CUSTOMS & EXCISE

Background of customs law
 Customs duty is on import into India and export out of India. The rate

of duty is as prescribed in Customs Tariff Act,1975. Import duty is levied on almost all items, while export duty is levied only on a few limited products, where Indian goods are in commanding position.
 Import and export duty is a union subject and is power to levy is

derived from constitution
 Customs duty is levied in the following cases:  On free replacements and free supplies  In the case of warehoused goods, the goods continue to be in

customs bond. Import takes place only when goods are cleared from the warehouse.  In case of export, tax is levied is complete only when goods cross territorial waters of India.
 Territorial waters of India means that portion of sea which is up to 12

nautical miles from the base line on the coast of India.

Goods under customs act  Customs duty is on ‗goods‘ as per section 12 of customs act. aircrafts and vehicles (b) stores (c ) baggage (d) currency and negotiable instruments and (e)any other kind of movable property . The duty is payable on goods belonging to Government as well as goods not belonging to the government  Section 2(22) gives inclusive definition of goods as follows: ‗Goods‘ include (a)vessels.

or as the case may be. for export from India for delivery at the time and place of exportation. where the buyer and seller of the goods are not related and price is the sole consideration for the sale subject to such other conditions as may be specified in the rules made in this behalf :  Provided such transaction value in the case of imported goods shall include.Valuation of goods  The value of the imported goods and export goods shall be the transaction value of such goods. the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation. any amount paid or payable for costs and services  Provided also that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented . in addition to the price.

it may. having regard to the trend of value of such or like goods.Valuation of goods  The Board has the authority to fix tariff values for any class of imported goods or export goods if it is satisfied that it is necessary to do so. and where any such tariff values are fixed. the duty shall be chargeable with reference to such tariff value  For the purpose of this section ―rate of exchange‖ means the rate of exchange —  determined by the Board. or  ascertained in such manner as the Board may direct. for the conversion of Indian currency into foreign currency or foreign currency into Indian currency. . by notification in the Official Gazette.

on the date on which a bill of entry for home consumption in respect of such goods is presented under that section. Provided that if a bill of entry has been presented before the date of entry inwards of the vessel or the arrival of the aircraft by which the goods are imported  The provisions of this section shall not apply to baggage and goods imported by post. on the date of payment of duty.  in the case of goods cleared from a warehouse under section 68. shall be the rate and valuation in force.Date for determination of rate of duty and tariff valuation of imported goods  The rate of duty and tariff valuation.  in the case of goods entered for home consumption under section 46. on the date on which a bill of entry in respect of such goods is presented under that section. . if any. applicable to any imported goods.  in the case of any other goods.

Date for determination of rate of duty and tariff valuation of export goods  The rate of duty and tariff valuation. applicable to any export goods. if any. shall be the rate and valuation in force  The provisions of this section shall not apply to baggage and goods exported by post .

re-assess the duty leviable on such goods . self-assess the duty. the proper officer may require the importer. without prejudice to any other action which may be taken under this Act. as the case may be. shall. if any. or an exporter entering any export goods. examine or test any imported goods or export goods or such part thereof as may be necessary  For verification of self-assessment . whereby the duty leviable on the imported goods or export goods. insurance policy. catalogue or other document. examination or testing of the goods that th e self-assessment is not done correctly. the proper officer may. broker‘s note. leviable on such goods  The proper officer may verify the selfassessment of such goods and for this purpose. can be ascertained.Assessment of duty  An importer entering any imported goods . and to furnish any information required for such ascertainment which is in his power to produce or furnish  Where it is found on verification. exporter or any other person to produce any contract.

the amount paid shall be adjusted against the duty finally assessed and if the amount so paid falls short of. binding himself in a sum equal to twice the amount of the excess duty . the proper officer may. require the importer to execute a bond. as the case may be  (b) in the case of warehoused goods. then –  (a) in the case of goods cleared for home consumption or exportation. as the case may be. or is in excess of the duty finally assessed. the importer or the exporter of the goods shall pay the deficiency or be entitled to a refund. where the duty finally assessed or re-assessed.Provisional assessment of duty When the duty leviable on such goods is assessed finally or reassessed by the proper officer in accordance with the provisions of this Act. is in excess of the duty provisionally assessed.

paid on such duty to any other person  (d) the export duty as specified in section 26  (e) drawback of duty payable under sections 74 and 75 . as the case may be. paid on such duty to any other person  (b) the duty and interest. if any. instead of being credited to the Fund. as the case may be. if any. or the exporter.Provisional assessment of duty The amount of duty refundable under sub-section (2) and the interest under sub-section (4). paid on such duty borne by the buyer. if any. if such amount is relatable to  (a) the duty and interest. be paid to the importer or the exporter. if any. if he had not passed on the incidence of such duty and interest. shall. if he had not passed on the incidence of such duty and interest. if any. paid on such duty on imports made by an individual for his personal use  (c) the duty and interest. if any. paid on such duty paid by the importer.

