which the proper officer makes an order permitting clearance and loading of the goods for exportation In the case of any other goods On the date of payment of duty

Imported Goods / Export Goods Rate of Exchange (Proviso to Section 14)
In the case of goods entered for home consumption u/s 46 Of the date on which a bill of entry is presented u/s 46 In the case of goods cleared from a warehouse u/s 68 In the case of any other goods In the case of goods entered for export Of the date on which shipping bill or bill export is presented u/s 50

Assessment (Section 17) First Appraisement System
After an importer has entered imported goods or an exporter has entered any export goods, the imported / export goods or such part thereof as may be necessary may be examined and tested by the proper officer without undue delay After such examination and testing, the duty leviable on such goods shall be assessed The proper officer may require importer, exporter or any person to produce any contract, policy of insurance, etc whereby the duty leviable on goods can be ascertained

Assessment (Section 17) The goods may prior to the examination or testing thereof, be permitted by the proper officer to be assessed to duty on the basis of statement, documents or information furnished. If the statement so furnished is not true in respect of any matter relevant to assessment, the goods may be re-assessed to duty

Provisional Assessment (Section 18)
Where the proper officer is satisfied that an importer or exporter is unable to produce any document etc necessary for assessment or Where the proper officer deemed it necessary to subject any goods to any chemical or other test for the purpose of assessment or Where the importer or exporter has produced all the necessary documents but the proper officer deems it necessary to make further inquiry for assessing the duty The proper officer may direct that the duty leviable on such goods may be assessed provisionally It is provisional assessment pending the production of such documents or completion of test The importer or exporter has to furnish such security as proper officer may deem fit Where the duty is finally assessed the deficiency or excess shall be adjusted

When CVD is not payable on the basis of MRP
FOB Value **** Add Freight(Actual Amount & if not ascertainable, then 20% of FOB, if by air, actual cost or 20% of FOB whichever less) Insurance Charges(Actual amount & if not ascertainable, then 1.125% of FOB) Adjustments under Rule 9(1) (Commission, packing charges, Design Charges, etc ) ** CIF in foreign Currency CIF value in Foreign Currency x Rate of exchange under proviso to sec 14(1) as declared by CBEC (CIF In Rs) Landing Charges (1% of CIF – ascertainable or not) Assessable Value (AV) Basic Customs Duty (Assessable Value * Rate of BCD) AV+BCD CVD (CVD = Excise as per CETA + Education Cess) Education Cess [2% of (CVD+BCD)]

Warehousing (Chapter IX)
Warehousing Station (Section 9) The board may by notification in the official gazette, declare places to be warehousing stations at which alone public or private warehouses may be appointed Appointing of public warehouses. (Sec 57) - At any warehousing station, the Assistant Commissioner of Customs or Deputy Commissioner of Customs, may appoint public warehouses wherein dutiable goods may be deposited.

Licensing of private warehouses (Section 58)
(1)At any warehousing station, the Proper Officer (Proper Officer) may license private warehouses wherein dutiable goods imported by or on behalf of the licensee, or any other imported goods in respect of which facilities for deposit in a public warehouse are not available may be deposited

Licensing of private warehouses (Section 58)
(2) The Proper Officer may cancel a license granted under sub-section (1) - (a) by giving one month's notice in writing to the licensee; or (b) if the licensee has contravened any provision of this Act or the rules or regulations or committed breach of any of the conditions of the license : the licensee shall be given a reasonable opportunity of being heard, before cancellation of license (3) Pending an enquiry the proper officer may suspend the license.

Warehousing Bond (Section 59)
The importer of any goods specified in sub-section (1) of section 61, which have been entered for warehousing and assessed to duty under section 17 or section 18 shall execute a bond binding himself in a sum equal to twice the amount of the duty assessed on such goods (a) to observe all the provisions of this Act and the rules and regulations in respect of such goods; (b) to pay on or before a date specified in a notice of demand all duties, and interest, if any, payable under subsection (2) of section 61; rent and charges claimable on account of such goods under this Act, together with interest on the same from the date so specified at such rate (c) to discharge all penalties incurred for violation of the provisions of this Act and the rules and regulations in respect of such goods.

