Customs Act and Import

UNIT 12 CUSTOMS ACT AND IMPORT Control Regulations

CONTROL REGULATIONS
Structure
12.0 Objectives
12.1 Introduction
12.2 Items Allowed for Import/Export
12.2.1 Prohibited Items
12.2.2 Canalized (Restricted to Certain Importers) Items
12.2.3 Restricted Items
12.3 Compliance with Laws
12.4 Procedure for Import of Goods into India
12.5 Steps for Obtaining Importer/Exporter Code (IEF No.)
12.6 Requirement of Import Authorisation
12.7 Special Import Provisions
12.8 Procedure for Import Clearance in India
12.8.1 Arrival of Goods
12.8.2 Preparing the Bill of Entry
12.8.3 Filing of Bill of Entry
12.8.4 Retirement of Documents
12.8.5 Presentation of Bill of Entry and its Noting
12.8.6 Processing of the Bill of Entry
12.9 Levy of Customs Duty
12.9.1 Import Duties
12.9.2 Excise Duties
12.9.3 Mode of Levy of Duty
12.9.4 Valuation of Goods
12.9.5 Classification of Goods for Assessment of Duty
12.9.6 Assessment of Customs Duty
12.9.7 Guidelines for Rate or Duty and Tariff Valuation
12.9.8 Payment of Import Duty
12.9.9 Release of Goods
12.10 Import of Goods by Post
12.11 Warehousing of Imported Goods
12.11.1 Clearance of Warehoused Goods for Home Consumption under Ex-bond
12.11.2 Cargo Handling and Demurrage Charge
12.12 Green Channel for Import Cargo Clearance
12.13 Imports by 100% EoUs/SEZ Units
12.14 Duty Free Imports
12.15 Special Economic Zone Scheme (SEZ)
12.16 Import of Commercial Samples
12.16.1 Commercial Samples (Paid for)
12.16.2 Commercial Samples and Prototypes (Free of Charge)
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Export and Import 12.17 Exchange Control Regulations and Imports
Laws and Regulations
12.17.1 Evidence of Import
12.17.2 Time Limit for Settlement of Import Payments
12.17.3 Advance Remittance
12.17.4 Refund of Advance Remittance
12.17.5 Receipt of Import Bills/Documents
12.17.6 Interest on Import Bills
12.18 Let Us Sum Up
12.19 Key Words
12.20 Answers to Check Your Progress Exercises
12.21 Suggested Reading

12.0 OBJECTIVES
After reading this unit, we shall be able to understand as to:
• which are the goods that can be imported/exported freely;
• which are goods prohibited or canalized through designated agencies;
• which are the restricted items for import/export;
• what are the reasons for prohibiting the import/export of certain goods;
• what is the procedure for import of goods into India;
• what is importer/exporter code (IEC No.);
• what are the customs duties paid for import of goods;
• how customs duty is assigned for imported goods;
• the procedure for import of goods by post;
• procedure for warehousing of imported goods; and
• procedure for duty free import or import under SEZ scheme.

12.1 INTRODUCTION
Internationally, all import and export shipments originating or entering in a
country are regulated through the customs laws and regulations of respective
country. In India, all import and export shipments are cleared through various
customs check points as per provisions contained in the Indian Customs Act
(ICA) 1962. Section 7 of the ICA defines customs check points as under:
• The ports and airports which alone shall be customs ports or customs
airports for the unloading of imported goods and the loading of export
goods or any class of such goods.
• The places which alone shall be inland container depots for the unloading
of imported goods and the loading of export goods or any class of such
goods.
• The places which alone shall be land customs stations for the clearance of
goods imported or to be exported by land or inland water or any class of
such goods.

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• The routes by which alone goods or any class of goods specified in the Customs Act and Import
Control Regulations
notification may pass by land or inland water into or out of India, or to or
from any land customs station from or to any land frontier.
• The ports which alone shall be coastal ports for the carrying on of trade in
coastal goods or any class of such goods with all or any specified ports in
India.
Section 8 of ICA empowers the Commissioner of Customs to approve proper
places in any customs port or customs airport or coastal port for the unloading
and loading of goods or for any class of goods and specify the limits of any
customs area.

12.2 ITEMS ALLOWED FOR IMPORT/EXPORT

Generally, all the items are freely allowed to be imported/exported except for
the list of goods that are notified as prohibited or canalized through agencies
designated in the Foreign Trade Policy announced by the Director General of
Foreign Trade (DGFT) under Section 5 of the Foreign Trade (Development &
Regulation) Act, 1992 (No.22 of 1992). However, Section 11 of the ICA deals
with power to prohibit import or export of goods if the Central Government is
satisfied that it is necessary to do so for any of the following purposes:
a) The maintenance of the security of India;
b) The maintenance of public order and standards of decency or morality;
c) The prevention of smuggling;
d) The prevention of shortage of goods of any description;
e) The conservation of foreign exchange and the safeguarding of balance of
payments;
f) The prevention of injury to the economy of the country by the uncontrolled
import or export of gold or sliver;
g) The prevention of surplus of any agricultural product or the product of
fisheries;
h) The maintenance of standards for the classification, grading or marketing
of goods in international trade;
i) The establishment of any industry;
j) The prevention of serious injury to domestic production of goods of any
description;
k) The protection of human, animal or plant life or health;
l) The protection of national treasures of artistic, historic or archaeological
value;
m) The conservation of exhaustible natural resources;
n) The protection of patents, trade marks and copyrights;
o) The prevention of deceptive practices;
p) The carrying on of foreign trade in any goods by the State, or by a
Corporation owned or controlled by the State to the exclusion, complete or
partial, of citizens of India;
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Export and Import q) The fulfilment of obligations under the Charter of the United Nations for
Laws and Regulations
the maintenance of international peace and security;
r) The implementation of any treaty, agreement or convention with any
country;
s) The compliance of imported goods with any laws which are applicable to
similar goods produced or manufactured in India;
t) The prevention of dissemination of documents containing any matter which
is likely to prejudicially affect friendly relations with any foreign State or is
derogatory to national prestige;
u) The prevention of the contravention of any law for the time being in force;
and
v) Any other purpose conducive to the interests of the general public.

List of items prohibited or restricted for Import are as under:

12.2.1 Prohibited Items

• Certain animals and plants and parts or products falling under CITES
(Convention on International Trade in Endangered Species of Wild Flora
and Fauna).
• Wild animals as defined under Wild Life Protection Act, 1972.
• Meat of Wild Animals.
• Pig fat, fat of bovine animals, sheep or goat.
• Natural Abrasives - Emery, Natural.
• Publications containing maps showing incorrect boundaries of India.

12.2.2 Canalized (Restricted to Certain Importers) Items

• Rice (through FCI, STC, MMTC, PEC).
• Cereals other than seed quality (through FCI).
• Petroleum Oil.

