excise and customs

7/29/2019 excise and customs

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CUSTOMS & EXCISE


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Background of customs law

Customs duty is on import into India and export out of India. The rateof duty is as prescribed in Customs Tariff Act,1975. Import duty islevied on almost all items, while export duty is levied only on a fewlimited products, where Indian goods are in commanding position.

Import and export duty is a union subject and is power to levy isderived from constitution

Customs duty is levied in the following cases: On free replacements and free supplies

In the case of warehoused goods, the goods continue to be in

customs bond. Import takes place only when goods are cleared fromthe warehouse.

In case of export, tax is levied is complete only when goods crossterritorial waters of India.

Territorial waters of India means that portion of sea which is up to 12

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


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Goods under customs act

Customs duty is on goods as per section 12 of

customs act. The duty is payable on goods

belonging to Government as well as goods not

belonging to the government

Section 2(22) gives inclusive definition of goods as

follows: Goods include (a)vessels, aircrafts and

vehicles (b) stores (c ) baggage (d) currency andnegotiable instruments and (e)any other kind of

movable property


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Valuation of goods

The value of the imported goods and export goods shallbe the transaction value of such goods, the price actuallypaid or payable for the goods when sold for export toIndia for delivery at the time and place of importation, oras the case may be, for export from India for delivery at

the time and place of exportation, where the buyer andseller of the goods are not related and price is the soleconsideration for the sale subject to such other conditionsas may be specified in the rules made in this behalf :

Provided such transaction value in the case of importedgoods shall include, in addition to the price, any amount paidor payable for costs and services

Provided also that such price shall be calculated withreference to the rate of exchange as in force on the date onwhich a bill of entry is presented


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Valuation of goods The Board has the authority to fix tariff values for any

class of imported goods or export goods if it issatisfied that it is necessary to do so, it may, bynotification in the Official Gazette, having regard tothe trend of value of such or like goods, and where

any such tariff values are fixed, the duty shall bechargeable with reference to such tariff value

For the purpose of this section rateof exchange

means the rate of exchange determined by the Board, or

ascertained in such manner as the Board may direct, forthe conversion of Indian currency into foreign currencyor foreign currency into Indian currency;


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Date for determination of rate of duty

and tariff valuation of imported goods

The rate of duty and tariff valuation, if any, applicable to any imported

goods, shall be the rate and valuation in force, -

in the case of goods entered for home consumption under section

46, on the date on which a bill of entry in respect of such goods ispresented under that section;

in the case of goods cleared from a warehouse under section 68,

on the date on which a bill of entry for home consumption in

respect of such goods is presented under that section;

in the case of any other goods, on the date of payment ofduty, Provided that if a bill of entry has been presented before the

date of entry inwards of the vessel or the arrival of the aircraft by

which the goods are imported

The provisions of this section shall not apply to baggage and goodsim orted b ost.


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Date for determination of rate of duty

and tariff valuation of export goods

The rate of duty and tariff valuation, if any, applicable

to any export goods, shall be the rate and valuation

in force

The provisions of this section shall not apply to

baggage and goods exported by post


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Assessment of duty An importer entering any imported goods , or an exporter entering any

export goods, shall, self-assess the duty, if any, leviable on such goods

The proper officer may verify the self-

assessment of such goods and for this purpose, examine or test any

imported goods or export goods or such part thereof as may be necessary

For verification of self-assessment , the proper officer may require the

importer, exporter or any other person to produce any contract, brokers

note, insurance policy, catalogue or other document, whereby the duty

leviable on the imported goods or export goods, as the case may be,

can be ascertained, and to furnish any information required for such

ascertainment which is in his power to produce or furnish

Where it is found on verification, examination or testing of the goods that th

e self-assessment is not done correctly, the proper officer may,

without prejudice to any other action which may be taken under this

Act, re-assess the duty leviable on such goods


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Provisional assessment of duty

When the duty leviable on such goods is assessed finally orreassessed by the proper officer in accordance with theprovisions of this Act, then

(a) in the case of goods cleared for home consumption orexportation, the amount paid shall be adjusted against theduty finally assessed and if the amount so paid falls short of,or is in excess of the duty finally assessed, the importer or theexporter of the goods shall pay the deficiency or be entitled toa refund, as the case may be

(b) in the case of warehoused goods, the proper officer may,where the duty finally assessed or re-assessed, as the casemay be, is in excess of the duty provisionally assessed,

require the importer to execute a bond, binding himself in asum equal to twice the amount of the excess duty


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Provisional assessment of duty

The amount of duty refundable under sub-section (2) and the interest undersub-section (4), if any, shall, instead of being credited to the Fund, be paid tothe importer or the exporter, as the case may be, if such amount is relatableto

(a) the duty and interest, if any, paid on such duty paid by the importer, or the

exporter, as the case may be, if he had not passed on the incidence of suchduty and interest, if any, paid on such duty to any other person

(b) the duty and interest, if any, paid on such duty on imports made by anindividual for his personal use

(c) the duty and interest, if any, paid on such duty borne by the buyer, if hehad not passed on the incidence of such duty and interest, if any, paid onsuch duty to any other person

(d) the export duty as specified in section 26

(e) drawback of duty payable under sections 74 and 75


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e erm na on o u y w ere goo sconsist of articles liable to different rates

of duty

Except as otherwise provided in any law for the time being inforce, where goods consist of a set of articles, duty shall becalculated as follows