Warehousing Bond (Section 59)
For the purposes of sub-section (1), the Proper Officer may permit an importer to enter into a general bond A bond executed under this section by an importer in respect of any goods shall continue in force notwithstanding the transfer of the goods to any other person or the removal of the goods to another warehouse However the Proper officer (AC/DC) may accept a fresh bond from the transferee and thereupon the bond executed by the transferor shall be enforceable only for a sum mentioned therein less the amount for which a fresh bond is accepted from the transferee.

Permission for deposit of goods in a warehouse (Sec 60)
When the provisions of section 59 have been complied with in respect of any goods, the proper officer may make an order permitting the deposit of the goods in a warehouse.

Period of warehousing (Sec 61)
Any warehoused goods may be left in the warehouse: (a) in the case of capital goods intended for use in any 100% EOU, till the expiry of five years (aa) in the case of goods other than capital goods intended for use in any 100% EOU, till the expiry of three years; and (b) in the case of any other goods, till the expiry of one year, after the date on which the proper officer has made an order u/s 60 permitting the deposit of goods in a warehouse

Extension in the case of any goods which are not likely to deteriorate, the period specified in clause(a) or clause (aa) or clause (b) may, on sufficient cause being shown, be extended- in the case of such goods intended for use in any 100% EOU, by the Commissioner of Customs, for such periods he may deem fit; in any other case, by the Commissioner of customs, for a period not exceeding six months and by the Chief Commissioner of Customs for such further period as he may deem fit;

Reduction in the case of any goods referred to in clause (b), if they are likely to deteriorate, the aforesaid period of one year may be reduced by the Commissioner of Customs to such shorter period as he may deem fit: Provided further that when the license for any private warehouse is cancelled, the owner of any goods warehoused therein shall, within 7 days from the date on which notice of such cancellation is given or within such extended period as the proper officer may allow, remove the goods from such warehouse to another warehouse or clear them for home consumption or exportation.

Interest Where any warehouse goods specified in (a) or (aa) remain in warehouse beyond the period specified by reason of extension of the aforesaid period or otherwise, interest at specified rate shall be payable , on the amount of duty payable at the time of clearance of the goods, for the period from the expiry of the said warehousing period till the date of payment of duty on the warehoused goods Where any warehouse goods specified in (b) remain in a warehouse beyond 90 days, interest at specified rate shall be payable on the amount of duty payable at the time of clearance of goods for the period from the expiry of the said 90 days till date of payment of duty.

Control over warehoused goods (Sec 62)
All warehoused goods shall be subject to control of the proper officer No person shall enter a warehouse or remove any goods there from without the permission of the proper officer The proper officer may cause any warehouse to be locked with the lock of customs department and no person shall remove or break such lock The proper officer shall have access to every part of a warehouse and power to examine the goods.

Payment of rent and warehouse charges (Section 63)
The owner of any warehoused goods shall pay to the warehouse keeper rent and warehouse charges at the rates fixed under any law If any rent or warehouse charges are not paid within 10 days when they become due, with the permission of the proper officer The warehouse keeper may sell that portion of the goods as he may select It is must for him to give a notice in regard to this to the owner of warehoused goods

Owner’s right to deal with warehoused goods (Section 64)
On payment of the prescribed fees, with the sanction of the proper officer, the owner of any goods may either before or after warehousing the same Inspect the goods Separate damaged or deteriorated goods from the rest Sort goods or change their containers for the purpose of preservation, sale or disposal of goods Show the goods for resale Take samples of goods without entry for home consumption and if the proper officer so permits, no need to pay duty on such samples taken

Manufacture in warehouse (Sec 65)
With the sanction of the Assistant Commissioner and subject to payment of such fees as may be prescribed, the owner of any warehoused goods may carry on any manufacturing process or other operations in the warehouse in relation to such goods Treatment of Waste When in the course of any operation, there is any waste, the provision regarding its treatment shall differ with use of export goods: When finished goods exported When finished goods cleared for home consumption

Treatment of waste When finished goods exported If the whole or any part of the finished goods resulting from such operations are exported, and if the resultant waste comprises of imported material Import duty shall be remitted on the imported material which is part of waste too The waste has arisen from operations carried on, in relation to goods exported The resultant waste is destroyed If waste is not destroyed duty shall be payable on such waste, as if it has been imported into India in that form

Treatment of waste When finished goods cleared for home consumption
If the whole or part of finished goods resulting from such operations are cleared for home consumption Import Duty shall be charged on the imported material which is part of waste which has arisen from operations carried on in relation to the goods cleared for home consumption

