CONTENTS u Chapter-heads I-5 u Section-wise Index I-17 DIVISION ONE LIABILITY OF CUSTOMS DUTY 1 BACKGROUND OF INDIRECT TAX LAW 1.1 Features of Indirect Taxes 3 1.2 Constitution of India 4 1.3 Bill, Act, Ordinance and Rules 6 1.4 Information on website 8 1.5 Budget 2013-14 8 1.6 Foreign Trade Policy 2009-14 10 2 INTRODUCTION TO CUSTOMS DUTY 2.1 Brief background of Customs Law 12 2.2 Nature of customs duty 18 2.3 Territorial waters and customs waters 22 2.4 Goods under Customs Act 26 2.5 Classification for Customs and rate of customs duty 28 3 TYPE OF CUSTOM DUTIES 3.1 Basic customs duty 31 3.2 Additional customs duty u/s 3(1) (CVD) 32 I-7
CONTENTS I-8 3.3 Education cess on customs duty 40 3.4 Secondary and Higher Education Cess 41 3.5 Additional duty under section 3(3) 41 3.6 Additional duty under section 3(5) (Special CVD - SAD) 42 3.7 Protective duties 46 3.8 Countervailing duty on subsidised goods 46 3.9 Anti-dumping duty on dumped articles 46 3.10 Safeguard duty 63 3.11 NCCD of Customs 67 3.12 Export duty 67 3.13 Cess 68 4 CLASSIFICATION OF GOODS 4.1 Central Excise Tariff Act (CETA) and Customs Tariff Act (CTA) 69 4.2 Overview of Tariff 73 4.3 Rules for Interpretation of Tariff 76 4.4 Application of GIR in Tariff 80 4.5 Classification in case of conflict between various headings 88 4.6 Other provisions relating to classification 94 4.7 Classification of parts 95 5 PRINCIPLES OF CLASSIFICATION 5.1 Trade Parlance Theory 101 5.2 HSN and classification 109 5.3 Relevance of end use in classification 111 5.4 Other principles of classification 114 5.5 Ayurvedic, Unani, Homoeopathic medicines 118 DIVISION TWO VALUATION IN CUSTOMS 6 VALUATION FOR CUSTOMS DUTY 6.1 Value for purpose of Customs Act 123
I-9 CONTENTS 6.2 Transaction value at the time and place of importation 125 6.3 Rate of Exchange for Customs Valuation 127 6.4 WTO Valuation Agreement 128 6.5 Customs Value - Inclusions 129 6.6 Exclusions from Assessable Value 147 6.7 Valuation of second hand machinery and old motor cars 150 6.8 Declaration of value by importer 157 6.9 Illustration of calculations of customs duty 157 6.10 Customs value as per earlier section 14(1) 160 7 METHODS OF VALUATION FOR CUSTOMS 7.1 WTO Valuation Agreement 161 7.2 Transaction value of same goods for customs valuation 162 7.3 Transaction value of identical goods for customs valuation 172 7.4 Transaction value of similar goods for customs valuation 174 7.5 Deductive value for customs valuation 175 7.6 Computed value for customs valuation 176 7.7 Residual method for customs valuation 177 8 VALUATION OF EXPORT GOODS 8.1 Transaction value for assessment 179 8.2 Over invoicing/mis-declaration for export 181 8.3 Earlier provisions relating to customs value of export goods 183 9 UNDERVALUATION OF CUSTOMS DUTY 9.1 Transaction value to be normally accepted 184 9.2 Cases where charge of undervaluation not held valid 189 9.3 Cases where charge of undervaluation held valid 200 9.4 Burden of proof of undervaluation in customs 203 9.5 Debit of Import Authorisation only with invoice value 205
CONTENTS I-10 DIVISION THREE PROCEDURES IN CUSTOMS 10 CUSTOMS PROCEDURES 10.1 Administrative set up of Central Excise and Customs 209 10.2 Binding nature of departmental circulars 215 10.3 General provisions relating to procedures 218 10.4 Self assessment of customs duty 223 10.5 Containers and Inland Container Depots 228 10.6 Miscellaneous Customs Procedures 233 10.7 Coastal goods 237 11 IMPORT PROCEDURES 11.1 Import procedures by carrier 238 11.2 Overview of procedures for import 242 11.3 Submission of Bill of Entry 243 11.4 Self-assessment of customs duty 249 11.5 Provisional assessment 252 11.6 Relevant date