Final Course

(Revised Scheme of Education and Training)

Study Material
(Modules 1 to 4)

Paper 8

Indirect Tax Laws

Part – II: Customs & FTP
[As amended by the Finance Act, 2019]

Module – 4
(Relevant for May, 2020 and
November, 2020 examinations)

BOARD OF STUDIES
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA

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This study material has been prepared by the faculty of the Board of Studies. The
objective of the study material is to provide teaching material to the students to
enable them to obtain knowledge in the subject. In case students need any
clarifications or have any suggestions for further improvement of the material
contained herein, they may write to the Director of Studies.
All care has been taken to provide interpretations and discussions in a manner
useful for the students. However, the study material has not been specifically
discussed by the Council of the Institute or any of its Committees and the views
expressed herein may not be taken to necessarily represent the views of the
Council or any of its Committees.
Permission of the Institute is essential for reproduction of any portion of this
material.

© The Institute of Chartered Accountants of India

All rights reserved. No part of this book may be reproduced, stored in a retrieval
system, or transmitted, in any form, or by any means, electronic, mechanical,
photocopying, recording, or otherwise, without prior permission, in writing, from
the publisher.

Edition : October, 2019

Website : www.icai.org

E-mail : bosnoida@icai.in

Committee/ : Board of Studies

Department

ISBN No. :

Price (All Modules) : `

Published by : The Publication Department on behalf of The Institute of

Chartered Accountants of India, ICAI Bhawan, Post Box
No. 7100, Indraprastha Marg, New Delhi 110 002, India.

Printed by :

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CONTENTS

PART – I : GOODS AND SERVICES TAX

MODULE – 1
Chapter 1: GST in India – An Introduction

Chapter 2: Supply under GST

Chapter 3: Charge of GST

Chapter 4: Exemptions from GST

Chapter 5: Place of Supply

Chapter 6: Time of Supply

Chapter 7: Value of Supply

MODULE – 2
Chapter 8: Input Tax Credit

Chapter 9: Registration

Chapter 10: Tax Invoice, Credit and Debit Notes

Chapter 11: Accounts and Records; E-way Bill

Chapter 12: Payment of Tax

Chapter 13: Returns

MODULE – 3
Chapter 14: Import and Export under GST

Chapter 15: Refunds

Chapter 16: Job Work

Chapter 17: Assessment and Audit

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Chapter 18: Inspection, Search, Seizure and Arrest

Chapter 19: Demands and Recovery

Chapter 20: Liability to Pay Tax in Certain Cases

Chapter 21: Offences and Penalties

Chapter 22: Appeals and Revision

Chapter 23: Advance Ruling

Chapter 24: Miscellaneous Provisions

PART – II: CUSTOMS & FTP

MODULE - 4
Chapter 1: Levy of and Exemptions from Customs Duty

Unit I-Introduction to Customs Law

Unit-II -Levy and Exemptions

Chapter 2: Types of Duty

Chapter 3: Classification of Imported and Export Goods

Chapter 4: Valuation under the Customs Act, 1962

Chapter 5: Importation, Exportation and Transportation of Goods

Chapter 6: Duty Drawback

Chapter 7: Refund

Chapter 8: Foreign Trade Policy

Unit I – Introduction to FTP

Unit II – Basic Concepts relating to Export Promotion Schemes

under FTP

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DETAILED CONTENTS : MODULE - 4

CHAPTER 1 – LEVY OF AND EXEMPTIONS FROM CUSTOMS DUTY

Learning Outcomes ............................................................................................................... 1.1

UNIT I-INTRODUCTION TO CUSTOMS LAW

1. Basic Concepts ............................................................................................................ 1.2
2. Constitutional provisions ......................................................................................... 1.3
3. Overview of the Customs Law ................................................................................ 1.3

UNIT-II -LEVY AND EXEMPTIONS

1. Determining factors ................................................................................................... 1.8

2. Point and circumstances of levy ............................................................................ 1.9
3. Procedure, mechanism and organisation for assessment of duty.............. 1.20
4. Remission, abatement and exemptions ............................................................. 1.22
Test your knowledge .......................................................................................................... 1.39
Answers/Hints ....................................................................................................................... 1.41
Significant select cases ...................................................................................................... 1.48

CHAPTER 2 - TYPES OF DUTY

Learning Outcomes ............................................................................................................... 2.1

1. Basic customs duty [Section 12 of the Customs Act &
Section 2 of the Customs Tariff Act] .................................................................... 2.2
2. Integrated Tax [Sections 3(7) of the Customs Tariff Act] ................................ 2.3
3. Goods and Services Tax Compensation Cess
[Section 3(9) of the Customs Tariff Act] ............................................................... 2.3
4. Manner of Computing value in case of warehoused goods
[Section 3(8A) of the Customs Tariff Act] ............................................................ 2.5

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5. Additional duty of Customs under Section 3 of Customs Tariff Act ............ 2.6
6. Protective duties [Sections 6 & 7 of the Customs Tariff Act] ........................ 2.7
7. Emergency power to impose or enhance export duties
[Section 8 of Customs Tariff Act] ........................................................................... 2.8
8. Emergency power to impose or enhance import duties [Section 8A of
Customs Tariff Act] .................................................................................................... 2.9
9. Safeguard duty [Section 8B of the Customs Tariff Act] ................................... 2.9
10. Countervailing duty on subsidized articles [Section 9 of the
Customs Tariff Act] .................................................................................................. 2.11
11. Anti-dumping duty [Section 9A of the Customs Tariff Act] ......................... 2.14
12. No levy under section 9 or section 9A in certain cases
[Section 9B of the Customs Tariff Act] ............................................................... 2.21
13. Appeal [Section 9C of the Customs Tariff Act] ................................................ 2.23
14. Social Welfare Surcharge on Imported Goods................................................. 2.24
Test your knowledge .......................................................................................................... 2.25
Answers/Hints. ..................................................................................................................... .2.26