Power to exempt import material used in the manufacture of goods in warehouse (Sec 66)
If any imported raw material is used for manufacture of any goods and the rate of duty leviable on imported material exceeds the rate of duty leviable on such goods The central Government may exempt the imported material from the whole or part of the excess rate of duty The CG should be satisfied that it is in interest of establishment or development of any domestic industry

Permissible removals from warehouse (Section 71)
No warehouse goods shall be taken out of a warehouse except for any of the following purpose: On clearance for home consumption Re-exportation Removal to another warehouse As otherwise provided by this Act

Removal of goods from one warehouse to another (Sec 67)
The owner of any warehouse goods may, with the permission of the proper officer, remove them from one warehouse to another, subject to such conditions as may be prescribed for the due arrival of warehoused goods at the warehouse to which removal permitted (Procedure for removal discussed in succeeding slides)

Clearance of goods for home consumption(Section 68)
The importer of any warehouse goods may clear them for home consumption if A bill of entry for home consumption has been presented in prescribed form The import duty leviable on such goods and all penalties, rent, interest and other charges payable in respect of such goods have been paid An order for clearance of such goods for home consumption has been made by the proper officer (Relinquishment of title in notes) Relinquishment of Title The owner of any warehoused goods may at any time before an order for clearance of goods for home consumption has been made, relinquish his title to the goods upon payment of rent, interest, other charges and penalties that may be payable in respect of the goods and upon such relinquishment, he shall not be liable to pay duty thereon.

Clearance of warehoused goods for Export (Sec 69)
(1)Any warehoused goods may be exported to a place outside India without payment of import duty if A shipping bill or bill of export has been presented in prescribed form The export duty, penalties, rent, interest and other charges have been paid The order for clearance of such goods for exportation has been made by proper officer

Clearance of warehoused goods for Export (Sec 69)
(2) If Central Government is of opinion that warehoused goods of any specified description are likely to be smuggled back into India, it may direct That such goods shall not be exported without payment of duty or Such goods may be allowed to be so exported subject to specified conditions

Allowance in case of Volatile goods (Section 70)
(1) When any warehoused goods are found to be less in quantity on account of natural loss, at the time of delivery from warehouse, AC may remit the duty on such deficiency (2) This section applies to such warehoused goods as the Central Government may notify e.g., aviation fuel, kerosene, wine, etc having regard to volatility of the goods and manner of their storage.

Goods improperly removed from warehouse (Section 72)
Goods are considered to be removed improperly in following of the cases where any warehoused goods are removed from a warehouse in contravention of section 71 where any warehouse goods have not been removed from a warehouse at the expiration of period during which such goods are permitted to remain in warehouse where any warehoused goods have been taken as sample u/s 64, without payment of duty where any goods in respect of which a bond has been executed and which have not been cleared for HC or export, are not duly accounted for

Goods improperly removed from warehouse (Section 72)
(1) If goods are removed in the manner stated in previous slide, the proper officer may demand and the owner of such goods shall forthwith pay the full amount of duty chargeable on such goods, together with all penalties, rent, interest, etc. (2) If owner fails to pay any amount demanded, the proper officer may detain and sale the goods after notice to the owner.

Cancellation and return of warehousing bond (Section 73)
When the whole of goods have been cleared for home consumption or export or are otherwise duly accounted for and when all amounts due on such goods have been paid, the proper officer shall cancel the bond and shall deliver it to the person who executed it.

Chapter X Drawback Conditions for claiming drawback
When any goods capable of being easily identified, which have been imported into India and upon which any duty has been paid on importation are entered for export or or is to be exported as baggage or are entered for export by post and the proper officer makes an order permitting clearance and loading of the goods for export

Drawback Drawback Amount 98% of such duty shall be repaid as drawback
Conditions of claiming drawback The goods are identified to the satisfaction of AC as the goods which were imported The goods are entered for export within two years from the date of payment of duty on the importation thereof ( The period of 2 years may be extended by the board) Goods shall be deemed to have been entered for export on the date with reference to which the rate of duty is calculated under Section 16 In the case of goods assessed to duty provisionally under section 18, the date of payment of the provisional duty shall be deemed to be the date of payment of duty.