for rate and valuation of import duty 255 11.7 Relevant date for foreign exchange rate 258 11.8 Execution of bond 259 11.9 Customs clearance from view of import policy 263 11.10 Procedure after assessment and checking of authorization 269 11.11 Import of software through data communication 272 11.12 Demurrage if goods not cleared from customs 272 11.13 Disposal if goods not cleared within 30 days 275 12 EXPORT PROCEDURES 12.1 Procedures by person in charge of conveyance 278 12.2 Procedure to be followed by exporter 280 12.3 Permission to export by customs 287 12.4 Other procedures relating to exports 290
I-11 CONTENTS 13 BAGGAGE 13.1 General provisions about baggage 292 13.2 Rate of customs duty on baggage 295 13.3 Exemptions/restrictions on baggage 298 13.4 Baggage of Indian resident or foreigner residing in India 301 13.5 Concession to persons transferring his residence (TR) 304 13.6 Concessions to tourists 306 13.7 Practical examples on baggage 307 13.8 Other provisions of baggage 309 14 CUSTOMS PROCEDURES FOR COURIER AND POST 14.1 Import and export through courier 314 14.2 Export and import by post 318 DIVISION FOUR EXEMPTIONS AND DEMANDS IN CUSTOMS 15 EXEMPTION FROM DUTY 15.1 Tariff rate and effective rate of duty 323 15.2 Exemption from duty by a notification 324 15.3 Exemption optional 327 15.4 Other provisions in respect of exemption 329 15.5 Exemption when required certificate obtained later 335 16 SPECIFIC EXEMPTIONS IN CUSTOMS 16.1 Exemption from Customs Duty 338 16.2 Project imports 338 16.3 General exemptions under customs notifications 344 16.4 Control over end use exemptions 346
CONTENTS I-12 17 INTERPRETATION OF EXEMPTION NOTIFICATION 17.1 Strict construction of exemption notification 348 17.2 Purposive interpretation of exemption notification 351 17.3 Relevance of end use in exemption notification 355 17.4 Relevance of tariff for interpretation of exemption notification 357 17.5 Other principles of interpretation 359 18 REMISSION, RE-IMPORTS AND RE-EXPORTS 18.1 Remission on lost/pilfered goods 362 18.2 Remission on relinquished goods 367 18.3 Abatement of duty on damaged goods 369 18.4 Re-import of goods 370 18.5 Refund of customs duty if imported goods are rejected 372 18.6 Re-exports 372 19 DEMANDS OF CUSTOMS DUTY 19.1 Short payment of customs duty 374 19.2 Time limit for demand of duty 380 19.3 Show cause notice 383 19.4 Who can issue show cause notice 385 19.5 Requirements of show cause notice 388 19.6 Revised show cause notice/corrigendum 389 19.7 Authority cannot go beyond show cause notice 390 19.8 Serving of show cause notice 391 19.9 Reply, Hearing and Order by adjudicating authority 393 19.10 Provisional attachment pending adjudication 395 20 INTEREST FOR DELAYED PAYMENT OF DUTY 20.1 Interest if duty paid late 398 20.2 Nature of tax, penalty and interest 400
I-13 CONTENTS 21 DEMANDS FOR SUPPRESSION, MISSTATEMENT OR FRAUD 21.1 Extended period for demand 404 21.2 Wilful suppression of facts 404 21.3 Primary facts must be disclosed, but not the inferences 408 21.4 Fraud/Misstatement/Collusion 408 21.5 Notice for demand for suppression, fraud 409 21.6 Burden of proof is on department 410 21.7 Voluntary payment in case of show cause notice alleging suppression of facts 411 22 RECOVERY OF DUES 22.1 Recovery of sums due to Government 412 22.2 Detention and sale of property 415 22.3 General provisions in respect of recovery 416 DIVISION FIVE OTHER PROVISIONS IN CUSTOMS 23 REFUND OF CUSTOMS DUTY 23.1 Claim of refund when appeal not required 423 23.2 Procedure for filing refund application 429 23.3 Time limit for filing refund application 432 23.4 Refund when benefit could not be availed due to department s mistake 437 23.5 Duty collected from buyer must be paid 437 23.6 Proof of not passing of burden 442 23.7 Interest on late disbursement of refund 446 23.8 Consumer Welfare Fund 450 23.9 Applicability and validity of doctrine of unjust enrichment 451 23.10 Non-application of provisions of unjust enrichment 457 23.11 Refund if amount returned to buyer by cheque or credit note or debit note 465
