Class Notes on Taxation – Unit IV
Customs Laws
Legislative Background of the Levy:
- Legislative Framework: Customs laws in India are primarily governed by the Customs Act, 1962. This Act provides the framework for the imposition, collection, and enforcement of customs duties on goods imported into and exported from India.
- Key Amendments: Over the years, the Customs Act has been amended multiple times to address various issues related to international trade and to comply with global standards.
Examples:
- Customs Act, 1962: The primary legislation under which customs duties are levied and enforced in India.
Appointment of Customs Officers
- Designation: Customs officers are appointed by the Central Government and are classified into different ranks, including Assistant Commissioner, Deputy Commissioner, and Commissioner of Customs.
- Duties: Their roles include enforcing customs laws, conducting inspections, assessing duties, and preventing smuggling.
Examples:
- Customs Inspector: Responsible for inspecting goods and verifying the documentation at ports and airports.
Ports
- Role: Ports are designated locations where goods are imported into or exported from India. They are crucial for the handling and processing of cargo.
- Types: Major ports like Mumbai, Chennai, and Kolkata, and minor ports spread across the coastline.
- Regulations: Ports operate under the guidelines and regulations set by the Customs Department to ensure compliance with customs laws.
Examples:
- Major Ports: Mumbai Port and Chennai Port handle a large volume of international trade.
Warehouses
- Purpose: Warehouses are facilities where imported goods can be stored before they are cleared for home consumption or re-exported.
- Types: Public warehouses, private warehouses, and customs-bonded warehouses.
- Regulations: Goods stored in customs-bonded warehouses are subject to customs control, and duties are payable when goods are removed for home consumption.
Examples:
- Customs-Bonded Warehouse: Goods can be stored in a customs-bonded warehouse without payment of duty until they are cleared for home use or export.
Nature and Restrictions on Exports and Imports
- Nature: Customs regulations cover both imports and exports, with specific rules applicable to different types of goods.
- Restrictions:
- Import Restrictions: Certain goods may be restricted or prohibited from being imported due to security, health, or environmental concerns.
- Export Restrictions: Exports of certain goods may be restricted to conserve resources or meet international obligations.
Examples:
- Import Restrictions: Import of hazardous chemicals may be restricted to ensure safety.
- Export Restrictions: Export of endangered species and their products is regulated to comply with international conventions.
Levy, Exemption, and Collection of Customs Duties
Levy:
- Basis: Customs duties are levied based on the value of goods (ad valorem duty), quantity (specific duty), or a combination of both.
- Types of Duties: Include basic customs duty, countervailing duty, and anti-dumping duty.
Exemption:
- Types: Certain goods may be exempt from customs duties under specific conditions, such as goods imported for charitable purposes or for government projects.
- Schemes: Various exemption schemes like Duty-Free Import Authorization (DFIA) and Export Promotion Capital Goods (EPCG) scheme.
Collection:
- Procedure: Customs duties are collected at the point of importation or exportation. Importers and exporters must file a bill of entry or shipping bill, respectively, and pay the applicable duties.
Examples:
- Duty-Free Import: Certain equipment used for research may be exempt from customs duties.
Overview of Law and Procedure
Customs Law Procedure:
- Assessment: Customs officers assess the value and classification of goods to determine the applicable duties.
- Documentation: Importers and exporters must provide detailed documentation, including invoices, shipping bills, and packing lists.
- Enforcement: Customs authorities enforce compliance with customs laws through inspections, audits, and investigations.
Examples:
- Bill of Entry: A document filed by importers declaring the details of goods being imported and the duties payable.
Clearance of Goods from the Port, Including Baggage
Goods Clearance:
- Procedure: Goods are cleared from the port after payment of customs duties and compliance with regulatory requirements. This includes submission of the required documents and inspection by customs officers.
- Baggage: Personal baggage of travelers is also subject to customs clearance. There are allowances for duty-free items, but excess or restricted items may attract duties or be confiscated.
Examples:
- Clearance Process: Importers must present a bill of entry and pay the duty before goods are released from the port.
- Baggage Allowance: Travelers are allowed a certain quantity of duty-free goods; exceeding this limit may result in duty payments.
Goods Imported or Exported by Post, and Stores and Goods in Transit
Goods Imported or Exported by Post:
- Procedure: Goods sent by post are subject to customs regulations. Customs duties may be levied on postal shipments based on their value and nature.
- Documentation: Importers must provide a postal receipt, invoice, and any other required documents for customs clearance.
Examples:
- Postal Imports: Books or merchandise sent via international mail must clear customs, and duties may apply.
Stores and Goods in Transit:
- Stores: Goods meant for use by ships, aircraft, or other means of transport are considered stores and may be subject to different regulations.
- Goods in Transit: Goods that pass through India without being subject to customs duties if they are destined for another country.
Examples:
- Goods in Transit: Goods transported through India to another country are exempt from customs duties under specific conditions.
Duty Drawback Provisions
Duty Drawback:
- Definition: Duty drawback is a scheme where customs duties paid on imported inputs used in the manufacture of exported goods are refunded.
- Eligibility: Manufacturers or exporters can claim a drawback if they have paid customs duties on inputs used in producing export goods.
Procedure:
- Application: Exporters must apply for a duty drawback by providing evidence of duty payment and export of goods.
- Refund: The refund amount is determined based on the value of the exported goods and the duties paid on the inputs.
Examples:
- Drawback Claim: A textile manufacturer who exports finished garments can claim a refund on the duties paid for raw materials imported for the production.