Reduction of Drawback The rate of drawback in the case of goods which have been used after importation shall be notified by the Central Government, having regard to to the duration of use, depreciation in value, etc As per notifications issued by the Central Government I Notification No drawback shall be allowed if the following goods are used after import Wearing Apparel, Tea, Cinematography films, Photographic Films, and plates and X-Ray Films

Reduction of Drawback II Notification In respect of Motor Cars or goods imported by a person for his personal and private use drawback shall be calculated By reducing the import duty paid in respect of such motor car or goods By 4%, 3%, 2.5% and 2% for each quarter or part thereof during the period of 1st, 2nd, 3rd, and 4th year respectively III Notification In respect of other used after their import and which have been out of Custom control the rate of duty drawback shall be as follows in the succeeding slide However if the period of use has been more than 24 months, drawback shall be allowed, only when the period beyond 24 months has been extended

Percentage of import duty to paid as drawback
Length of period between date of clearance for home consumption and date when goods are placed under customs control for export Percentage of import duty to paid as drawback Not more than 3 months more than 3 but not more than 6 months 95% 85% > 6 months but < 12 months 70% >12 months but < 18 months 60% >18 months but < 24 months 50% >24 months but < 30 months 40% >30 months but < 36 months 30% More than 36 Months Nil

Drawback on Export of goods after processing (Section 75)- Specs to FEMA must be adhered
Where it appears to the the CG that in respect of any goods manufactured, processed or on which any operation has been carried out in India Where the goods are entered for export and an order permitting the clearance and loading thereof for export has been made by the proper officer Drawback shall be allowed of duties of customs on any material used in the manufacture or processing of such goods as the Central Government may direct However no drawback shall be allowed if The export value of such goods is less than the value of the imported material used in the manufacture or processing of such goods The export value of such goods is not more than such percentage of the value of the imported material used in the manufacture or processing of such goods as the CG may specify However if the drawback has been allowed and the sale proceeds of such goods are not received in time under FEMA, such drawback shall be recovered.

Interest on drawback (Section 75A)
Interest payable by Government If the drawback payable is not paid within one month from the date of filing a claim, interest at the rate specified by the board along with the drawback shall be paid from the expiry of the said one month till the date of actual payment Interest payable by the exporter If any drawback has been paid erroneously, the claimant, shall within 2 months from the date of demand pay interest at the rate specified from the expiry of the said period of 2 months till the date of recovery

Prohibition of Drawback (Section 76)
Notwithstanding anything contained hereinbefore, no drawback shall be allowed In respect of any goods, the market price of which is less than the amount of draw-back duty thereon; or where the draw-back due in respect of any goods is less than Rs 50 (Market price of the goods prevailing in the country(India) is the relevant consideration for the purpose of getting drawback, and not the price of goods which the exporter expects to receive from the overseas purchaser) If Central Government is of the opinion that goods of any specified description in respect of which drawback may be claimed are likely to be smuggled into India it may direct that drawback shall not be allowed in respect of such goods or may be allowed subject to specified conditions

Special Economic Zone (Chapter XA)
Section 76B Application The provisions of this chapter in respect to SEZ are superseding provisions and shall prevail over any other proviso in case of conflict. Section 76E (Exemption) Without prejudice to the provisions of section 76F, 76G, & 76H any goods admitted to an SEZ shall be exempt from duties of the customs

Levy of Customs Duty (Section 76F)
Removal from DTA to SEZ Any goods admitted to an SEZ from the domestic tariff area shall be chargeable to export duties at such rates as are leviable on such goods when exported Removal from SEZ to DTA Any goods removed from an SEZ for home consumption shall be chargeable to customs duty including anti-dumping, CVD and safeguard duties under the Customs Tariff Act, where applicable, as leviable on such goods when imported Applicable Rate of Duty The rate of duty and tariff valuation, applicable to goods admitted to, or removed from, an SEZ shall be the rate and tariff valuation in force as on the date of such admission or removal, and where such date is not ascertainable, on the date of payment of duty

Other Provisions of SEZ
Authorized Operations(Section 76G) All goods admitted to Special Economic Zone shall undergo such operations including processing or manufacturing as may be specified in the rules made in this behalf Goods utilized within SEZ (Section 76H) Central Government may make rules to enumerate cases in which goods to be utilized inside an SEZ may be admitted free of customs duties and lay down requirements to be fulfilled Goods utilized contrary to the provisions of rules made under sub section (1) shall be chargeable to duties of customs in the same manner as provided under clause (b) of Section 76F as if they have been removed for home consumption

Drawback on goods admitted to SEZ (Section 76-I)
Any goods admitted to an SEZ from the DTA for the purposes authorized under this Chapter shall be eligible for drawback under Section 75 as if such goods are export goods for the purposes of that section

Goods in Transit (Section 52 to 56)
The provisions to follow for transit and transshipment shall not apply to baggage, goods imported by post and stores Transit of goods The goods shall be allowed to be transited without payment of duty if the goods are imported in a conveyance and it is mentioned in the import manifest as “for transit in the same conveyance to any place outside India or any customs station.”