12.2.3 Restricted Items

• Live Animals - other than defined under Wild Life Act, 1972
• Live plants
• Meat of Bovine Animals
• Bird's eggs, in shell, fresh, preserved or cooked
• Guts, Bladder and stomach of animals other than fish
• Potatoes, Garlic
• Australian Lupin Seeds
• Nutmeg, mace and Cardamom
• Seeds
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• Cereals Customs Act and Import
Control Regulations
• Inorganic Chemicals
• Organic or Inorganic Compounds of (i) Precious Metals, (ii) Rare Earth
Metals, (iii) Radioactive Elements of Isotopes CANALIZED (restricted to
certain importers)
• Rice (through FCI)
• Cereals other than seed quality (through FCI)
• Petroleum Oil

12.3 COMPLIANCE WITH LAWS

Paragraph 2.2 of the policy provides that every exporter or importer shall
comply with the provisions of the Foreign Trade (Development and
Regulation) Act, 1992, the Rules and Orders made there under, the provisions
of the Policy and the terms and conditions of any License/certificate/
permission/Authorisation granted to him, as well as provisions of any other
law for the time being in force. All imported goods shall also be subject to
domestic laws, rules orders, regulations, technical specifications,
environmental and safety norms as applicable to domestically produced goods.
No import or export of rough diamonds shall be permitted unless the shipment
parcel is accompanied by Kimberley Process (KP) Certificate required under
the procedure specified by the Gem & Jewellery Export Promotion Council
(GJEPC).

12.4 PROCEDURE FOR IMPORT OF GOODS

INTO INDIA
Any firm intending to venture into import or export activity is required to
obtain an Importer Exporter Code (IEC No.) from the Regional Licensing
Authorities (RLAs) of the Directorate General of Foreign Trade. To facilitate
the above process, the DGFT has 41 RLAs spread over across the country
indicating the areas under jurisdiction of each RLA. The IEC No. allotted to a
firm is valid for all its branches/offices/units.

12.5 STEPS FOR OBTAINING IMPORTER/

EXPORTER CODE (IEC NO.)
1) Download Aayaat Niryaat Form (ANF 2A) from the DGFT website.
2) Fill in Part A, B & D of this form.
3) Sign on each page of the application form.
4) Documents to be attached with the application form in a file cover:
• Demand Draft of Rs. 250/- evidencing payment of application fee in
favour of the concerned regional office of DGFT. Money can also be paid
through Electronic Fund Transfer (EFT).
• Certificate from your Banker in the specified format (annexed to the ANF
2A form). A copy of your photograph is to be attested by the banker on
the Certificate.
• Self certified copy of PAN issued by Income Tax Authorities.
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Export and Import • Two copies of passport size of your photograph.
Laws and Regulations
• Self addressed envelope and postal stamp of Rs. 30/-.
(Note: In case of applicants for importer exporter Code Number who are ordinarily residents of Sikkim,
trade tax / sales tax registration number issued by the State Government of Sikkim may also be accepted
as a substitute to Permanent Account Number (PAN) issued by Income Tax authorities.)
The above documents may be sent by post or hand delivered at the concerned regional DGFT office.

# Check Your Progress Exercise 1

Note: a) Use the space below for your answers.
b) Check your answers with those given at the end of the unit.
1) What do you understand by the customs check points as per Customs Act
(ICA) 1962?
………………………………………………………………………………
…………………………………………………………………………….…
…………………………………………………………………………….…
……………………………………………………………………………….
2) Define Prohibited items for import.
………………………………………………………………………………
…………………………………………………………………………….…
…………………………………………………………………………….…
……………………………………………………………………………….
3) What are canalized items? Name any one agency designated in the Foreign
Trade Policy to import canalized goods.
………………………………………………………………………………
…………………………………………………………………………….…
…………………………………………………………………………….…
……………………………………………………………………………….
4) Name any two items which are classified under restricted list of items?
………………………………………………………………………………
…………………………………………………………………………….…
…………………………………………………………………………….…
……………………………………………………………………………….
5) What is IEC No.?
………………………………………………………………………………
…………………………………………………………………………….…
…………………………………………………………………………….…
……………………………………………………………………………….

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 Customs Act and Import
12.6 REQUIREMENT OF IMPORT Control Regulations
AUTHORISATION
As discussed above, no license or permission is required from DGFT for
import of goods into India, except those listed as prohibited, canalized, or
restricted items in Schedule II of Indian Trade Classification (Harmonised
System) ITC (HS). The ITC (HS) volume published by the Directorate
General of Commercial Intelligence & Statistics (DGCI&S) details the
classification of items of import or export into 99 chapters – each chapter
covering a specific product group category.

12.7 SPECIAL IMPORT PROVISIONS

As per the current Foreign Trade Policy & Procedure, the import of goods is
also permissible under the following special schemes designed to encourage
export:
• Export Promotional Capital Goods Scheme (EPCG) under which capital
goods can be imported at a concessional/custom duty rate subject to export
obligation.
• Duty Exemption/Remission Scheme and Duty Entitlement Pass Book
Scheme under which imported raw materials and components etc. required,
as imports for export production are made available to the registered
exporters in advance free of Custom duty.
• Diamond, Gem and Jewellery Export Promotion Scheme and Diamond
Dollar Account Scheme for promoting export of Gold silver and jewellery
articles etc.

12.8 PROCEDURE FOR IMPORT CLEARANCE IN

INDIA
The various steps involved in the process of customs clearance of the import
consignments are as follows:

12.8.1 Arrival of Goods

On arrival of goods, the shipping line or the airline files Import General
Manifest (IGM) with the customs authorities and transfers the cargo to the
customs bonded warehouse attached to the port of discharge. Thereafter, the
shipping line/airline sends Cargo Arrival Notice to the consignee of goods
giving details of the import consignment such as date of arrival, flight/vessel
etc.

12.8.2 Preparing the Bill of Entry

The basic document used for obtaining customs clearance of import of goods is
called the Bill of Entry. This is a very vital and important document which
every importer has to submit under section 46 of ICA for entering the imported
goods for assessment and clearance. The size of Bill of Entry is 16" × 13".
However, for computerizations purposes, 15" × 12" size is permitted. Bill of
Entry should be submitted in quadruplicate – original and duplicate for

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Export and Import customs, triplicate for the importer and fourth copy is meant for bank for
Laws and Regulations
making remittances.
The different types of Bill of Entry are as under:
1) Bill of Entry for Home Consumption
2) Bill of Entry for Warehousing
3) Bill of Entry for Ex-bond Clearance
1) Bill of Entry for Home Consumption:- is used when the imported goods
are to be cleared on payment of full duty. Home consumption means use
within India. It is white coloured and hence often called ‘white bill of
entry’.
2) Bill of Entry for Warehousing:- If the imported goods are not required
immediately, importer may like to store the goods in a warehouse without
payment of duty under a bond and then clear from warehouse when
required on payment of duty. This will enable him to defer payment of
customs duty till goods are actually required by him. This Bill of Entry is
printed on yellow paper and often called ‘Yellow Bill of Entry’. It is also
called ‘Into Bond Bill of Entry’ as bond is executed for transfer of goods in
warehouse without payment of duty.
3) Bill of Entry for Ex-bond Clearance:- The third type is for Ex-Bond
clearance. This is used for clearance from the warehouse on payment of
duty and is printed on green paper. The goods are classified and value is
assessed at the time of clearance from customs port. Thus, value and
classification is not required to be determined in this bill of entry. The
columns in this bill of entry are similar to other bills of entry. However,
declaration by importer is not required as the goods are already assessed.
The Bill of Entry contains the following particulars as regards the import
consignment:
• Vessel’s name, rotation number and date, line number;
• Country of origin and its code, county of consignment (if different from
country of origin and its code);
• Bill of lading number and its date, details of goods description, packages,
quantity and gross weight of the consignment;
• Custom tariff heading and exemption notification number and year, duty
code, and details of basic and additional duties;
• Assessable value under section 14 of the Customs Act, 1962;
• Details as regards entry port code, importer’s name and address and its
code and custom house agent code; and
• Declarations to be signed by the importer regarding correctness of the
contents of goods described in the Bill of Entry, price/value, and purchase
of goods on outright basis/consignment basis and whether that importer has
any connection with the supplier/manufacturer of the imported goods.

