LEVY AND COLLECTION OF DUTY

What is Customs duty? Customs duty is the duty charged on goods on their importation
into India or exportation out of India.
What are the different types of rates of duties of Customs ? There are two types
of rates of duty of Customs:

1.                    Ad valorem rate i.e., the duty is charged on the basis of

value.

2.                    Specific rate i.e., on the basis of quantity/number/ volume/

weight.

What are the different kinds of duties of Customs levied on imported goods?
Different kinds of duties of customs levied on imported goods are

(i)                  Basic Customs Duty

(ii)                Surcharge

(iii)               Additional duty of customs

(iv)              Special additional duties 

(v)                Additional levies like Countervailing

duty, Anti dumping duty,

Safe guard duty etc.,

  What is the authority to levy and collect duties of Customs on imported goods?
authorises the Customs Officers to levy and collect these duties
What is meant by  special duty of customs? Special additional duty is specified under
Section 3A of the Customs Tariff Act, 1975. The amount of Special Additional duty is
computed by applying this rate on value, which is equal to the total of the assessable value,
the basic customs duty and the additional duty of customs described above.
What is Surcharge? Additional duty of customs equal to the, excise duty leviable
on like goods produced or manufactured in India. This is levied under
Section 3 of Customs Tariff Act, 1975. This is usually referred to as
"countervailing duty" (CVD). However, the correct description of this duty is
Additional Duty of Customs. In order to determine the applicable rate, you
have to obtain the correct classification of the goods under the Central Excise
Tariff Act, 1986. The duties under the Central Excise Tariff are on ad
valorem basis. However, specific rates have been prescribed for some items.
 Importantly, the value for the purpose of computing additional duties of 
Customs is the total of the assessable value (generally the transaction value -
roughly equal to the c.i.f. value) and the basic customs duty.

If you are a manufacturer, importing goods to be used as inputs for

manufacture of other goods, you would be generally eligible for obtaining
credit (called CENVAT credit) equal to the additional duty of customs paid
on the imported goods. This duty amount is eligible for credit under input
duty Central Excise Rules, 1944. This credit can be used for paying central
excise duties on your manufacture.

What is the additional duty of customs? What is the authority to levy it on

imported       goods? Surcharge  at the rate of 10% of the Basic Customs
Duty is leviable on imported goods under Section 90 of the Finance Act, 2000
( unless exempted by a notification).

What is the Foreign Exchange Rate applied to the value of Invoice? The rate of
exchange applicable is the rate in force on the date on which a Bill of entry (Whether it is
home consumption Bill of entry or Bill of entry for warehousing) is presented under Section
46 of the Customs Act 1962.  The same exchange rates are applicable to the Ex-bond bill of
entry filed for clearing the goods for home consumption form the bonded warehouse.  The
exchange rates are notified by the Central Government by issue of notifications from time
to time.
How to compute the duty amount in respect of imported goods? Under the
Custom Tariff Act, 1975 and other laws, there are various types of duties,
which are leviable. As a first step, the following three types of customs duties
have to computed:-

(i) Duty which is specified against each Heading or Sub-Heading in the First
Schedule to the Customs Tariff Act, 1975. This is usually referred to as Basic
Customs Duty. There are different rates of duty for different commodities.
You may find these rates in column no. 4 (labeled as "standard rates") of the
tariff. There is also a 5th column specifying the "preferential rates". These are
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 ( in such cases it is called ad valorem duty) or at a specific rate, which
is based on unit of measurement which is specified in the tariff entry. The rate
of duty in percentage (in the case of advalorem duties) has to be applied on
the Cost Insurance and Freight

(ii)  A Surcharge  at the rate of 10% of the Basic Customs Duty is leviable
on imported goods under Section 90 of the Finance Act, 2000 ( unless
exempted by a notification).
 (iii) Additional duty of customs equal to the, excise duty leviable on like
goods produced or manufactured in India. This is levied under Section 3 of
Customs Tariff Act, 1975. This is usually referred to as "countervailing
duty" (CVD). However, the correct description of this duty is Additional
Duty of Customs. In order to determine the applicable rate, you have to
obtain the correct classification of the goods under the Central Excise Tariff
Act, 1986. The duties under the Central Excise Tariff are on ad valorem basis.
However, specific rates have been prescribed for some items. Importantly, the
value for the purpose of computing additional duties of  Customs is the total
of the assessable value (generally the transaction value - roughly equal to the
c.i.f. value) and the basic customs duty.

If you are a manufacturer, importing goods to be used as inputs for

manufacture of other goods, you would be generally eligible for obtaining
credit (called CENVAT credit) equal to the additional duty of customs paid
on the imported goods. This duty amount is eligible for credit under input
duty Central Excise Rules, 1944. This credit can be used for paying central
excise duties on your manufacture.

