FAQs Q1. Write a note on importance and demerits of custom duty. Ans. Importance of Customs duty a. Important source of revenue. b. Protection to domestic industry. c. Reduce deficit in the balance of trade and the balance of payment. d. Controlling the smuggling. e. Reducing export f. Saving foreign exchange. Demerits of customs duty a. Causing inflation b. Increase black money c. Absence of better quality goods. Q2. Discuss main features of Customs Duty in India explain its role in International trade. Ans. Fundamental features of Customs duty Act, 1962 a. It is an indirect tax levied on import and export. b. This duty is imposed only on goods and not on services. c. Sale or purchase is not the criterion for the levy of customs duty; the duty is connected with movement of goods. d. It is also subject to education cess. However, education cess is not applicable on export duty.
Note: - If the agent in India gets goods from his overseas principal and even in the case of baggage brought into India by the passenger duty is attracted. Role of Customs duty in International Trade Customs duty is imposed with an apparent motive of earning revenue by the Government. It is imposed so as to:- a. Regulate b. Control c. Promote international trade with reference to duty imposing country. Custom duty is imposed on goods imported so as to promote domestic product, it is also imposed on goods exported out of India so as to meet domestic requirement. Sometimes customs duty is relaxed regarding exported from India so as to earn more foreign exchange. Q3. Define the following. a. Coastal Goods b. Goods Ans. a. Coastal Goods [Section 2(7)] Coastal Goods means goods, other than imported goods, transported in a vessel from one port in India to another. b. Goods (Section 2(2)] Goods includes a. Vessels, aircraft and vehicles
b. Stores c. Baggage Q4. Explain the following:- a. Imported Goods b. Export Goods c. Person in charge Ans. a. Imported Goods [Section 2(19)] Imported goods means any goods brought into India from a place outside India. Note:- Goods which have been cleared for home consumption are not considered as imported goods. b. Export Goods [Section 2(19)] Export Goods means any goods which are to be taken out of India to a place outside India. c. Person-in-charge [Section 2(31)]:- Means a. Vessels :- Master of the vessel b. Aircraft :- The commander or pilot in charge of the aircraft c. Railway: - The conductor/guard or other person having the chief direction of the train. d. Any other conveyance: - The driver or other person in charge of the conveyance. Note:- Person-in-charge is to ensure that the conveyances coming through approved route and land at approved places.
Q5. What is the treatment of Government Goods? Enlist relevant laws applicable in relation to customs duty. Ans. Treatment of Government Goods [Section 12(2)] Government goods shall be treated at par with the non-government goods for the purpose of levy of Custom Duty. It means charging section equally applies to the goods imported by State or Union Government. RELEVANT LAWS A. The customs Act, 1975. It provides levy of import and export duties of customs on goods imported into or exported from India. It contains provisions related to:- Levy and collection of duty Importation/exportation Warehousing Duty drawback Appeals Offences and penalties etc. The Customs Tariff Act, 1975 It contains various verities of customs duties to be levied on the import and export. It has 2 schedules Schedule 1 - specifies import duty Schedule 2 - specifies Export tariff. It has 21 sections and 98 chapters.
Schedules are based on Harmonized System of Nomenclature (HSN). It is a six digit system. Rules Section 156 of the Custom Act, 1962 empowers the Central Government to make rules for matters relating to :- a. Determining the price of imported goods b. Duty drawback c. Bagged, detention and confiscation of goods. Regulations Section 157 empowers the Central Board of Excise and Customs to make regulation consistent with the Act and the rules. Regulations so far framed (i) Import Manifest Vessels Regulations (ii) Boat Note Regulations. (iii) Export Manifest Vessels Regulations. Notifications under Custom Act. Central Government is empowered to issue notifications under various sections of the customs Act, 1962. Q6. State whether following statements are True or False. a. Customs Act, 1962 came into force on 1.2.1962. b. Section 157 of customs Act, 1962 empower the Central Government to make regulations to carry out the purpose of the Act. c. Central Government has been empowered to issue notification under various sections of the customs Act, 1962.
Ans. [a. False, b. False, c. True.] Q7. Write notes on:- a. Customs Area b. Assessment c. Conveyance Ans. a. Customs Area [Section 2(11)] Customs Area means the area of a customs station and includes any area in which imported goods or exported are ordinarily kept before clearance by Customs Authority. b. Assessment [Section 2(2)] It includes provisional assessment, reassessment, order of assessment, self-assessment and other assessment in which the duty is assessed nil. c. Conveyance [Section 2(9)] Conveyance includes:- a. A vessel (by sea) b. An aircraft (by air) c. A vehicle (by land) The definition covers all modes of transport.