Goods in Transit Transshipment of Goods Transshipment outside India
The goods shall be allowed to be transshipped without payment of duty if the goods are imported into a customs station and it is mentioned in the import manifest as “for transshipment to any place outside India.” If any goods imported into a customs station are intended for transshipment, a bill of transshipment shall be presented

Goods in Transit Transshipment in India
Mention in IGM Any goods imported into a customs station mentioned in the import manifest as “transshipment to any major port or the customs airport at Mumbai, Calcutta, Delhi or Chennai or any other notified airport may be allowed to be transshipped without payment of duty Bill of Transshipment If any goods imported into a customs station are intended for transshipment , a bill of transshipment shall be presented Conditions for arrival It shall be subject to conditions prescribed, for arrival of such goods at the customs station to which transshipment is allowed

Goods in Transit Where goods are allowed to be transited or transshipped to any customs station, they shall be liable to duty, on their arrival at such station, as if they were imported for the first time in India Imported goods may be transported without payment of duty from one land of customs station to another, and any goods may be transported from one part of India to another part through any foreign territory, subject to such conditions as may be prescribed for due arrival of such goods at the destination

Coastal Goods and vessel carrying coastal goods (Section 91 to 99)
Coastal Goods “Coastal goods” means goods transported in a vessel from one part of India to another other than imported goods Powers of Government Central Government may make rules for preventing export of coastal goods or substitution of imported goods as coastal goods CG may exempt the coastal goods from all or any provisions of the Act Duty of Consignor The consignor shall present a “Bill of coastal good” to the proper officer

Coastal Goods and vessel carrying coastal goods
Duties of Master of Vessel The master of vessel shall not permit loading of any coastal goods on the vessel until such bill has been passed and delivered by the consignor to master The master shall carry such bill on board and deliver the bill to the proper officer of the port of unloading (destination). Proper officer shall permit clearance if he is satisfied that the goods are entered in the bill. The master shall carry an advice book on board, supplied by customs authorities. The proper officer at each port of call shall make entries relating to the goods loaded on the vessel at port Coastal goods shall be loaded or unloaded only at appointed customs/coastal port The master shall allow the ship to leave the port only after a written order has been given by the proper officer The provisions do not apply to baggage and stores

Baggage Baggage means all dutiable articles, imported by passenger or a member of a crew in his baggage. (Baggage includes un-accompanied baggage) Thus, baggage rules are also applicable in respect of baggage which comes separately and which is dispatched from abroad before or after the traveler's departure within prescribed period. (Does not include motor vehicle)

BONA FIDE BAGGAGE Bona fide baggage exempt from duty. It includes wearing apparel, toilet requisites and other personal effects. ( “personal effects” can be allowed only in reasonable quantity considering the status of the person. )

JEWELLERY A person returning to India shall be allowed clearance free of duty jewellery in his Bona Fide baggage. Indian passenger who has been residing abroad for over one year (1)Jewellery upto an aggregate value of Rs.10,000 by a gentleman passenger Or (2).Upto aggregate value of Rs.20,000 by a lady passenger.

PASSENGERS RETURNING FROM COUNTRIES OTHER THAN NEPAL , BHUTAN, MYANMAR OR CHINA
An Indian resident or a foreigner residing in India shall be allowed clearance free of duty articles in his bona fide baggage. Age of passenger Duration of stay abroad Article allowed free of duty (a)10 yrs. Or above (1)More than 3 days (2)3 days or less Rs. 25,000 Rs.12,000 (b)Upto 10 yrs. Rs.6,000 Rs.3,000