(iv) Imported goods are also liable to a Special additional duty at a rate
specified in Section 3A of the Customs Tariff Act, 1975. The amount of
Special Additional duty is computed by applying this rate on value which is
equal to the total of the assessable value, the basic customs duty and the
additional duty of customs described above.

(3) Additional Levies

Having computed the above mentioned duties, you have to determine whether
there are any additional levies on the particular items you intend to import.
Some of the levies are commodity specific and would be applicable
regardless of the time of import.  These include cesses under various
enactments as also Additional Duties on specified commodities.

 There are certain other levies which are specific to the country of origin.
Please consider the following levies.

Countervailing Duty on bounty-fed articles is leviable under Section 9, of

the Customs Tariff Act 1975. No such duty is however, being levied at
present.

Anti-dumping Duty (under Section 9A, Customs Tariff Act 1975) on

specified goods imported from specified countries to protect indigenous
industry from injury resulting from dumping of goods. This is notified and
published from time to time.
 Safeguard Duty (under Section 8B of the Customs Tariff Act, 1975) is
applicable on certain goods at the time of import for specified periods in
order to check their excessive imports, which may be injurious to the Indian
industry.

4.  Exemptions:

These exemptions and concessions can be granted in a number of ways.

Some of these exemptions are briefly discussed below: -

Exemption by Notification: The Central Government may notify by

publication in the Official Gazette certain exemptions and concessions. Such
exemptions or concessions may be conditional or absolute. There are general
exemptions given to a variety of items imported under certain conditions
These include exemption of imports for promotion of exports, import by UN
bodies, defence imports etc.,.. There are also exemptions which are
unconditional and are applicable across the board. There are other exemptions
based on conditions of end use.

Preferential Rates : Preferential rates of customs duty have been made

applicable in respect of imports from certain countries such as Sri Lanka,
Mauritius, Seychelles and Tonga provided certain conditions are satisfied.
The goods in question must actually be manufactured or produced in such
preferential areas. Rules have been framed in order to determine whether the
goods have been manufactured or produced in such areas. Determination of
origin of the goods is very essential in order to avail of the benefits of such
concessional rates of duty.

What is the rate of duty applicable to a home consumption Bill of entry? The
rate of duty applicable is the rate prevailing on the date of presenting the Bill of entry
in the Customhouse.  However, in the case of Bills of entry filed before the date of
entry inwards of the vessel, the arrival of the aircraft the rate of duty applicable is the
rate prevailing on the date of entry inwards or arrival as the case may be (Section
15(1) (a) of the Customs Act 1962).

Note: Granting of entry inwards means permitting the unloading of goods

from the vessel by the proper officer of customs.

 
 

How do you compute the value for the purpose of charging duty on imported
goods? The rate of duty applicable is the rate prevailing on the date of presenting the
Bill of entry in the Customhouse.  However, in the case of Bills of entry filed before
the date of entry inwards of the vessel, the arrival of the aircraft the rate of duty
applicable is the rate prevailing on the date of entry inwards or arrival as the case
may be (Section 15(1) (a) of the Customs Act 1962).

Note: Granting of entry inwards means permitting the unloading of goods

from the vessel by the proper officer of customs.

What are Stevedoring Charges? Are these charges to be added to the assessable
value for the purpose of charging duty? Stevedoring charges are the charges
incurred for unloading the goods from ship hold to wharf.  These charges are treated
as forming part of the freight and are to be added to the value for the purpose of
charging duty on imported goods.  This contingency arises only when the carrier
does not include these charges in the Freight Bill.

In case the Importer is aggrieved can he pay the duty under protest?  If so what
are the advantages? When the importers do not agree with the assessment made in the
Bill of entry respect of classification/valuation/rate of duty etc., they may pay the duty
‘under protest’ as provided for the Section 27 of the Customs Act 1962.  In such cases the
importers should indicate the reasons in writing for such protest, which will be registered
by the customs officers and intimated to the Importers.  The advantage of paying the duty
under protest is that in such cases the time stipulated in Section 27 of customs Act, 1962 to
prefer refund claim shall not apply.
What is meant by effective rate of duty? The statutory or the highest rate of duty is
specified in the Tariff Schedules for each of the articles.  The rate of duty so specified may
be reduced by issue of exemption notifications.  For computing the amount of duty payable,
the rate of duty indicated in the exemption notification has to be taken. Such rate is
commonly known as ‘Effective rate of duty’.  If the exemption notification imposes any
conditions, the reduced rate of duty is applied subject to fulfillment of the conditions laid
down therein.