12.8.3 Filing of Bill of Entry

The entire process of customs clearance is complex, and it is, therefore,
desirable that services of an accredited Custom House Agent are taken for
clearance of the import consignment.
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The importer or his agent will prepare the relevant Bill of Entry and present it Customs Act and Import
Control Regulations
to the customs authorities for endorsement on the Bill of Entry.
As Electronic Data Processing system is in practice in case of customs
clearance of air consignments, the importer is required to supply information
as per prescribed format to the designated computer service centre attached to
the office of Import Cargo Unit of Customs. On the basis of the information
given by the importer, this agency prepares necessary inward clearance
document called Bill of Entry and hands it over to the importer or his
authorized Customs House Agent for further processing. Procedures for the
same has been prescribed vide Bill of Entry (Electronic Declaration)
Regulations, 1995.

12.8.4 Retirement of Documents

On receipt of information from the airlines/shipping lines regarding arrival of
goods, the importer should approach the bank for retirement of documents sent
by the exporter. The retirement of the documents depends upon the mode of
payment agreed between the importer and the exporter. In case of D/P mode of
payment the importer’s bank will release the documents sent by the exporter
when the payment is made. In case of D/A mode of payment, the importer’s
bank will release the documents when the importer accepts the usance draft
sent by the exporter. Under letter of credit mode of payment, the importer’s
bank will make payment to the exporter’s bank only when the document sent
by the exporter are found to be non-discrepant and thereafter it will release the
documents to the importer. In case the documents are found to be discrepant,
then the importer’s bank will deal with the documents as per provisions of
UCP 600.The importer should submit Form A-1 to the bank for the purchase of
foreign exchange for sending its remittance to the exporter.

12.8.5 Presentation of Bill of Entry and its Noting

The Bill of Entry, complete in all respects and with proper declarations signed
by the importer (and his clearing agent, if any) should be presented to the
Import Noting Department (IND). On receipt of the Bill of Entry, this
department (IND) conducts its scrutiny in regard to the entries in the importer
manifest, various particulars declared in the bill of entry and the attached
documents (which normally cover invoice and the Bill of Lading/Air Way Bill
at the stage). If no discrepancies are noticed, then the bill of entry is deemed to
be noted against the relevant entry in the manifest. This date of presentation is
crucial as it is used for determining the rate of duty as well as rate of exchange
in terms of Section 15 of Customs Act, 1962.
After a bill of entry is noted in the Import Department, the same is routed
through the Appraising Main Section to the Appraising Group concerned for
dealing with live documents for scrutinizing the bill of entry and noting the
rate of duty. The Bill of Entry is scrutinized to ensure that all the columns have
been duly filled in by the importer. The Bill of Entry is accompanied by
documents like:
a) Bank attested commercial invoice;
b) Copy of the letter of credit;
c) Import Authorization, of required;
d) Bill of Lading/Air Way Bill (original and non-negotiable) along with
delivery order from the carrier;
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Export and Import e) Packing List (2 copies);
Laws and Regulations
f) Insurance certificate/policy;
g) Certificate of origin;
h) If the invoice is for FOB, freight charges and insurance premium amount
certificate should be attached;
i) Catalogue/ write up/ drawing for machinery items; and
j) Importer Exporter Code Number.
The import Authorization must be valid and cover the goods imported.
Confiscation of goods is justified where the goods do not conform to the
description in the Bill of Entry and are not accompanied by the relevant import
Authorization, if required.

12.8.6 Processing of the Bill of Entry

These are two procedures for the processing of Bill of Entry for the purpose of
customs clearance of import consignment, namely:
1) First Check Procedure
2) Second Check Procedure
Once the Bill of Entry is completed by the Appraiser, and the same has been
countersigned by the Assistant Collector, then it is forwarded to the Licence
Department for debit and audit, and thereafter returned to the importers for
payment of duty in the Accounts/ Cash department. (The Bill of Entry is routed
through Licence department in only those cases where the import is being
made against licence under the Negative list or against Advance
Authorization/Duty Free Import Authorization/EPCG Authorization. After
recovery of duty, the original Bill of Entry is retained in the Accounts
Department and the duplicate and other copies are returned to the importer for
getting the goods examined in the docks. In the Docks, Shed
Appraiser/Examiner shall examine the goods, and if the consignment is in
order, he will give the out of charge for payment of the Port Trust Charges.
This procedure under which 80 to 90% of the consignments are being clear is
known as the Second Check Procedure, as against this, in the alternative
procedure what is known as the First Check Procedure, the Scrutinizing
Appraiser in the Group gives the examination order. The goods are then
examined in the docks and the Bill of Entry returned to the Scrutinizing
Appraiser for completion and Authorization/licence debit. In this case, the
Customs out of charge is given by the Accounts Department soon after the
recovery of duty. This procedure is resorted to only in cases where the
appraisers or the Assessing Group finds it difficult to complete the assessment
on the basis of the documents made available. It is worth noting that 80-90% of
the import consignments are cleared under Second Check Procedure.
The import consignment can be opened only by the proper officer of the
Customs for examination of the goods lying in a customs area. The main
function of the Appraising Department is to conduct the examination of cargo
for the purpose of assessment import duty payable by the importer. The
examination is done by the special staff of examiners in the docks/Air Cargo
shed. The result of the examination or weightment is noted on the reverse of
the Bill of Entry. It is absolutely essential that records of examination and
weightment should be made, attested and dated at the time of examination or
weightment. If examination or weightment takes place on more than one day,
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result of examination or weightment made on each day is clearly recorded. The Customs Act and Import
Control Regulations
Customs Officer also obtains on the documents the importer’s or his accredited
representative’s signature on the entries made from day-to-day showing the
result of weightment.

12.9 LEVY OF CUSTOMS DUTY

The basic legislation concerning levy of customs duties is the Customs Act,
1962 read with Customs Tariff Act, 1975. Section 12 of the Customs Act, 1962
empowers for levy of duties of customs on goods imported into or exported
from India. However, the rates at which the different import duty shall be
levied have been specified in the First Schedule to the Customs Tariff Act,
1975 called the Import Tariff.

