A
Customs duty is the duty charged on goods on their importation into India
or exportation out of India.
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Q.2
What are the different types of rates of duties of Customs
?
A
There are two types of rates of duty of Customs:
1.
Ad valorem rate i.e., the duty is charged on the basis of value.
2.
Specific rate i.e., on the basis of quantity/number/ volume/ weight.
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A.
Different kinds of duties of customs levied on imported goods are
(i) Basic Customs Duty
(ii) Surcharge
(iii) Additional duty of customs
(iv) Special additional duties
(v) Additional levies like Countervailing duty, Anti dumping duty,
Safe guard duty etc.,
In addition, cess duty is leviable on certain goods.
Section 12 of the Customs Act, 1962 authorises the Customs Officers to levy and collect these duties
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Q.4
What is meant by special additional duty of customs?
A
Special additional duty is specified under Section 3A of the Customs Tariff Act,
1975. The amount of Special Additional duty is computed by
applying this rate on value, which is equal to the total of the assessable
value, the basic customs duty and the additional duty of customs described
above.
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Q.5
What is the additional duty of customs? What is the
authority to levy it on imported goods?
A
Additional duty of customs equal to the, excise duty
leviable on like goods produced or manufactured in India. This is levied under
Section 3
of Customs Tariff Act, 1975. This is usually
referred to as "countervailing duty" (CVD). However, the correct description of
this duty is Additional Duty of Customs. In order to determine the applicable
rate, you have to obtain the correct classification of the goods under the
Central Excise Tariff Act, 1986. The duties under the Central Excise Tariff are
on ad valorem basis. However, specific rates have been prescribed for some
items. Importantly, the value for the purpose of computing additional duties
of Customs is the total of the assessable value (generally the
transaction value - roughly equal to the c.i.f. value) and the basic customs
duty.
If you are a manufacturer, importing goods to be
used as inputs for manufacture of other goods, you would be generally eligible
for obtaining credit (called CENVAT credit) equal to the additional duty of
customs paid on the imported goods. This duty amount is eligible for credit
under input duty Central Excise Rules, 1944. This credit can be used for paying
central excise duties on your manufacture.
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A
Surcharge at the rate of 10% of the Basic Customs Duty is
leviable on imported goods under Section 90 of the Finance Act, 2000 ( unless
exempted by a notification).
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Q.7
How to compute the duty amount in respect of imported
goods?
A.
Under the Custom Tariff Act, 1975 and other laws, there are various types
of duties, which are leviable. As a first step, the following three types of
customs duties have to computed:-
(i) Duty which is specified against each
Heading or Sub-Heading in the First Schedule to the Customs Tariff Act, 1975.
This is usually referred to as Basic Customs Duty. There are different
rates of duty for different commodities. You may find these rates in column no.
4 (labeled as "standard rates") of the tariff. There is also a 5th
column specifying the "preferential rates". These are different rates of duty
for goods imported from certain countries in terms of bilateral or other
agreements with such countries--which are called preferential rates of duties.
The duty may be a percentage of the value of the goods ( in such cases it is
called ad valorem duty) or at a specific rate, which is based on unit of
measurement which is specified in the tariff entry. The rate of duty in
percentage (in the case of advalorem duties) has to be applied on the Cost
Insurance and Freight
(ii) A Surcharge at the rate of 10% of the
Basic Customs Duty is leviable on imported goods under Section 90 of the Finance
Act, 2000 ( unless exempted by a notification).
(iii) Additional duty of customs equal to the, excise duty
leviable on like goods produced or manufactured in India. This is levied under
Section 3
of Customs Tariff Act, 1975. This is usually
referred to as "countervailing duty" (CVD). However, the correct description of
this duty is Additional Duty of Customs. In order to determine the applicable
rate, you have to obtain the correct classification of the goods under the
Central Excise Tariff Act, 1986. The duties under the Central Excise Tariff are
on ad valorem basis. However, specific rates have been prescribed for some
items. Importantly, the value for the purpose of computing additional duties
of Customs is the total of the assessable value (generally the
transaction value - roughly equal to the c.i.f. value) and the basic customs
duty.
If you are a manufacturer, importing goods to be used as inputs for
manufacture of other goods, you would be generally eligible for obtaining credit
(called CENVAT credit) equal to the additional duty of customs paid on the
imported goods. This duty amount is eligible for credit under input duty Central
Excise Rules, 1944. This credit can be used for paying central excise duties on
your manufacture.
(iv) Imported goods are also liable to a Special additional
duty at a rate specified in Section 3A of the Customs Tariff Act, 1975.
The amount of Special Additional duty is computed by applying this rate on value
which is equal to the total of the assessable value, the basic customs duty and
the additional duty of customs described above.
(3) Additional Levies
Having computed the above mentioned duties, you
have to determine whether there are any additional levies on the
particular items you intend to import. Some of the levies are commodity specific
and would be applicable regardless of the time of import. These include
cesses under various enactments as also Additional Duties on
specified commodities.
