import clearance
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Import
clearance
andcustom duty
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Customs duties
Types of customs duties
Import of goods into India attracts customs duty.Customs duty consists of :
Basic customs duty
Additional duty/Counter Vailing Duty (CVD)
levied under section 3 of Customs Tariff Act Special additional duty levied under section 3A
of Customs Tariff Act
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STEPS OF IMPORT CLEARANCE
PURCHASE ORDER CONDITION
L. C. CONDITIONS
MODE OF DESPATCH
ARRANGEMENT OF CARRIER COLLECTION OF DELIVERY ORDER
CUSTOM CLEARANCE
STORAGE AND ONWARD DESPATCH TOPROJECT SITE
ARRANGEMENT OF RE EXPORT
SETTLEMENT OF CUSTOM DISPUTE
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Customs clearance processes
Arrival of carrier - Cargo Arrival Notice Filing of Manifest - Cargo declaration
Filing of Bill of Entry - Import declaration
Assessment Appraisal
Classification
Valuation
Payment of duty
Examination
Release of goods
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Import processing - Steps involved
Cargo Arrival Notice by shipping/Air lines tothe importer
Along with IGM, an application for entryinwards has to be filed by the shipping/Air line
Preparation of BOE ( BILL OF ENTRY )
Submission of import documents and relevant
supporting documents
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Import processing - Steps involved
Submission of BOE for home consumption
Appraisal and Assessment
Approval by the Assistant Commissioner(Customs) (AC) of the assessment and
Payment of duty, examination and
Out of Charge by Customs
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Customs duties
Types of customs duties
Import of goods into India attracts customs duty.Customs duty consists of :
Basic customs duty
Additional duty/Counter Vailing Duty (CVD)levied under section 3 of Customs Tariff Act
Add Cess (Education) on CVD, if any Special additional duty (SAD) levied under section
3A of Customs Tariff Act
Add Cess (Education) on Total Custom Duty
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Customs duty Calculation
(I)
Value of goods (CIF) + 1% of CIF value as Landing chargespaid in India (A) 100.0
Basic customs duty @ 25 % (B) 25.0
Total = (A) + (B) =(C) 125.0 Additional duty/CVD @ 16 % of (C)=(D) 20.0
Total = (C) + (D) =(E) 145.0
Special additional duty @ 4 % of (E) = (F) 5.8
Total landed cost = (E) + (F) =(G) 150.8
Effective duty = (G) - (A) = 50.8 The table provides the method of calculating effective customs
duty
(Cess to be added on CVD & Total Custom Duty)
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Customs duty Calculation
(II) For ITA Items Value of goods (CIF) + 1% of CIF value as Landing charges paid
in India (A) 100.0MEGA ITA
Basic customs duty @ 0 % (B) NIL NIL
Total = (A) + (B) =(C) 100.0 100.000
Additional duty/CVD @ 0/16 % of (C)=(D) NIL 16.000
Total = (C) + (D) =(E) 100.0 116.000
Special additional duty @ 4 % of (E) = (F) 4.0 4.640
Total landed cost = (E) + (F) =(G) 104.0 120.640
Custom duty = (G) - (A) = 4.0 20.640
Education Cess @ 2% => 0.08 0.413
Effective Custom Duty => 4.08 21.053(The table provides the method of calculating effective customsduty)
(Cess to be added after CVD & Total Custom Duty)
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NEW TARIFF CALCULATION (III)EFECTIVE FROM 1.3.2005
Value of goods (CIF) + 1% of CIF value as Landing charges paid in India(A) 100.000
Basic customs duty @ 15 % (B) 15.000 Total = (A) + (B) = (C) 115.000 Additional duty/CVD @ 16 % of (C) =>(D) 18.400 Education Cess @ 2% (E) 0.368 Total CVD (D) + (E) = (F) 18.768 Total Custom Duty (B) + (F) 33.768 Education Cess @ 2% (G) 0.675 Effective duty (H) =(B) + (F) + (G) => 34.443 Total landed cost = (A) + (H) => (I) 134.443
The table provides the method of calculating effective customs duty
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Value of goods (CIF) + 1% of CIF value as Landing charges paid inIndia (A) 100.000
Basic customs duty @ 12.5 % (B) 12.500Total = (A) + (B) = (C) 112.500Additional duty/CVD @ 16 % of (C) =>(D)
18.000Education Cess @ 2% (E) 0.360Total CVD (D) + (E) = (F) 18.360Total Custom Duty (B) + (F) 30.860
Education Cess @ 2% (G) 0.6172Effective duty (H) =(B) + (F) + (G) => 31.4772Special Add. Duty (J) @4% = 5.2591Total landed cost = (A) + (H) => (I) 136.7363
The table provides the method of calculating effective customs duty(For Mega Power Stations BCD/CVD/EC/SAD all are NIL.)
NEW TARIFF CALCULATION (IV)EFECTIVE FROM 1.3.2006
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Value of goods (CIF) + 1% of CIF value as Landing charges paid inIndia (A) 100.000 Basic customs duty @ 10 % (B) 10.000 Total = (A) + (B) =(C) 110.000 Additional duty/CVD @ 16 % of (C) =>(D) 17.600
Education Cess @ 2% (E1) 0.352/17.952H Education Cess @ 1% (E2) 0.176/18.128
Total CVD (D) + (E) = (F) 18.128 Total Custom Duty (B) + (F) 28.128
Education Cess @ 2% (G1) 0.56256/28.69 Education Cess @ 1% (G2) 0.28128/28.97
Effective duty (H) =(B) + (F) + (G) => 28.97184 Special Add. Duty (J) @4% = 5.15887/34.13071 Total landed cost = (A) + (H) => (I) 134.13071
The table provides the method of calculating effective customs duty
(For Mega Power Stations BCD/CVD/EC/SAD all are NIL.)