12.9.1 Import Duties

India follows the Harmonized Code System of the World Customs
Organisation for classification of commodities (up to 10 digits). The following
are the Import Duties which are presently levied on import of goods into India.
1) Basic Customs Duty (Basic)
Import Duty, which is specified against each Heading or Sub-heading in the
first Schedule to the CTA. This is popularly called Basic Custom Duty. There
are different rates of duty for different commodities. This duty is also known
as Schedule rate and it can be changed by an Act of parliament. The duty can
also be changed by the exemption notification of the department of Revenue.
All basic duties are given as per Finance Act, 1999 and are computed on the
aggregate of assessable value.
2) Preferential Rate of Duty (PRE)
There are also 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 (when it is called ad valorem duty) or at a specific rate.
3) Antidumping
Under Section 12 of the Custom Act, 1962, Antidumping duties are applied at
the rates specified goods imported from specified countries to protect
indigenous industry from injury resulting from dumping of goods.
4) Countervailing Duty (CVD)
Additional duty equal to the excise leviable on like goods produced or
manufactured in India. This is levied under Section 3 of CTA. This is
commonly called "countervailing duty"(CVD). If such duty is on ad valorem
basis then the value for this purpose is the total of the assessable value plus
custom duty.

12.9.2 Excise Duties

There are several types of excise duties in India which are applied at the time
of clearance of such goods. These duties are:
1) Basic Excise Duty
2) Special Excise Duty
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Export and Import 3) Additional Duties of Excise
Laws and Regulations
4) Cess

1) Basic Excise Duty : This duty is specified against each sub-heading in the
First Schedule to the Central Excise Tariff Act, 1985. There are however,
notifications issued by the Central Government which grant either total or
partial exemption from incidence of basic duty. These exemptions are both
general and conditional in nature. The effective rate of basic excise duty is
thus determinable only after reference to the relevant exemption
notification given under the heading "General Exemptions".

2) Special Excise Duty : This duty is leviable only on a few items. The rate
of duty and the items on which it is leviable are specified under the Second
Schedule to the Central Excise Tariff Act, 1985.

3) Additional Duties of Excise : There are a number of additional duties

leviable under different enactments on various commodities. Under
Additional Duties of Excise (Textile and Textile Articles) Act, 1978, duties
of excise are chargeable on specified textiles and textile articles. Additional
Duties of Excise (Goods of Special Importance) Act, 1957 prescribes
additional duties on sugar, tobacco products and textile articles in lieu of
sales tax.

4) Cess : Different items are subject to levy of Cess at varying rates under
different enactments.
• Additional Duties,
• Special Additional Duty of Customs (SAD),
• Special additional duty of 4% SAD will be computed on the aggregate
of assessable value of basic duty of customs, and
• Additional duty of customs (CVD). The SAD will be charged under
Section 3(A) of Customs Tariff Act, 1985.

12.9.3 Mode of Levy of Duty

Customs duties are levied in one of the three alternative ways namely:
i) Specific rate of duty: The duty is levied at the rate per unit on the basis of
weight or length.
ii) Ad valorem duty: The duty is charged as a percentage of value of the
goods.
iii) Specific and ad valorem: This is the rate of duty on value of goods
subject to a maximum amount per unit.

12.9.4 Valuation of Goods

When the goods attract specific rate of duty there is no problem. But when
duty is ad-valorem, often importer and Customs administration have disputes
on the value of goods. Valuation of goods for customs purpose is done as per
the principles laid down in the Custom Valuation (Determination and Prices of
Imported Goods) Rules, 1988.
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 Customs Act and Import
12.9.5 Classification of Goods for Assessment of Duty Control Regulations

Goods may be classified and evaluated for calculation of customs duty on the
basis of nature of goods or their end use. While negotiating the terms and
conditions of import contract with the exporter, an importer should be clear
about the customs classification of the goods being ordered; the description of
goods should be such that it conforms to the customs classification of the
items(s) of import. This will enable the importer to avoid any kind of
classification problems at the time of customs clearance for the determination
of rate of import duty.

12.9.6 Assessment of Customs Duty

The assessment of goods for the levy of import duty is done considering the
following aspects:
• whether the goods covered by the bill of entry are such as are regularly
imported, or
• whether the goods are required to be tested by the customs house
laboratory for fulfillment of Authorization conditions, or
• whether the appraiser desires to see the representative sample before
completing the bill of entry for the purpose of verification of the
value/description, etc., or
• whether the required document is not forthcoming.
In case the imported goods are such as are normally imported and on the basis
of the documents submitted, the appraiser is prima facie satisfied that the
goods are properly covered by these documents including the Authorization, he
completes the bill of entry. In this case, the importer pays the duty even before
the arrival and examination of the goods. After this, goods are not examined
and cleared directly without going back to customs house.
In all other cases the appraiser gets the goods examined first from shed
appraiser in the docks/air cargo shed. On receipt of the test report or any other
document or report of inspection of the sample, he completes the bill of entry.
Thereafter, the importer pays duty and takes delivery of goods from the
docks/air cargo shed.

12.9.7 Guidelines for Rate or Duty and Tariff Valuation

i) The rate of duty and the rate of tariff valuation (if any) applicable to goods
entered for home consumption are those in force on the date on which the
bill of entry is presented under Section 46 of the Customs Act. Bill of Entry
are presented in the Import Department and the date of presentation of Bills
of Entry, not submitted under the ‘prior entry’ system, is shown by the
Import Department stamp in the top right hand corner of the original bill of
entry. This date is usually, but not always, the same as the date of noting.
ii) In the case of bills of entry submitted under the Prior Entry system, the date
of presentation under Section 46 is the date of the ship’s final entry in the
Import Department.
iii) The crucial date of determining the rate of customs duty under that Section
20(1) would be the date of presentation of the Bill of Entry under Section
46 of the Customs Act, 1962.
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Export and Import iv) The relevant date for the purpose of application of rates of duty, rate of
Laws and Regulations
exchange, and tariff valuation for levy of duty on ship’s stores in the case
of vessels in the foreign trade which have diverted to the coastal trade, is
the date of presentation of the Bills of Entry for home consumption to the
proper officer of Customs in accordance with section 15 of the Customs
Act, 1962.
v) The rate of duty to which goods are properly assessable is determined
according to the tariff schedule in force and applicable to the Bills of Entry
concerned as modified by Government orders of exemption and interpreted
according to tariff rulings issued form time to time.
vi) In the case of goods assessable to alternative duty, the Appraisers specify
clearly on the Bill of Entry the rate applicable to the Bill of Entry under
assessment.
The procedure for the assessment of the customs duty is as follows:
CIF Value : xxx
Add 1% of Value as landing charges : xxx
Assessable Value (AV) : xxx
1. Basic Duty (BD)
(AV x Rate of Basic duty) : xxx
2. Additional Customs Duty (ACD)
{(AV+BD)xRate of Additional duty} : xxx
3. Special Additional Duty (SAD)
{(AV+BD+AD)xRate of SAD} : xxx
4. Education Cess on BCD+ACD+SAD : xxx
Total Duty: (1+2+3) : xxx

12.9.8 Payment of Import Duty

The import duty assessed by the customs is paid by the importer in the
designated bank by filing in the prescribed form called ‘Treasury Challan’.