There are certain other levies which are
specific to the country of origin. Please consider the following levies.
Countervailing Duty
on bounty-fed articles is leviable under Section 9, of
the Customs Tariff Act 1975. No such duty is however, being
levied at present.
Anti-dumping Duty
(under Section 9A, Customs Tariff Act 1975) on
specified goods imported from specified countries to protect indigenous industry
from injury resulting from dumping of goods. This is notified and published from
time to time.
Safeguard Duty (under Section 8B of
the Customs Tariff Act, 1975) is applicable on certain goods at
the time of import for specified periods in order to check their excessive
imports, which may be injurious to the Indian industry.
4. Exemptions:
These exemptions and concessions can be granted in a number of ways.
Some of these exemptions are briefly discussed below: -
Exemption by Notification: The Central Government may notify by
publication in the Official Gazette certain exemptions and concessions. Such
exemptions or concessions may be conditional or absolute. There are general
exemptions given to a variety of items imported under certain conditions These
include exemption of imports for promotion of exports, import by UN bodies,
defence imports etc.,.. There are also exemptions which are unconditional and
are applicable across the board. There are other exemptions based on conditions
of end use.
Preferential Rates
: Preferential rates of customs duty have been made applicable in respect
of imports from certain countries such as Sri Lanka, Mauritius, Seychelles and
Tonga provided certain conditions are satisfied. The goods in question must
actually be manufactured or produced in such preferential areas. Rules have been
framed in order to determine whether the goods have been manufactured or
produced in such areas. Determination of origin of the goods is very essential
in order to avail of the benefits of such concessional rates of duty.
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Q.8
What is the Foreign Exchange Rate applied to the value of
Invoice?
A
The rate of exchange applicable is the rate in force on the date on which
a Bill of entry (Whether it is home consumption Bill of entry or Bill of entry
for warehousing) is presented under Section 46 of
the Customs Act 1962.
The same exchange rates are applicable to the Ex-bond bill of entry filed
for clearing the goods for home consumption form the bonded warehouse. The exchange rates are notified by the
Central Government by issue of notifications from time to time.
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Q.9
What is the rate of duty applicable to a home consumption
Bill of entry?
A
The rate of duty applicable is the rate prevailing on the date of
presenting the Bill of entry in the Customhouse. However, in the case of Bills of entry
filed before the date of entry inwards of the vessel, the arrival of the
aircraft the rate of duty applicable is the rate prevailing on the date of entry
inwards or arrival as the case may be (Section
15(1) (a) of the Customs Act 1962).
Note:
Granting of entry inwards means permitting the unloading of goods from the
vessel by the proper officer of customs.
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Q.10 How do you compute the value for the purpose of charging duty on
imported goods?
A.
CIF value (Cost, insurance and freight) and landing charges s the normal
basis. In addition, any royalty or
service charges etc. paid or payable by the importers are also to be added. Value for the purpose of charging duty
on imported goods determined under Section14 of
the Customs Act 1962 read with Customs
valuation (Determination of Prices of Imported Goods) rules,
1988. The actual
landing charges or at the prescribed rate are also to be added. If the invoice shows the clue of FOB (
Free on Board) actual freight and insurance charges have to be added if the import
is by Sea. In the absence of actual
charges, notional charges at 20% on FOB value as fixed by the Government have to
be added. However, in the case of certain bulk cargos where freight is more than
FOB value, the actual freight has to be added. In the case of import by Air when the
invoice value is FOB, actual freight and insurance or notional freight (20% of
FOB presently) and notional insurance (1,125 % of FOB presently), whichever is
less are added to the FOB value.
This becomes CIF clue arrived at by adding all these elements is known as
“Assessable Value”. Basic customs duty is leviable on such assessable value.
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A.
Stevedoring charges are the charges incurred for unloading the goods from
ship hold to wharf. These charges
are treated as forming part of the freight and are to be added to the value for
the purpose of charging duty on imported goods. This contingency arises only when the
carrier does not include these charges in the Freight Bill.
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Q.12 In case the Importer is aggrieved can he pay the duty under
protest? If so what are the
advantages?
A
When the importers do not agree with the assessment made in the Bill of
entry respect of classification/valuation/rate of duty etc., they may pay the
duty ‘under protest’ as provided for the Section 27 of
the Customs Act 1962.
In such cases the importers should indicate the reasons in writing for
such protest, which will be registered by the customs officers and intimated to
the Importers. The advantage of
paying the duty under protest is that in such cases the time stipulated in Section 27 of
customs Act, 1962 to prefer refund claim shall not
apply.
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Q.13 What is meant by effective rate of duty?
A
The statutory or the highest rate of duty is specified in the Tariff
Schedules for each of the articles.
The rate of duty so specified may be reduced by issue of exemption
notifications. For computing the
amount of duty payable, the rate of duty indicated in the exemption notification
has to be taken. Such rate is commonly known as ‘Effective rate of duty’. If the exemption notification imposes
any conditions, the reduced rate of duty is applied subject to fulfillment of
the conditions laid down therein.
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