Determination of duty where goods consist of articles liable to different rates of duty Except as otherwise provided in any law for the time being in force. be chargeable to duty at the highest of such rates articles not liable to duty shall be chargeable to duty at the rate at which articles liable to duty with reference to value are liable under clause (b)  (b)  (c) . and if they are liable to duty at different rates. if they are liable to duty at the same rate. where goods consist of a set of articles. duty shall be calculated as follows  (a) articles liable to duty with reference to quantity shall be chargeable to that duty articles liable to duty with reference to value shall. be chargeable to duty at that rate.

or with the consent of the owner in any  (a)  (b) . the value of damaged or deteriorated 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.Abatement of duty on damaged or deteriorated goods The duty to be charged on the damaged or deteriorated goods shall bear the same proportion to the duty chargeable on the goods before the damage or deterioration which the value of the damaged or deteriorated goods bears to the value of the goods before the damage or deterioration  For the purposes of this section. or such goods may be sold by the proper officer by public auction or by tender.

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.Remission of duty on lost. the Assistant Commissioner of Customs or Deputy Commissioner of Customs shall remit the duty on such goods The owner of any imported goods may. destroyed or abandoned goods  (1) Without prejudice to the provisions of section 13. 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  (2) . at any time before clearance for home consumption.

Refund of export duty in certain cases Where on the exportation of any goods any duty has been paid. such duty shall be refunded to the person by whom or on whose behalf it was paid. if –  (a) 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  (b)  (c) an application for refund of such duty is made before the expiry of six months from the date on which the proper officer makes an order for the clearance of the goods .

from the date of payment of such duty or interest .Claim for refund of duty  Any person claiming refund of any duty or interest (a) paid by him or (b) borne by him  May make an application in such form and manner as may be prescribed for such refund to the Assistant Commissioner of Customs or Deputy Commissioner of Customs before the expiry of one year.

but usually incidence is transferred over to the buyer  Central Govt.) . is responsible for levy & collection of excise in India  Few Exceptions (Liquor. narcotics – state govt.Excise Duty  Excise is the duty levied on goods produced or manufactured in India for sale in India  Usually not applicable to goods that are exported  Indirect Tax  Levied on the manufacturer.

Administration of Excise  The tax / duty is administered by the Central Govt. under the authority of Entry 84 of the Union List (List 1) under the 7th Schedule read with the Article 246 of the Constitution of India  The Laws are administered by the CBEC through its Central Excise Commissionerates  India  23 Zones  93 Commissionerates (each zone headed by a Chief Commissioner)  Divisions headed by Deputy / asst commissioners  Ranges headed by Superintendents .

1944  The rates of duty are prescribed under the Section I and II of the Central Excise Tariff Act. 1985  Taxable Event  Manufacture  Liability of Central Excise duty arises as soon as the goods are manufactured  Howerver. manufacturer has the flexibility to pay the duty at the time of clearance of goods from the factory premises .Administration of Excise  The Central Excise Duty is levied in terms of the Central Excise Act.

Bases of Excise Duty  Specific Duty  Duty is charged at a particular rate fixed per unit or number. weight. volume or area  Slabs  The rate of duty levied varies depending on the total volume or value during a given period  Compounded duty  Levied on the production capacity irrespective of the actual production  Ad valorem duty  The amount of duty leviable is fixed as a percentage of the ‗assessable value‘ of the product (where ‗assessable value‘ refers to the price at which the product being assessed for excise duty is sold ordinarily at the place and time of removal of .

1985  Special Excise Duty : As per the Section 37 of the Finance Act.1978 Special excise Duty was attracted on all excisable goods on which there is a levy of Basic excise Duty under the Central Excises and Salt Act.1944  Charged under section 3 of the Central Excise Act. 1985 . and at the rates set forth in the Schedule II to the Central Excise Tariff Act. 1944 on all excisable goods other than salt which are produced or manufactured in India at the rates set forth in the Schedule I to the Central Excise Tariff Act.Kinds of Excise Duty  Basic Excise Duty : Charged under section 3 of the Central Excise Act. 1944 on all excisable goods.

.1957 authorises the levy and collection in respect of the goods described in the Schedule to this Act.  This is levied in lieu of sales Tax and shared between Central and State Governments.Kinds of Excise Duty  Additional Duty : Section 3 of the Additional duties of Excise (goods of special importance) Act.

input service and capital goods (for which credit can be allowed) are as specified in the Rule 2 of the CENVAT Credit Rules.CENVAT Credit  This gives provision for allowing credit of the duty paid on inputs & capital goods and the service tax paid on input services used for the manufacture of the final products / services  The credit so obtained can be utilized for payment of the duty leviable on the final product  The scheme was introduced for avoiding multi level taxation on same product or service (also called cascading effect)  The definitions for Input goods. 2004 .

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