12.9.9 Release of Goods

Once the import duty has been paid, then the goods are examined in the
customs warehouse in the presence of the authorized representative/customs
house agent of the importer. If the goods are found to be in order and conform
to the specifications given in the invoice, then the goods are released to the
importer. The importer takes the delivery of goods after payment of warehouse
charges.

12.10 IMPORT OF GOODS BY POST

When the goods are imported by post parcel, the postal authorities transfer
such goods on receipt to the customs office attached to the Foreign Post Office.
A Demand-cum-Show cause notice is issued to the importer to file requisite
documents, namely:
i) Bank attested Commercial Invoice from the supplier
ii) Packing List
106
iii) Copy of Registered Post Parcel Receipt Customs Act and Import
Control Regulations
iv) Certificate of Origin
v) Customs purposes copy of Import Authorization in original, if applicable
vi) Any other document/registration certificate in support of eligibility of the
importer to import such goods.
On the basis of these documents and any additional information or
documents(s) that may be required by the customs, goods are examined and
assessed for duties payable, in the presence of the importer or his authorized
agent.
On being satisfied about the genuineness of the import and that all documents
are in order, the customs authorities order release of the goods to the importer
on payment of duties levied thereon. The importer receives the parcel of goods
through post office on payment of Customs Duties.

Check Your Progress Exercise 2 "

Note: a) Use the space below for your answers.
b) Check your answers with those given at the end of the unit.
1) Which are the special scheme of import of goods to encourage export as
per the current Foreign Trade Policy?
………………………………………………………………………………
…………………………………………………………………………….…
…………………………………………………………………………….…
……………………………………………………………………………….
2) What do you understand by the term of bill of entry? How many types of
bill of entry are there?
………………………………………………………………………………
…………………………………………………………………………….…
…………………………………………………………………………….…
……………………………………………………………………………….
3) What is the basic legislation concerning levy of customs duties in India?
………………………………………………………………………………
…………………………………………………………………………….…
…………………………………………………………………………….…
……………………………………………………………………………….
4) Define basic customs duty. How this is different from preferential rate of
duty and antidumping duties?
………………………………………………………………………………
…………………………………………………………………………….…
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Export and Import …………………………………………………………………………….…
Laws and Regulations
……………………………………………………………………………….
5) What are three different mode of levy of duty?
………………………………………………………………………………
…………………………………………………………………………….…
…………………………………………………………………………….…
……………………………………………………………………………….

12.11 WAREHOUSING OF IMPORTED GOODS

An importer may not like to clear or may have certain problems in clearing the
goods imported immediately on payment of duty for Home Consumption. In
such an eventually, he can, subject to certain conditions being satisfied, deposit
the goods in a Public or Private Bonded Warehouse. The objective of
warehousing is to allow the facility of deferring payment of duty on imported
goods pending actual clearance for Home Consumption on payment of duty or
their re-export without payment of duty to any foreign port.
The importers are required to file a set of yellow coloured bill of entry
commonly known as warehousing or into bond Bill of Entry (B/E) if they want
the facility of Consumption Bill of Entry and the procedures for its processing
are also the same except that the payment of the duty is deferred.
After the assessment of goods for the levy of the import duty is completed, the
scrutinizing appraiser debits the import Authorization(s)/licence where
necessary, and the set of warehousing Bill of Entry (WR B/E) undergoes usual
counter checks by the Assistant Collector of Customs. The formalities of
calculation of duty, Authorization/licence, registration and its pre-audit are also
gone through as in the case of a Home Consumption B/E.
The W.R. Bill of Entry is thereafter audited by the Internal Audit Department
and then sent to Import Bond Department where the importers file, the
requisite warehousing bond under Section 59 of Customs Act, 1962. The Bond
after scrutiny is accepted by A.C. (Bond) and registered in the Bond
Department and WR number is impressed on all copies of B/E. The original
copy is kept in the Bond Department, while the others are handed over to
importers/clearing agent. The goods are thereafter examined by the Dock
Appraising staff on the basis of orders of the scrutinizing Appraiser on
Duplicate copy, and if found in order, the same are allowed to be physically
warehoused by the Dock Appraiser under the escort of a Preventive Officer.

12.11.1 Clearance of Warehoused Goods for Home

Consumption under Ex-bond
In order to clear the dutiable imported goods from warehouse, the importer is
required to present an ex-bond bill of entry, printed on green paper in the
Imported Bond Department. It is not obligatory for the importer to take
clearance of the entire consignment which was warehoused under a particular
into Bond B/E while filing an Ex-bond Bill of Entry. Even Ex-bond Bills of
Entry for part clearance can be submitted. The Importer after the Ex-Bond B/E
registered in the Import Bond Department submits it to Appraising Department
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along with Triplicate copy of related into Bond B/E and invoice/ packing list, Customs Act and Import
Control Regulations
for verification of the particular furnished on the B/E (made on the basis of
into Bond B/E). The concerned Group Appraiser classifies and reassesses, if
necessary. The assessed B/E is thereafter handed over to the importers/clearing
agents for payment of duty and taking delivery of the goods after the usual
counter check by concerned group A.C. and calculation of import duty.

12.11.2 Cargo Handling and Demurrage Charges

The goods discharged in the custom area by the carrier carrying imported
goods are stored in warehouses of Central Warehousing Corporation (CWC) or
Port Trusts or other designated authority. The storage is without levy of
demurrage charges for few days, thereafter demurrage charges are levied.
Following general principles are applied for ‘free period’.
a) General Cargo 3 calendar days or 2 working days
(Commercial/Non-Commercial)
from date of landing
b) Unaccompanied baggage 5 calendar days from date of landing
The Cargo Handling is to be paid in respect of import consignments as per
details given below, in terms of circular 25th May, 1998 issued by the Airport
Authority of India.
General Cargo Rs. 3.50 per kg (Minimum Rs. 100)
Special Cargo Rs. 7.00 per kg (Minimum Rs. 200)
In case the import cargo is not cleared within free period, then demurrage
charges have to be paid, as per the following rates:

Types of Cargo Period Rate per day Minimum

General Cargo Upto 7 days Rs. 1 per kg Rs. 250/-
Including free period
Between 8 and 30 days Rs. 2 per kg Rs. 250/-
Beyond 30 days Rs. 3 per kg Rs. 250/-
Special Cargo Upto 7 days including Rs. 2 per kg Rs. 500/-
free per period
Between 8 and 30 days Rs. 4 per kg Rs. 500/-
Beyond 30 days Rs. 6 per kg Rs. 500/-
Valuable Cargo Upto 7 days including Rs. 4 per kg Rs. 1000/-
free period
Between 8 and 30 days Rs. 8 per kg Rs. 1000/-
Beyond 30 days Rs. 12 per kg Rs. 1000/-
According to the guidelines given in the circular dated 25th May, 1998 referred
to above,
i) Charges are levied on the gross weight or the actual weight of the
consignment, whichever is higher.
ii) The benefit of free period is available if the cargo is cleared within free
period. If cargo is not cleared within free period, then full period shall be
charged as per tariff.
iii) Special cargo consists of cold storage, perishable, live animals and
hazardous goods.
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Export and Import iv) Valuable cargo consists of gold, bullion, currency notes, securities, shares,
Laws and Regulations
share coupons, traveller cheques, diamonds (including diamonds for
industrial use) diamond jewellery and watches made of silver, gold,
platinum and items valued at USD 1000 per kg (Gross weight) and above.
v) Forklift charges are not levied separately.