CONTENTS I-14 24 WAREHOUSING IN CUSTOMS 24.1 Need for warehousing 469 24.2 Public/Private bonded warehouses 472 24.3 Warehousing period under customs 474 24.4 Manufacture in customs bonded warehouse 478 24.5 Clearance from bonded warehouse 480 24.6 Other provisions of customs warehousing 485 24.7 Storage in warehouse pending clearance 490 25 OTHER PROVISIONS IN CUSTOMS LAW 25.1 Prohibitions on Imports and Exports 491 25.2 Customs Broker 494 25.3 Suspension or revocation of CB licence 498 25.4 Limited liability of Customs Broker (CB) 507 25.5 Stores in customs 510 25.6 Customs - Other provisions 511 26 PENALTIES AND APPEALS IN CUSTOMS 26.1 Departmental Adjudication 514 26.2 Enforcement Powers of Revenue Officers 517 26.3 Penalties 525 26.4 Confiscation of goods 531 26.5 Criminal offences 533 26.6 Proof in adjudication and prosecution 536 26.7 Appeals 538 DIVISION SIX FOREIGN TRADE POLICY 27 OVERVIEW OF FOREIGN TRADE POLICY 27.1 Background 549 27.2 FT(D&R) Act 550
I-15 CONTENTS 27.3 Foreign Trade Policy 552 27.4 General provisions regarding procedures under FTP 554 27.5 Import/Export authorisation 557 27.6 Export promotion councils 559 27.7 Policy for import of goods 560 27.8 Restrictions on exports 563 27.9 Status Holders 564 27.10 Deemed exports 567 27.11 Penalties/punishments for violation of Foreign Trade Policy (FTP) 571 28 EXPORT PROMOTION SCHEMES 28.1 Schemes for encouraging exports 573 28.2 Highlights of EOU/SEZ scheme 575 28.3 Setting up an EOU/STP/EHTP/BTP 577 28.4 Obtaining approval for setting up EOU/STP/EHTP/BTP 579 28.5 Joint Venture and Technology Agreement 581 28.6 Promotional measures through duty credit schemes 583 28.7 Duty credit scrips 588 29 DUTY DRAWBACK 29.1 Drawback of duty on inputs 595 29.2 Type of drawback rates 599 29.3 Drawback rate fixation 603 29.4 Drawback claim procedure 606 29.5 Drawback - Other provisions 610 29.6 Duty drawback on re-export 613 30 EOU AND SIMILAR SCHEMES 30.1 An overview of EOU scheme 617 30.2 Inputs and capital goods without payment of duty 622 30.3 Bonding period for EOU 633 30.4 All purpose bond in form B-17 634 30.5 Procedures by EOU 637 30.6 Exit of EOU (Earlier known as Debonding) 647
CONTENTS I-16 30.7 Recovery of duty and penal action on EOU 652 30.8 Other provisions in respect of EOU 655 30.9 EOU and Customs Law 656 30.10 Central Excise and EOU 657 30.11 Excise procedures by EOU units 675 30.12 Service tax and EOU 677 30.13 Income-tax and EOU/SEZ 677 30.14 Other schemes similar to EOU 679 31 SPECIAL ECONOMIC ZONES 31.1 SEZ to encourage exports 685 31.2 Special Economic Zones Act and Rules 689 31.3 Setting up a new SEZ 691 31.4 Benefits to developer 700 31.5 Development Commissioner 701 31.6 Setting up a unit in SEZ 703 31.7 Routine operations in SEZ 708 31.8 Sale to SEZ from DTA 715 31.9 Sale from SEZ to DTA 719 31.10 Tax exemptions to SEZ 721 31.11 Miscellaneous provisions 728 31.12 FEMA provisions relating to SEZ 729 31.13 SEZ policies of State Governments 731 32 OTHER EXPORT PROMOTION SCHEMES 32.1 Advance authorisation 733 32.2 Duty Entitlement Pass Book Scheme (DEPB Scheme) 743 32.3 Duty Free Import Authorisation (DFIA) 743 32.4 Liability of transferee of authorisation/credit 746 32.5 EPCG authorisation 748 32.6 Project imports 757 SUBJECT INDEX 759