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CS Professional – Customs Law Revision Notes

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Chapter 1 – Basic Concepts of Customs Law

  • Customs duty is imposed on goods imported into or exported out of India as per the rates specified under the Customs Tariff Act, 1975 or any other law.
  • The custom duty is considered to be charged on the goods imported and not on the person importing or paying the duty. It is expected to be passed on to the buyer.
  • Government goods shall be treated at par with non-government goods for the purpose of levy of custom duty, though government goods may be exempted by notification(s) under Section 25.
  • The basic condition for levy of customs duty is import/export of goods i.e. goods become liable to duty when there is import into (bringing into India from a place outside India) or export from (taking out of India to a place outside India) India.
  • If goods are imported into India after exportation there from, such goods shall be liable to duty and be subject to all the conditions and restrictions, if any, to which goods of the like kind and value are liable or subject, on the importation thereof.
  • 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. (Section 13)
  • Without prejudice to the provisions of section 13, where it is shown to the satisfaction of the Assistant Commissioner of Customs or Deputy Commissioner of Customs that any imported goods have been lost (otherwise than as a result of pilferage) or destroyed, at any time before clearance for home consumption, the Assistant Commissioner of Customs or Deputy Commissioner of Customs shall remit the duty on such goods.
  • The owner of any imported goods may, at any time before an order for clearance of goods for home consumption under section 47 or an order for permitting the deposit of goods in a warehouse under section 60 has been made, relinquish his title to the goods and thereupon he shall not be liable to pay the duty thereon.

However, the owner of any such imported goods shall not be allowed to relinquish his title to such goods regarding which an offence appears to have been committed under this Act or any other law for the time being in force.

  • Types of duties under Customs Act, 1962: Basic Custom Duty, Integrated Tax, Goods and Services Tax Compensation Cess, Additional Duty of Customs, Special Additional Duty, Protective Duty, Safeguard Duty, Countervailing Duty on Subsidized Articles, Provisional Countervailing Duty on Subsidized Articles, Anti-Dumping Duty, Provisional Anti-Dumping Duty.


Chapter 2 – Valuation and Assessment of Imported and Export Goods and Procedural Aspects

  • The CBIC is the authority to appoint and designate establishments under the Act
  • The types of Customs Duties are Basic Customs Duty (BCD). Countervailing duty (CVD) and Special Additional Duty (CVD) are now subsumed under GST
  • There are other types of duties, which are protective duties, intended to safeguard the interests of the indigenous goods / industry
  • Goods become liable for duty when they are imported in to / exported out of India
  • The rates of customs duty are specified under the Customs Tariff Act
  • BCD is calculated on AV. Education Cess (EC) & Secondary Higher Education Cess(SHEC) is calculated on BCD. IGST is calculated on all (AV Plus all Customs Duties). GST Compensation Cess, like IGST is calculated on (AV Plus all Duties)
  • Warehouses allow goods to be stored and deferment of duty. The Goods are to be released from the Warehouse, subject to “clearance”; i.e.; post assessment and payment of Duty.
  • The Duty Drawback is a facility that enables the Exporter to obtain a refund of the Import Duties (Customs Duty) paid on inputs, which are processed for manufacture of goods to be exported.
  • In transit; the goods remain in the same vessel and consequently reach the port of clearance. In transhipment, however, the vessel after reaching an intermediate port, transfers the goods to another vessel and the second vessel into which the goods are transferred (loaded) from the 1st vessel, carries the goods to the destination port.
  • The Act and the Rules provide well defined procedures for import / export and the roles and responsibilities of the parties involved, including the Importer, the Exporter, the Custodian, the Customs and the Carrier
  • Varied types of assessments could take place pre-post clearances and there could be circumstances that could allow the refund of the import / the export duty, subject to timelines and conditions being fulfilled
  • The Act provides and enunciates circumstances wherein the goods can be confiscated or fines and penalties can be levied in lieu of the confiscation
  • Offences under the act could attract civil or criminal liabilities or both
  • Advance Ruling refers to the determination, by the authority, of a question of law / fact specified in the application, regarding the liability to pay duty in relation to an activity proposed to be undertaken by an applicant.
  • The Central Government may if it deems necessary to do so in the general interest of the public, exempt goods generally or specifically.