12.12 GREEN CHANNEL FOR IMPORT CARGO

CLEARANCE
Under the scheme of Green Channel for the clearance of the import cargo,
there is no 100% examination of imported cargo. Rather, a small percentage of
the cargo is subjected to the customs check. This facility is available to the
following categories of the importers:
i) Government departments/Public Sector Undertakings
ii) Bulk Importers
iii) Consignment consisting of a single product of a well known brand of a
specification covered by a valid test report
iv) Goods which do not require physical identification for the purposes of ITC
restrictions or Customs Classifications
v) Importers of proven identity and unblemished track record.
The purpose of the Green Channel facility is to provide a “Fast Track” for
clearance of imported goods and thus obviate time taken for examination of
goods. This facility is however, not applicable to goods cleared under the self-
assessment scheme.

12.13 IMPORTS BY 100% EoUs/SEZ UNITS

The Government of India decided to establish export processing zones in 1965
in order to provide all facilities to the exporters too promote exports from
India. The entire scheme was reviewed in 1980 when it was decided by the
Government to introduce the scheme of export oriented units and provide them
with all facilities in order to achieve faster rate of growth in exports. The
export oriented units could be established in the export processing zones or
outside the zones. The 100% EOUs located in export processing zones were
known as EPZ units. Besides, the export processing zones the Government are
established specialized processing zones to promote the export of electronics
hardware, and computer software. For this purpose electronics hardware
technology parks and software technology parks were established. The basic
requirement of the units to be established under these zones or for the export
their entire production of goods and services.
The units established as export oriented units or units in the export processing
zones may be engaged in the manufacture, services, trading, development of
software, agriculture, agro-processing, aqua-culture, animal husbandry, bio-
technology, floriculture, horticulture, pisciculture, viticulture, poultry,
sericulture and granites. Such units are allowed to export all products except
banned items.
All the Export Processing zones have now been converted into special
economic zones w.e.f. 1.1.2003. Besides, new Special Economic Zones have

110
also been set up in the country following the Chinese model of special Customs Act and Import
Control Regulations
economic zones.

12.14 DUTY FREE IMPORTS

The most significant feature of the units in these zones or export oriented units
is that these are allowed to make duty free import of all types of goods
including capital goods required by the units for the manufacture of goods or
trading of goods or supply or services. The only condition is that the items of
import should not be banned under Foreign Trade Policy: 2004-09.
Such units are also allowed to import goods including capital goods required
by them free of cost or on loan from their clients in foreign countries.
The units in the STP/EHTP/EPZ are also allowed to import duty free all types
of goods for creating a central facility for use by software development units in
STP/EHTP/EPZ.
The EoU/EHTP/STP units can procure the goods from bonded warehouses in
the domestic tariff area without payment of import duty.
The units are allowed to import even second hand capital goods or import
goods on lease basis.
The EOU/EHTP/STP units are allowed to import without payment of import
duty all other goods besides capital goods required by them for their activities.
The list of items permitted for export is as follows:
1) Capital goods, as defined in the Policy including the following and their
spares.
(i) DG, sets captive power plants, transformers and accessories,
(ii) Pollution control equipment,
(iii) Quality assurance equipment,
(iv) Material handling equipment, like fork lifts and overhead cranes,
(v) Un-interrupted Power Supply System (UPS), Special racks for
storage, storage systems, modular furniture, computer furniture, anti-
static carpet, teleconference equipment, servo control system, air-
conditioners, panel for electrical goods,
(vi) Security Systems, and
(vii) Tools, jigs, fixtures, gauges, moulds, dyes, instruments and
accessories.
2) Raw materials, components, consumables, intermediates, spares and
packing materials.
3) Prototypes and technical samples for product diversification, development
or evaluation.
4) Drawing, blue prints, charts, microfilms and technical data.
5) Office equipment, including PABX, fax machines, video projection
system.
6) Spares and consumables for the above items.
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Export and Import The facility of duty free import available to the EOU/STP/EHTP is subject to
Laws and Regulations
fulfillment of export obligation by these units. The obligations of these units
are at two different levels as explained below :
1. These units have to achieve the minimum levels of net foreign exchange as
a percentage (NFEP) of exports. The NFEP is defined as follows:
NFEP = (A-B)/ Ax 100
A = FOB value of exports
B = CIF value of all the imported inputs, imported capital goods, all
payments made in foreign exchange by way of commission,
royalty, fees, dividends, interest on external commercial
borrowings during the first five year period.
2. Each unit is expected to achieve a certain minimum level of export
performance for the five years.
The minimum level of NFEP and the minimum level of export
performance vary from industry to industry.
Each zone is headed by a Development Commissioner and each EOU is
under the supervision and administrative control of the designated
Development Commissioner. The EOU or the units in these zones have to
obtain prior permission of the concerned Development Commissioner at
the time of making imports.

12.15 SPECIAL ECONOMIC ZONE SCHEME

(SEZ)
In a major initiative to provide a big push to promotion of exports, the
Government of India announced on 31.03.2000 the setting up of Special
Economic Zones (SEZ) on the pattern of Chinese model of special economic
zones. The main objective of SEZ scheme is to provide an internationally
competitive and hassle-free environment for export production.
SEZ is a specifically delineated duty free enclave and shall be deemed to be
foreign territory for the purpose of trade operations and duties and tariffs.
Goods and services going into the SEZ area from Domestic Tariff Area (DTA)
shall be treated as exports and goods and services coming from the SEZ area
into DTA shall be treated as if these are being imported.
An exporter can set up a unit in SEZ for manufacturing, trading or for
rendering services.
At present, the Special Economic Zones functioning in the country are as
follows:
• Cochin SEZ
• Kandla SEZ
• Noida SEZ
• Surat SEZ
• Falta SEZ
• Madras SEZ
• SEEPZ SEZ
112
• Visakhapatnam SEZ Customs Act and Import
Control Regulations
• Indore SEZ
• Manikanchan-Saltlake SEZ
• Jaipur SEZ
Surat SEZ is the first special economic zone developed by the private sector in
India. At present, the number of approved SEZ is around 450 of which only 90
are functional. Government of India has granted approval to the setting up
another 200 Special Economic Zones in the private, public and joint sector.
The operational SEZs are listed above, these include the existing Export
Processing Zones that have been converted into SEZs.
Salient Features of SEZ Units
The salient features of SEZ units, in brief, are as follows:
1. Sales from Domestic Tariff Area (DTA) to SEZs shall be treated as
exports. This would now entitle domestic suppliers to Drawback/DEPB
benefits, Central Sales Tax exemption and Service Tax exemption.
2. Agriculture/Horticulture processing SEZ units will now be allowed to
provide inputs and equipments to contract farmers in DTA to promote
production of goods as per the requirement of importing countries. This is
expected to integrate production and processing and help in promoting
SEZs specializing in agro exports.
3. Foreign bound passengers will now be allowed to take goods from SEZs to
promote trade, tourism and exports.
4. Domestic sales by SEZ units will now be exempt from special additional
duty.
5. Restriction of one year period for remittance of export proceeds has been
removed for SEZ units.
6. Netting of export proceeds permitted for SEZ unit provided it is between
same exporter and importer over a period of 12 months.
7. SEZ units are permitted to take job work abroad and exports goods from
there only.
8. SEZ units can capitalize import payables by way issue of equity shares to
non-residents against import of capital goods subject to specified
conditions.
9. Wastage for sub-contracting/exchange by gem and jewellery units in
transactions between SEZ and DTA is allowed.
10. Export/import of all products through post parcel/courier by SEZ units is
allowed.
11. The value of capital goods imported by SEZ units can be amortised
uniformly over 10 years.
12. SEZ units are allowed to sell all products including gems and jewellery
through exhibitions and duty free shops or shops set up abroad.
13. Goods required for operation and maintenance of SEZ units shall be
allowed duty free entry.
14. Corporate tax holiday upto 2010 U/S 10B of the Income Tax Act. 1961.
113
Export and Import 15. 100% Foreign direct investment in manufacturing sector through automatic
Laws and Regulations
route.
16. Profit repatriation without any dividend balancing requirement.
17. Imports and exports are cleared by the customs on self declaration basis.
Imports by SEZ units are allowed duty free.