CHAPTER 3 - CLASSIFICATION OF IMPORTED AND EXPORT GOODS

Learning Outcomes ............................................................................................................... 3.1

1. Customs Tariff ............................................................................................................. 3.2
2. General explanatory notes ....................................................................................... 3.3
3. Rules of Interpretation of the First Schedule to Customs Tariff Act ............ 3.6
4. Project imports ......................................................................................................... 3.12
Test your knowledge .......................................................................................................... 3.14
Answers/Hints ....................................................................................................................... 3.14
Significant select cases ...................................................................................................... 3.16

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CHAPTER 4 - VALUATION UNDER THE CUSTOMS ACT, 1962

Learning Outcomes ............................................................................................................... 4.1

1. Introduction ................................................................................................................. 4.2
2. Concept of value ........................................................................................................ 4.2
3. Terms used in commercial parlance ..................................................................... 4.4
4 Technical terms relating to value in the course of import or export –
International Commercial (INCO) Terms.............................................................. 4.7
5. Concept of indirect tax and valuation for the same ......................................... 4.7
6. Two approaches for computing the assessable value ..................................... 4.8
7. Valuation of goods based on section 14 ............................................................. 4.9
8. Customs Valuation (Determination of Value of Imported
Goods) Rules, 2007 .................................................................................................. 4.12
9. Customs Valuation (Determination of Value of Export
Goods) Rules, 2007 .................................................................................................. 4.42
10. Date for determination of rate of duty and tariff value ................................ 4.47
11. Special provisions for classification of sets of articles and accessories .... 4.66
Test your knowledge .......................................................................................................... 4.68
Answers/Hints ....................................................................................................................... 4.73
Significant select cases ...................................................................................................... 4.82

CHAPTER 5 - IMPORTATION, EXPORTATION AND TRANSPORTATION OF

GOODS

Learning Outcomes ............................................................................................................... 5.1

1. Introduction ................................................................................................................. 5.2
2. Importation .................................................................................................................. 5.2
3. Definitions of important terms. .............................................................................. 5.2
4. Statutory provisions .................................................................................................. 5.7
5. Procedure for clearance of imported goods .................................................... 5.13
6. Exportation .................. ……………………………….………………………………………………5.30

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7. Procedure for the clearance of export goods .................................................. 5.34

8. Procedure for postal articles ................................................................................. 5.36
9. Special provisions relating to stores ................................................................... 5.38
10. Special procedures relating to clearance of baggage ................................... 5.41
11. Transit and Transhipment ...................................................................................... 5.53
Test your knowledge .......................................................................................................... 5.63
Answers/Hints ....................................................................................................................... 5.65

CHAPTER 6 - DUTY DRAWBACK

Learning Outcomes ............................................................................................................... 6.1

1 Introduction ................................................................................................................. 6.2
2 Drawback allowable on re-export of duty paid goods
[Sub-section (1) and (3) of Section 74] ............................................................... 6.3
3 Amount of drawback where imported goods are used before
re-exportation [Section 74(2)] ................................................................................ 6.6
4 Re-export of Imported Goods (Drawback of Customs Duties)
Rules, 1995 ................................................................................................................. 6.10
5 Drawback on imported materials used in the manufacture
of export goods [Section 75] ............................................................................... 6.13
6 Customs and Central Excise Duties Drawback Rules, 2017 .......................... 6.17
7 Interest on drawback [Section 75A] .................................................................... 6.29
8 Prohibition and regulation of drawback [Section 76] .................................... 6.31
Test your knowledge .......................................................................................................... 6.32
Answers/Hints ....................................................................................................................... 6.33

CHAPTER 7 - REFUND

Learning Outcomes ............................................................................................................... 7.1

1 Introduction ................................................................................................................. 7.2
2 Application for refund of import duty or interest [Section 27] ..................... 7.2

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3 Processing of refund claim [Section 27(2)] ......................................................... 7.3

4. Doctrine of unjust enrichment with respect to refund of duty ..................... 7.4
5 Interest on delayed refund [Section 27A] ........................................................... 7.7
6 Refund of export duty in certain cases [Section 26]......................................... 7.7
7 Refund of import duty in certain cases [Section 26A] ..................................... 7.8
8 Refund claim cannot be a substitute for appeal ............................................. 7.10
Test your knowledge .......................................................................................................... 7.11
Answers/Hints ....................................................................................................................... 7.13
Significant select cases ...................................................................................................... 7.18

CHAPTER 8 –FOREIGN TRADE POLICY

Learning Outcomes ............................................................................................................... 8.1

UNIT-I: INTRODUCTION TO FTP

1. Introduction ................................................................................................................. 8.2
2. Provisions regarding imports and exports .......................................................... 8.9

UNIT II: BASIC CONCEPTS RELATING TO EXPORT PROMOTION SCHEMES

UNDER FTP

1. Duty Exemption & Remission Schemes ............................................................. 8.19

2. Reward Schemes – MEIS, SEIS and Status Holders ......................................... 8.28
3. Export Promotion Capital Goods Scheme (EPCG) ........................................... 8.37
4. EOU, EHTP, STP & BTP Schemes .......................................................................... 8.41
5. Deemed Exports ....................................................................................................... 8.48
6. Penalties...................................................................................................................... 8.51
7. Glossary (Acronyms) ................................................................................................ 8.51
Test your knowledge .......................................................................................................... 8.54
Answers/Hints ....................................................................................................................... 8.56

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