(a) articles liable to duty with reference to quantity shall bechargeable to that duty

(b) articles liable to duty with reference to value shall, if theyare liable to duty at the same rate, be chargeable to duty at

that rate, and if they are liable to duty at different rates, bechargeable to duty at the highest of such rates

(c) articles not liable to duty shall be chargeable to duty atthe rate at which articles liable to duty with reference to valueare liable under clause (b)


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Abatement of duty on damaged or

deteriorated goods

The duty to be charged on the damaged or deteriorated goodsshall bear the same proportion to the duty chargeable on thegoods before the damage or deterioration which the value ofthe damaged or deteriorated goods bears to the value of the

goods before the damage or deterioration

For the purposes of this section, the value of damaged ordeteriorated goods may be ascertained by either of thefollowing methods at the option of the owner

(a) the value of such goods may be ascertained by theproper officer, or

(b) such goods may be sold by the proper officer by publicauction or by tender, or with the consent of the owner in any


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Remission of duty on lost, destroyed

or abandoned goods

(1) Without prejudice to the provisions of section 13,where it is shown to the satisfaction of the AssistantCommissioner of Customs or Deputy Commissioner of

Customs that any imported goods have been lost(otherwise than as a result of pilferage) or destroyed, atany time before clearance for home consumption, the

Assistant Commissioner of Customs or DeputyCommissioner of Customs shall remit the duty on such

goods

(2) The owner of any imported goods may, at any timebefore an order for clearance of goods for home

consumption under section 47 or an order for permittingthe deposit of goods in a warehouse under section 60


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Refund of export duty in certain

cases

Where on the exportation of any goods any duty hasbeen paid, such duty shall be refunded to the personby whom or on whose behalf it was paid, if

(a) the goods are returned to such personotherwise than by way of re-sale

(b) the goods are re-imported within one year fromthe date of exportation

(c) an application for refund of such duty is madebefore the expiry of six months from the date onwhich the proper officer makes an order for theclearance of the goods


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Claim for refund of duty

Any person claiming refund of any duty or interest

(a) paid by him or

(b) borne by him

May make an application in such form and manner as

may be prescribed for such refund to the Assistant

Commissioner of Customs or Deputy Commissioner

of Customs before the expiry of one year, from thedate of payment of such duty or interest


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Excise Duty

Excise is the duty levied on goods produced ormanufactured in India for sale in India

Usually not applicable to goods that are exported

Indirect Tax Levied on the manufacturer, butusually incidence is transferred over to the buyer

Central Govt. is responsible for levy & collection ofexcise in India

Few Exceptions (Liquor, narcotics state govt.)


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Administration of Excise

The tax / duty is administered by the Central Govt.under the authority of Entry 84 of the Union List (List

1) under the 7th Schedule read with the Article 246 of

the Constitution of India

The Laws are administered by the CBEC through its

Central Excise Commissionerates

India 23 Zones 93 Commissionerates (each

zone headed by a Chief Commissioner) Divisions

headed by Deputy / asst commissioners Ranges

headed by Superintendents


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Administration of Excise

The Central Excise Duty is levied in terms of theCentral Excise Act, 1944

The rates of duty are prescribed under the Section I

and II of the Central Excise Tariff Act, 1985

Taxable Event Manufacture

Liability of Central Excise duty arises as soon as thegoods are manufactured

Howerver, manufacturer has the flexibility to pay the

duty at the time of clearance of goods from the factory

premises


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Bases of Excise Duty

Specific Duty

Duty is charged at a particular ratefixed per unit or number, weight, volume or area

Slabs The rate of duty levied varies depending on

the total volume or value during a given period

Compounded duty Levied on the productioncapacity irrespective of the actual production

Ad valorem duty The amount of duty leviable isfixed as a percentage of the assessable value of theproduct (where assessable value refers to the priceat which the product being assessed for excise dutyis sold ordinarily at the place and time of removal of


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Kinds of Excise Duty

Basic Excise Duty :- Charged under section 3 of the Central Excise Act,

1944 on all excisable goods other than salt which are

produced or manufactured in India at the rates set forth

in the Schedule I to the Central Excise Tariff Act, 1985

Special Excise Duty :-

As per the Section 37 of the Finance Act,1978 Special

excise Duty was attracted on all excisable goods onwhich there is a levy of Basic excise Duty under the

Central Excises and Salt Act,1944

Charged under section 3 of the Central Excise Act,

1944 on all excisable goods, and at the rates set forthin the Schedule II to the Central Excise Tariff Act, 1985


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Kinds of Excise Duty

Additional Duty :-

Section 3 of the Additional duties of Excise (goods

of special importance) Act,1957 authorises the levy

and collection in respect of the goods described inthe Schedule to this Act.

This is levied in lieu of sales Tax and shared

between Central and State Governments.


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CENVAT Credit

This gives provision for allowing credit of the duty paidon inputs & capital goods and the service tax paid oninput services used for the manufacture of the finalproducts / services

The credit so obtained can be utilized for payment of theduty leviable on the final product

The scheme was introduced for avoiding multi level

taxation on same product or service (also calledcascading effect)

The definitions for Input goods, input service and capitalgoods (for which credit can be allowed) are as specified

in the Rule 2 of the CENVAT Credit Rules, 2004


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excise and customs

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