12.16 IMPORT OF COMMERCIAL SAMPLES

The import of commercial samples is exempt from the levy of import duty as
provided vide General Exemption No. 42 (Notification No. 154/94-Cus dated
13.07.1994-with latest amendment on 6.7.1999 vide notification no.
86/990Cus). The samples may be paid for or imported free of any charge. The
exemptions from import duty are different in both the cases.

12.16.1 Commercial Samples (Paid for)

1) The samples are imported as a part of personal baggage or by pot or by air.
2) The importer produces Importer-Exporter Code (IEC) Number at the time
of importation.
3) The goods are clearly market as samples.
4) The importer, at the time of importation
i) declares that :
a) The samples have been imported into India solely for the purpose of
being shown in India for the guidance of exporters or for securing
or executing an export order;
b) The total import value of samples does not exceed Rs. 60,000 or 15
units in number, within the period of last twelve months; and
c) Produces an undertaking to the appropriate customs authority too
pay the duty leviable on the said goods but for the exemptions
contained herein, if the declaration under clause (a) is found to be
false.

12.16.2 Commercial Samples and Prototypes (Free of Charge)

A bonafide business firm may import, without payment of import duty,
bonafide commercial samples and protytypes by post by air or by courier
service upto a value limit of Rs. 10,000 provided the said goods have been
supplied free of charge. The postal charges or the air freight is not taken into
account for determining the value of commercial samples and.

12.17 EXCHANGE CONTROL REGULATIONS

AND IMPORTS
Every importer is required to comply with various exchange control
regulations governing imports. These regulations (framed under Foreign
Exchange Management Act, 1999) are given in RBI circular A.P. (DIR
SERIES) circular no. 106 dated 19th June 2003. The salient points of these
regulations are as follows:
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 Customs Act and Import
12.17.1 Evidence of Import Control Regulations

Importer should submit evidence of import to the authorized dealer, in the form
specified below, in all cases where the value of import exceeds USD 25,000:
1) Exchange control copy of Bill of Entry for Home Consumption or
2) Exchange control copy of Bill of Entry for warehousing in the case of
100% EOUs or
3) Customs Assessment Certificate or Postal Appraisal Form, in the case of
imports by post or
4) A certificate from Chartered Accountant in the case of import of software
of date.
The evidence should be submitted within three months from the date of
remittance against importer bill.

12.17.2 Time Limit for Settlement of Import Payments

Remittance against imports should be made within 6 months from the date of
shipment. In case the importer has entered into deferred payment
arrangements, i.e. remittance to be sent within the time period exceeding six
months, then the remittance is treated as External Commercial Borrowings and
can be made as per RBI guidelines as in force from time to time. But
remittance against import of books can be made without any restriction as to
time limit.

12.17.3 Advance Remittance

An importer can send advance remittance for import of inputs/capital goods to
a foreign supplier to an amount of USD 1,00,000 or its equivalent. In case the
importer wants to remit more than USD 1,00,000 or its equivalent, then he will
have to submit the following documents to the bank:
1) An unconditional irrevocable stand by Letter of Credit or a guarantee an
international bank of repute situated outside India; and
2) An undertaking from the importer to furnish documentary evidence of
physical import of goods into India within 15 days from the close of the
relevant period for making import. The relevant period is six months (three
years in case of capital goods) from the date of remittance.

12.17.4 Refund of Advance Remittance

In case importer fails to import goods into India against advance remittance;
then he will have to repatriate the amount of advance into India.

12.17.5 Receipt of Import Bills/Documents

An importer should receive the documents regarding import through banking
channels i.e., the documents should be sent by the banker of the supplier to the
banker of the importer in India. Otherwise the banker of the importer shall not
make remittance against the import bills.
However, the authorized dealer shall make remittance against imports in
respect of import bills/documents received directly by the importer in the
following cases:
115
Export and Import i) the value of import bill does not exceed USD 10,000;
Laws and Regulations
ii) import bills received by wholly owned Indian subsidiaries of foreign
companies from their principals;
iii) import bills received by Status Holder Exporters, 100% EOUs/Units in
Special Economic Zones, Public sector undertakings;
iv) import bills received by joint stock companies (private/public limited
companies); and
v) import bills for value up to USD 25,000 in respect of import of books and
magazines, imports by Hospitals and other scientific research and
development institutes/universities.

12.17.6 Interest on Import Bills

Authorised dealers may allow payment of interest on usance bills for a period
of less than three years from the date of shipment the following rates of
interest:
i) Not exceeding LIBOR + 50 basis points for credit up to one year and
ii) Not exceeding LIBOR + 125 basis points for periods beyond one year but
less than three years, for the currency of credit. These rates of interest are
subject to change from time to time.

# Check Your Progress Exercise 3

Note: a) Use the space below for your answers.
b) Check your answers with those given at the end of the unit.
1) Define warehousing.
………………………………………………………………………………
…………………………………………………………………………….…
…………………………………………………………………………….…
……………………………………………………………………………….
2) What do you understand by the term home consumption under ex-bond?
………………………………………………………………………………
…………………………………………………………………………….…
…………………………………………………………………………….…
……………………………………………………………………………….
3) What do you understand by the term cargo?
………………………………………………………………………………
…………………………………………………………………………….…
…………………………………………………………………………….…
……………………………………………………………………………….
116
4) Explain the rate which are leveled for cargo handling. Customs Act and Import
Control Regulations
………………………………………………………………………………
…………………………………………………………………………….…
…………………………………………………………………………….…
……………………………………………………………………………….
5) What is meant by demurrage charges? Give the demurrage charges upto
seven days on general special and valuable cargo.
………………………………………………………………………………
…………………………………………………………………………….…
…………………………………………………………………………….…
……………………………………………………………………………….
6) Name the units which can procure the goods from bonded warehouses in
the domestic tariff area without payment of import duty.
………………………………………………………………………………
…………………………………………………………………………….…
…………………………………………………………………………….…
……………………………………………………………………………….
7) Define SEZ Scheme.
………………………………………………………………………………
…………………………………………………………………………….…
…………………………………………………………………………….…
……………………………………………………………………………….