NEW TARIFF CALCULATION (IV)
EFECTIVE FROM 1.3.2007
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CALCULATION OF ASSESIBLE VALUE
INVOICE VALUE : (A) FREIGHT : (B)
OTHER CHARGES : (C)
( P&F, IAC, Etc.)
INSURANCE @ % Of A + C : ( D )
HANDLING CHARGES @ 1% of A+B+C+D : (E)
TOTAL ASSESSABLE VALUE : A+B+C+D+E
CONVERSION RATE TO INR
FORMULA FOR CALCULATING ITEM WISE ASSESSABLEVALUE :-
Value Of Items as per Invoice x Gross Assessable valueTotal Invoice value
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EXAMPLE:
FREIGHT : 1927.00 INVOICE VALUE : 34008.10 OTHER CHARGES : 3159.90
( P&F, IAC, Etc.) 39095.00
INSURANCE @ 0.04 % Of (A+ C) 37168 : 14.866 HANDLING CHARGES @ 1% of 39109.866 391.100 TOTAL ASSESSABLE VALUE : in DM 32500.966 CONVERSION RATE -- 1DM = 21.20 INR 8347420.48 Rs.
123482.10
X 837420.48 = 304898.66 Rs34008.10
Basic Duty @ 20% on Value 304898.66 = 60979.73CVD @ 16% on value 365878.39 = 58540.54
Total Duty 1,19,510.27Rs
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Classification
The rate of customs duty applicable isgoverned by the sub-heading in whichclassification of the goods is covered under
the Customs Tariff Act, 1975 (Tariff Act)
The Schedule to the Tariff Act consist of 99Chapters arranged under 21 Sections and 6digit classification code in each Chapter
Each Chapter and Section has notes that
facilitate the classification of goods therein
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84 - Machinery & Mechanical Appliances .
85 - Electrical / Electronic Machinery &
Equipment
90 - Photographic, Medical, Measuring & etc.
Instruments
(These Chapters are subjects to certain
inclusions/exclusions in line with chapters notes )
CUSTOMS TARIFF -CHAPTERS eg.
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CODES :
XX XX XX XX
First 2 digits indicates Chapter No.
Next 2 digits indicates broad category of items
Next 2 digits indicates sub heading of the broadcategory
Next 2 digits indicates item covered .
eg. Torch Code8513 10 1013 Portable electric lamps ; 10 Lamps ; 10Torch
Miners Safety Lamps - 8513 10 30
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Basic principles of classification
Dictionary meaning
Technical literature
Common parlance test
The Harmonised System of Nomenclature(HSN) is an international system ofclassification and coding of goods
Trade/commercial understanding/usage
HSN explanatory notes have persuasivevalue
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Valuation - Sec 14
As per the Rules, the value of goods shall bethe transaction value
Transaction value is the price actually paid orpayable for the imported goods when sold forexport to India
Such price would include the following:
cost of transportation, Loading, unloading andhandling charges, Cost of insurance
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Relevant date for rate of duty-S.15 of
Customs Act
In case of home consumption, date on whichBOE is presented
In case of warehoused goods, date on whichgoods are actually removed from warehouse
In case of any other goods, date of payment ofduty
If BOE presented before entry inwards ofvessel, then it shall deemed to have beenpresented on the date of such entry inwardsor the arrival, as the case may be
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Warehousing
Section 49 of the Customs Act
In case the goods entered for homeconsumption are not cleared within areasonable time may with thepermission from the concernedofficer, be permitted to be stored ina warehouse.
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Drawback provisions
Section 74 of the Customs Act deals with
drawback of duty on re-export of duty paid goods The availability of drawback is subject to the
following conditions:
at the time of import, customs duty musthave been paid on the imported goods;
the goods imported must be identifiable as
the goods exported; where the goods are used in India, such
usage must be for the prescribed period
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Where the goods are used in Indiasubsequent to their import, thedrawback rate is determined on the
basis of the duration of use of thegoods in India (i.e., the length ofperiod from the date of clearance for
home consumption and the dategoods are placed under customscontrol for export)
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Drawback provisions (contd.)
Where imported goods are re-exportedwithout use, a refund of 98 percent ofthe customs duty paid on import ofsuch goods is available. The rates of
duty drawback where the goods areput to use in India are set out below:
Length of period between the date ofclearance for home consumption andthe date when the goods are placedunder customs control for export
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Percentage of customs duty be paid as drawback
Not more than 6 months 85%
More than 6 months but not more than 12 months
70%
More than 12 months but not more than 18 months60%
More than 18 months but not more than 24 months50%
More than 24 months but not more than 30 months40%
More than 30 months but not more than 36 months30%
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Drawback provisions (contd.)
Section 75 of the Customs Act read with section
37 of the Central Excise Act and the Customs
and Central Excise Duties Drawback Rules, 1995,
deals with drawback on imported materials used
in the manufacture of goods which are exported The drawback is allowed for the duties of
customs and excise, subject to specified
conditions and procedure Drawback is of two types
all Industry rate
brand rate
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