PASSENGERS RETURNING FROM NEPAL , BHUTAN, MYANMAR OR CHINA
An Indian resident or a foreigner residing in India shall be allowed clearance free of duty articles in his bona fide baggage. Age of passenger Duration of stay abroad Article allowed free of duty (a)10 yrs. Or above (b) Upto 10 yrs. (1)More than 3 days (2)More than 3 days Rs.6,000 Rs.1,500 No GFA if a person stay abroad 3 days or less or Returns by land route from these countries

Stores (Section 85 to 90) Stores means goods for use in a vessel or aircraft and includes fuel & spare parts and other articles of equipment, whether or not for immediate fitting Foreign going vessel or aircraft (FGV/A) means any vessel or aircraft for the time being engaged in the carriage of goods or passengers between any port or airport in India and any port or airport outside India, whether touching any intermediate port or airport in India or not and includes Any Naval vessel of a foreign government taking part in naval exercise Any vessel engaged in fishing or any other operations outside the territorial water of India Any vessel or aircraft proceeding to a place outside India for any purpose whatsoever

Stores Transit Any stores imported in a vessel or aircraft may without payment of duty, remain on board such vessel or aircraft while it is in India Consumption Such stores may be consumed without payment of duty as stores during the period such vessel or aircraft is FGV/A Tans-shipment Such stores may be transferred to any other vessel or aircraft as stores for consumption with the permission of proper officer. However such transfer shall be allowed only if the receiving vessel is entitled to consume the stores free of duty. Applicability of Section 69 Provisions of Section 69 shall apply to stores taken on board any FGV/A as they apply to other goods. (Under warehousing provisions if the warehoused goods are exported, no import duty has to be paid. This benefit has been extended to stores as well. Warehousing without assessment If imported goods are entered for warehousing and the importer makes a declaration that the goods are to be supplied as stores to vessels or aircraft without payment of import duty , under this chapter, the proper officer may permit the goods to be warehoused without assessment of duty

Stores Applicability of Chapter X Provisions of Chapter X shall apply to stores taken on board any FGV /A as they apply to other goods, subject to modification that in case of drawback u/s 74 on fuel and lubricating oil taken on board any foreign going aircraft 100% shall be substituted by 98% Export of Indian Stores Goods produce or manufacture in India and required as stores on any FGV/A may be exported free of duty in such quantities as the proper officer may determine, having regard to The size of the vessel Number of passengers & crew Length of journey Stores for Indian Navy Imported stores may without payment of duty be consumed on board a ship of the Indian Navy The benefits of point no 4 & 6 are applicable to such stores also

Import or Export by Post
Entry of postal imports as per Section 82 any label or declaration which accompany the goods, containing the description, quantity and value shall be deemed to be entry for import/export Rate of Duty Pursuant to Section 83 For import, rate of duty and tariff valuation shall be of the date on which postal authorities present a list of goods for assessment of duty to proper officer. However such date can’t be before the date of arrival of vessel/aircraft. For Export, rate of duty and tariff valuation shall be of the date on which exporter delivers such goods to postal authorities for exportation

Import or Export by Post
Powers of Board The board make rules providing: Manner of declaration of entry For custody, assessment of duty etc For transit or transshipment of goods imported / exported by post Regulations framed by the Board for postal and exports The bags containing parcels must be labeled as “Post parcels”. On receipt of parcel mail, the post master will hand over to the principal appraiser, a memo showing total number of parcels received The post master will get the mail bags opened and scrutinized in the presence of customs appraiser for detaining parcels suspected to contain dutiable goods.

Regulations Framed by the board for Postal imports & exports
Upon receipt of documents, the appraiser will examine the same and mark off all parcels required to be detained for examination either for want of necessary particulars, or defective description, or suspected mis-declaration or under valuation of contents Other parcels will be assessed by showing the rate of duty on the declarations or on the parcel bills. When further information is required, the addressee may be called upon to produce the information, invoice or document. The value, exchange rate, amount of duty will be mentioned on the parcel in Indian currency The Post master will detain the parcels marked for detention and allow other parcels to be delivered against payment to be marked on the parcels. When the detained parcels are ready for examination, it will be delivered to customs authorities, who will examine the parcels and note value, rate of duty and amount of duty against each parcel The duties collected by the Postal department will be paid to Customs Department as per procedure settlement from time to time.

Customs Act, 1962 By: Brijesh Grover.

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Customs Act, 1962 By: Brijesh Grover.

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Presentation on theme: "Customs Act, 1962 By: Brijesh Grover."— Presentation transcript:

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