import clearance

7/31/2019 Import Clearance

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Import

clearance

andcustom duty


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Customs duties

Types of customs duties

Import of goods into India attracts customs duty.Customs duty consists of :

Basic customs duty

Additional duty/Counter Vailing Duty (CVD)

levied under section 3 of Customs Tariff Act Special additional duty levied under section 3A

of Customs Tariff Act


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STEPS OF IMPORT CLEARANCE

PURCHASE ORDER CONDITION

L. C. CONDITIONS

MODE OF DESPATCH

ARRANGEMENT OF CARRIER COLLECTION OF DELIVERY ORDER

CUSTOM CLEARANCE

STORAGE AND ONWARD DESPATCH TOPROJECT SITE

ARRANGEMENT OF RE EXPORT

SETTLEMENT OF CUSTOM DISPUTE


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Customs clearance processes

Arrival of carrier - Cargo Arrival Notice Filing of Manifest - Cargo declaration

Filing of Bill of Entry - Import declaration

Assessment Appraisal

Classification

Valuation

Payment of duty

Examination

Release of goods


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Import processing - Steps involved

Cargo Arrival Notice by shipping/Air lines tothe importer

Along with IGM, an application for entryinwards has to be filed by the shipping/Air line

Preparation of BOE ( BILL OF ENTRY )

Submission of import documents and relevant

supporting documents


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Import processing - Steps involved

Submission of BOE for home consumption

Appraisal and Assessment

Approval by the Assistant Commissioner(Customs) (AC) of the assessment and

Payment of duty, examination and

Out of Charge by Customs


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Customs duties

Types of customs duties

Import of goods into India attracts customs duty.Customs duty consists of :

Basic customs duty

Additional duty/Counter Vailing Duty (CVD)levied under section 3 of Customs Tariff Act

Add Cess (Education) on CVD, if any Special additional duty (SAD) levied under section

3A of Customs Tariff Act

Add Cess (Education) on Total Custom Duty


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Customs duty Calculation

(I)

Value of goods (CIF) + 1% of CIF value as Landing chargespaid in India (A) 100.0

Basic customs duty @ 25 % (B) 25.0

Total = (A) + (B) =(C) 125.0 Additional duty/CVD @ 16 % of (C)=(D) 20.0

Total = (C) + (D) =(E) 145.0

Special additional duty @ 4 % of (E) = (F) 5.8

Total landed cost = (E) + (F) =(G) 150.8

Effective duty = (G) - (A) = 50.8 The table provides the method of calculating effective customs

duty

(Cess to be added on CVD & Total Custom Duty)


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Customs duty Calculation

(II) For ITA Items Value of goods (CIF) + 1% of CIF value as Landing charges paid

in India (A) 100.0MEGA ITA

Basic customs duty @ 0 % (B) NIL NIL

Total = (A) + (B) =(C) 100.0 100.000

Additional duty/CVD @ 0/16 % of (C)=(D) NIL 16.000

Total = (C) + (D) =(E) 100.0 116.000

Special additional duty @ 4 % of (E) = (F) 4.0 4.640

Total landed cost = (E) + (F) =(G) 104.0 120.640

Custom duty = (G) - (A) = 4.0 20.640

Education Cess @ 2% => 0.08 0.413

Effective Custom Duty => 4.08 21.053(The table provides the method of calculating effective customsduty)

(Cess to be added after CVD & Total Custom Duty)


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NEW TARIFF CALCULATION (III)EFECTIVE FROM 1.3.2005

Value of goods (CIF) + 1% of CIF value as Landing charges paid in India(A) 100.000

Basic customs duty @ 15 % (B) 15.000 Total = (A) + (B) = (C) 115.000 Additional duty/CVD @ 16 % of (C) =>(D) 18.400 Education Cess @ 2% (E) 0.368 Total CVD (D) + (E) = (F) 18.768 Total Custom Duty (B) + (F) 33.768 Education Cess @ 2% (G) 0.675 Effective duty (H) =(B) + (F) + (G) => 34.443 Total landed cost = (A) + (H) => (I) 134.443

The table provides the method of calculating effective customs duty


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Value of goods (CIF) + 1% of CIF value as Landing charges paid inIndia (A) 100.000

Basic customs duty @ 12.5 % (B) 12.500Total = (A) + (B) = (C) 112.500Additional duty/CVD @ 16 % of (C) =>(D)

18.000Education Cess @ 2% (E) 0.360Total CVD (D) + (E) = (F) 18.360Total Custom Duty (B) + (F) 30.860

Education Cess @ 2% (G) 0.6172Effective duty (H) =(B) + (F) + (G) => 31.4772Special Add. Duty (J) @4% = 5.2591Total landed cost = (A) + (H) => (I) 136.7363

The table provides the method of calculating effective customs duty(For Mega Power Stations BCD/CVD/EC/SAD all are NIL.)

NEW TARIFF CALCULATION (IV)EFECTIVE FROM 1.3.2006


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Value of goods (CIF) + 1% of CIF value as Landing charges paid inIndia (A) 100.000 Basic customs duty @ 10 % (B) 10.000 Total = (A) + (B) =(C) 110.000 Additional duty/CVD @ 16 % of (C) =>(D) 17.600

Education Cess @ 2% (E1) 0.352/17.952H Education Cess @ 1% (E2) 0.176/18.128

Total CVD (D) + (E) = (F) 18.128 Total Custom Duty (B) + (F) 28.128

Education Cess @ 2% (G1) 0.56256/28.69 Education Cess @ 1% (G2) 0.28128/28.97

Effective duty (H) =(B) + (F) + (G) => 28.97184 Special Add. Duty (J) @4% = 5.15887/34.13071 Total landed cost = (A) + (H) => (I) 134.13071

The table provides the method of calculating effective customs duty

(For Mega Power Stations BCD/CVD/EC/SAD all are NIL.)