12.18 LET US SUM UP

The foreign trade policy thus, provides various facilities for import of capital
goods/inputs to facilitate production for exports. These facilities enable the
exporters to reduce their cost of production and thereby become cost
competitive at the global market place. The use of imported capital goods also
facilitates manufacture of better quality products for exports. The impact of
these facilities is reflected finally in the promotion of exports which is the main
thrust of the Foreign Trade Policy of India for the period 2004-09.

12.19 KEY WORDS

Prohibited : Certain animals and plants and part or products falling
Items under convention of International Trade in Endangered
Species of Wild Flora and Fauna. Wild animals as
defined under Wile Life Protection Act, 1972 meat of
wild animals, pig fat, fat of bovine animals, sheep or
goat.
117
Export and Import
Laws and Regulations
Canalized : Those items which can be imported only by the
Items agencies designated in the Foreign Trade Policy
announced by the DGFT under Section 5 of the Foreign
Trade Act, 1992.
Restricted : Those items import of which is restricted by the
Items Government under section 11 of the ICA.
IEC No. : Import/Export Code Number required to be obtained
from the Regional Licensing Authorities (RLAs) of the
Directorate General of Foreign Trade by any firm
intending to venture into import or export activity.
Bill of Entry : The basic document used for obtaining customs
clearance of imports of goods is called bill of entry.
White Bill of : This bill of entry used for import of goods for home
Entry consumption (for use within India). Since it is white in
colour hence called the white bill of entry.
Yellow Bill of : It is bill of entry for warehousing goods. Since this bill
Entry is printed on yellow paper hence after called yellow bill
of entry.
Warehousing : Building where good are stored before sending to shops.
Green : Under the scheme of Green Channel for the clearance of
Channel import cargo, there is no 100% examination of imported
cargo. Rather, a small% of the cargo is subjected to the
customs check.
EOU : Export Oriented Unit which are provided all facilities to
promote export from India to achieve the faster rate of
growth in export. These units get all the facilities. These
units may be established in the export processing zone
or outside the zone. The 100% EOUs located in the EPZ
are known as EPZ units.
SEZ : Special Economic Zone were set to provide a big push
to the promotion of export. The scheme was announced
on 31.3.2000. The main objective of SEZ is to provide
an internationally competitive and hassle free
environment for export production.
NFEP : Net Foreign Exchange as Percentage of export. It is
define as follow:
NFEP = (A-B)/ Ax 100
A = FOB value of exports
B = CIF value of all the imported inputs. This is
one of the obligation where each unit has to
achieve a certain NFEP. The other obligation
is to achieve a minimum level of export
performance.
Cargo : Goods carried in a ship or aircraft.
Customs Duty : Tax payable to the Government on goods imported
from other countries.
EPCG : Export Promotional Capital Goods Scheme through
which the capital goods can be imported at a
concessional customs duty subject to export obligation.
118
12.20 ANSWERS TO CHECK YOUR PROGRESS " Customs Act and Import
Control Regulations
EXERCISES
Your answer should include the following points:

Check Your Progress Exercise 1

1) The Ports and Airports which alone shall be customs Port of Customs
airport or places which alone shall be inland container depots for the
unloading of imported goods and the loading of export goods or places
which alone shall be land customs stations for the clearance of goods
imported or to be exported by land or inland water or the routes by which
alone goods specified in the notification may pass by land or inland water
into or out of India or the ports which alone shall be coastal ports for the
carrying on of trade in coastal goods.
2) Certain animals and plants and part or products falling under convention of
International Trade in Endangered Spices of Wild Flora and Fauna will
animals as defined under wild life protection Act, 1972, meat of wild
animals, Pig fat, fat of bovine animals sheep or goat etc. comes under
Prohibited items as per Customs Act.
3) Canalized items are there goods which can be imported only through
agencies designated in the Foreign Trade Policy. Food Corporation of India
is designated in the Foreign Trade Policy for the Import of rice.
4) Two restricted items are Potatoes and Garlic.
5) IEC No. is the Importer/Exporter Code Number. Any Firm intending to
venture into export or import activity is required to obtain IEC Code
number from the Regional Licensing Authorities of the DGFTD.

Check Your Progress Exercise 2

1) EPCG Scheme, Duty Exemption/Remission/Duty entitlement Pass Book
Scheme, Diamond, Gem and Jewellery Export Scheme and Dollar Account
Scheme.
2) The basic document used to obtain customs clearance of import of goods is
called bill of entry. There are three types of bill of entry (1) The bill of
entry for home consumption (2) Bill of entry for warehousing and (3) Bill
of entry for ex-bond clearance.
3) Customs Act 1962 is the basic legislation concerning levy of customs duty.
4) The import duty which is specified against each healing or sub-healing in
the first schedule to the CTA this is popularly called basic customs duty.
On the other hand, preferential duty is the duty charged for goods imported
from certain countries under bilateral or other agreements with such
countries while antidumping duty is applied to protect the interest of
indigenous industry from dumping of goods.
5) The three mode of levy of duty are (1) Specific rate/unit weight or length
(2) Ad valorem which is charged as of value of goods and (3) Specific and
ad valorem which is the rate of duty on value of goods subject to a
maximum amount/unit.

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Export and Import Check Your Progress Exercise 3
Laws and Regulations
1) Warehouse is the building where good are stored before sending to shops.
2) In house consumption under ex-bond means the goods are for consumption
within the country.
3) Cargo means the goods carried in a ship or aircraft.
4) As per the rate fixed by the Airport Authority of India. The following cargo
handling charges are to be paid in respect of import consignments. General
Cargo Rs.3.50 per kg (minimum Rs. 100) and Special Cargo Rs.7.00 per
kg (Minimum Rs. 200).
5) After three calendar days or two working days for general cargo
(commercial/non-commercial) from date of landing and five calendar days
from the date of landing for unaccompanied baggage is the free period after
which the import cargo is not cleared then a demurrage have to be paid up
to seven days the rate for general cargo is Rs.1/kg and Rs.250/- minimum,
for special cargo Rs.2/kg and Rs.500/- minimum and for valuable cargo
Rs.4/kg and Rs.1000/- minimum.
6) The EOU/EHTP/STP units can procure the goods from bonded warehouses
in the domestic tariff area without payment of import duty.
7) SEZ is a specifically delineated duty free enclave and shall be deemed to
be foreign territory for the purpose of trade operations and duties and
tariffs. Goods and services going into the SEZ area from Domestic Tariff
Area (DTA) shall be treated as exports and goods and services coming
from the SEZ area into DTA shall be treated as if these are being imported.

12.21 SUGGESTED READING

The Customs Act, 1962 (Act 52 of 1962) (13th December, 1962).
The Foreign Trade (Development and Regulation) Act, 1992 (Act No 22 of
1992) 7th August, 1992.

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