Chapter 3 – Arrival or Departure and Clearance of Goods, Warehousing, Duty Drawback, Baggage & Miscellaneous Provisions

  • There are different procedures for Import and Export for different mode of transport.
  • Customs Tariff Act, 1975 has two Schedule which lay down the classification and rate of duty of goods
  • The person in charge is the representative of the transporter carrying goods through his conveyance.
  • The master of a vessel shall not permit the unloading of any imported goods until an order has been given by the proper officer granting entry inwards to such vessel.
  • Imported Goods not to be unloaded unless mentioned in Import Manifest or Import Report.
  • There are three kinds of Bills of Entry viz., (i) Bill of Entry for Home-consumption (White Colour) (ii) Warehousing (into-Bond) Bill of Entry (Yellow Colour) (iii) Bill of Entry for Clearance ‘Ex-Bond’ (Green Colour).
  • Warehousing is a very useful facility in export import business. Importer can deposit the dutiable goods in a bonded warehouse without payment of duty. This facility is available to traders as well as importers.
  • The owner of any warehoused goods may with the permission of the proper officer, remove them from one warehouse to another subject to such conditions as may be prescribed.
  • If import duty paid goods are exported with or without any value addition, the import duties and other taxes paid on such goods at input level are refunded in the form of duty drawback.


Chapter 4 – Advance Ruling, Settlement Commission, Appellate Procedure, Offences and Penalties

  • Application for advance ruling can be filed by any person holding a valid IEC number or by any person exporting any goods in India or with a justifiable cause to the satisfaction of the Authority for the reason of Classification of goods, application of a notification issued under sub-section (1) of section 25, principles to be adopted for determination of value of goods, application of notification issued in respect of duties under this Act, determination of origin of goods and for any other matter as the Central Government may notify.
  • The application for advance ruling can be filed before advance ruling authority in Form AAR (CUS-1). On receipt of application, the authority, if necessary, call for relevant records and after examining the application and record may allow or reject the application after giving an opportunity to the applicant of being heard. The Authority shall pronounce the order within three months from receipt of application and shall forward copy of order to Principal Commissioner/Commissioner of Customs.
  • There are three stages of appeal. First stage is appeal to Commissioner (appeal). Any person aggrieved by any decision or order passed under this Act by an officer of Customs below the rank of a Principal Commissioner/Commissioner of Customs may appeal to the Commissioner (Appeal) within sixty days from the date of the communication to him of such decision or order in Form No. CA-1. The Commissioner (Appeal) shall dispose the appeal within six months from the date on which it is filed.
  • Second stage of appeal is appeal to Appellate Tribunal having judicial and technical members. Appeal to Appellate Tribunal can be filed within three months from the date of communication of order in Form CA-5. The Appellate Tribunal shall pass an order confirming, modifying or annulling the decision or order appealed against and decides the appeal within three years from the date of appeal.
  • Third stage of appeal is appeal to High Court. This appeal can be filed within One Hundred and Eighty days from the date when the order being appealed against was received by the Principal Commissioner/Commissioner of Customs. Appeal to Supreme Court can be filed within sixty days from the date of receipt of order.
  • Application for settlement of cases can be filed before settlement commission. The settlement commission shall after issue of notice to the applicant and after making further inquiry, pass an order. The amount of settlement shall not be less than the duty liability admitted by the applicant.
  • Search of a person, premises and conveyance can be conducted under specified circumstances. If the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods:
  • There are civil and criminal liabilities for any offence under this Act. Civil liability includes confiscation of goods and monetary penalty provisions, and criminal liability includes provisions related to imprisonment and fine to be grated in a criminal court after prosecution.


Chapter 5 – Foreign Trade Policy (FTP) to the Extent Relevant to Indirect Tax

  • FTP is a policy document released by Central Government, Ministry of Commerce and Industry. It is a 5-year policy with revision every year by 1st April. Present Policy is from 2015 to 2020. FTP is a set of guidelines and instructions on matters relating to imports into and exports from India. It contains various policy decisions affecting foreign trade. Especially, it contains export promotion measures and procedures involved in foreign trade.
  • FTP is prepared and announced by Ministry of Commerce & Industry under Section 5 of Foreign Trade (Development & Regulation) Act, 1992. DGFT (Director General, Foreign Trade) is the authority to implement the FTP. Earlier, FTP was known as EXIM Policy.
  • Foreign trade (Development & Regulation) Act, 1992 is the basic and fundamental law governing imports and exports. It lays down the frame work for conducting foreign trade. The Act authorizes the Ministry of Commerce & Industry (MOC & I) to declare the Policy on foreign trade. The MOC & I announce the policy. The Director General, Foreign Trade (DGFT) assists in formulating the policy and also implements the policy
  • The basic objective of Export promotion schemes is to expand trade and economic activity to earn more foreign exchange. Various export promotion schemes are duty exemption & remission schemes, export promotion capital goods (EPCG) scheme, status holders’ scheme & reward schemes.

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