NEW TARIFF CALCULATION (IV)

EFECTIVE FROM 1.3.2007


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CALCULATION OF ASSESIBLE VALUE

INVOICE VALUE : (A) FREIGHT : (B)

OTHER CHARGES : (C)

( P&F, IAC, Etc.)

INSURANCE @ % Of A + C : ( D )

HANDLING CHARGES @ 1% of A+B+C+D : (E)

TOTAL ASSESSABLE VALUE : A+B+C+D+E

CONVERSION RATE TO INR

FORMULA FOR CALCULATING ITEM WISE ASSESSABLEVALUE :-

Value Of Items as per Invoice x Gross Assessable valueTotal Invoice value


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EXAMPLE:

FREIGHT : 1927.00 INVOICE VALUE : 34008.10 OTHER CHARGES : 3159.90

( P&F, IAC, Etc.) 39095.00

INSURANCE @ 0.04 % Of (A+ C) 37168 : 14.866 HANDLING CHARGES @ 1% of 39109.866 391.100 TOTAL ASSESSABLE VALUE : in DM 32500.966 CONVERSION RATE -- 1DM = 21.20 INR 8347420.48 Rs.

123482.10

X 837420.48 = 304898.66 Rs34008.10

Basic Duty @ 20% on Value 304898.66 = 60979.73CVD @ 16% on value 365878.39 = 58540.54

Total Duty 1,19,510.27Rs


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Classification

The rate of customs duty applicable isgoverned by the sub-heading in whichclassification of the goods is covered under

the Customs Tariff Act, 1975 (Tariff Act)

The Schedule to the Tariff Act consist of 99Chapters arranged under 21 Sections and 6digit classification code in each Chapter

Each Chapter and Section has notes that

facilitate the classification of goods therein


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84 - Machinery & Mechanical Appliances .

85 - Electrical / Electronic Machinery &

Equipment

90 - Photographic, Medical, Measuring & etc.

Instruments

(These Chapters are subjects to certain

inclusions/exclusions in line with chapters notes )

CUSTOMS TARIFF -CHAPTERS eg.


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CODES :

XX XX XX XX

First 2 digits indicates Chapter No.

Next 2 digits indicates broad category of items

Next 2 digits indicates sub heading of the broadcategory

Next 2 digits indicates item covered .

eg. Torch Code8513 10 1013 Portable electric lamps ; 10 Lamps ; 10Torch

Miners Safety Lamps - 8513 10 30


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Basic principles of classification

Dictionary meaning

Technical literature

Common parlance test

The Harmonised System of Nomenclature(HSN) is an international system ofclassification and coding of goods

Trade/commercial understanding/usage

HSN explanatory notes have persuasivevalue


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Valuation - Sec 14

As per the Rules, the value of goods shall bethe transaction value

Transaction value is the price actually paid orpayable for the imported goods when sold forexport to India

Such price would include the following:

cost of transportation, Loading, unloading andhandling charges, Cost of insurance


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Relevant date for rate of duty-S.15 of

Customs Act

In case of home consumption, date on whichBOE is presented

In case of warehoused goods, date on whichgoods are actually removed from warehouse

In case of any other goods, date of payment ofduty

If BOE presented before entry inwards ofvessel, then it shall deemed to have beenpresented on the date of such entry inwardsor the arrival, as the case may be


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Warehousing

Section 49 of the Customs Act

In case the goods entered for homeconsumption are not cleared within areasonable time may with thepermission from the concernedofficer, be permitted to be stored ina warehouse.


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Drawback provisions

Section 74 of the Customs Act deals with

drawback of duty on re-export of duty paid goods The availability of drawback is subject to the

following conditions:

at the time of import, customs duty musthave been paid on the imported goods;

the goods imported must be identifiable as

the goods exported; where the goods are used in India, such

usage must be for the prescribed period


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Where the goods are used in Indiasubsequent to their import, thedrawback rate is determined on the

basis of the duration of use of thegoods in India (i.e., the length ofperiod from the date of clearance for

home consumption and the dategoods are placed under customscontrol for export)


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Drawback provisions (contd.)

Where imported goods are re-exportedwithout use, a refund of 98 percent ofthe customs duty paid on import ofsuch goods is available. The rates of

duty drawback where the goods areput to use in India are set out below:

Length of period between the date ofclearance for home consumption andthe date when the goods are placedunder customs control for export


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Percentage of customs duty be paid as drawback

Not more than 6 months 85%

More than 6 months but not more than 12 months

70%

More than 12 months but not more than 18 months60%





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Drawback provisions (contd.)

Section 75 of the Customs Act read with section

37 of the Central Excise Act and the Customs

and Central Excise Duties Drawback Rules, 1995,

deals with drawback on imported materials used

in the manufacture of goods which are exported The drawback is allowed for the duties of

customs and excise, subject to specified

conditions and procedure Drawback is of two types

all Industry rate

brand rate

import clearance

Documents