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PROCEDURE OF CUSTOMS UNDER CUSTOMS ACT, 1962

PROCEDURE OF CUSTOMS UNDER CUSTOMS ACT, 1962

INTRODUCTION:

Customs is an authority or tax collection wing appointed by the Government in every country for controlling and for collecting of tax on the flow of goods into and out of a country. ‘Customs Duty’ refers to the tax imposed on the goods when they are transported across the international borders. Custom Duty is an indirect tax, imposed under the Customs Act formulated in 1962. Following are the types of customs duty in India, 

  • Basic Customs Duty (BCD)
  • Countervailing Duty (CVD)
  • Additional Customs Duty or Special CVD
  • Protective Duty,
  • Anti-dumping Duty

The power to enact the law is provided under the Constitution of India under the Article 265, which states that ―no tax shall be levied or collected except by authority of law. Entry No. 83 of List I to Schedule VII of the Constitution empowers the Union Government to legislate and collect duties on import and exports.

The primary objective behind levying customs duty is to safeguard each nation’s economy, jobs, environment, residents, etc., by regulating the movement of goods in and out of any country. It is also to minimise the smuggling of demerit goods such as cigarettes and alcoholic beverages across borders since these items are usually highly taxed and their tax rates may also vary significantly across borders. The Quantum of Customs duty in India depends upon the provisions of Customs Act, 1962 and Customs Tariff Act, 1975 and related Customs Rules, Notifications, Circulars, case Laws and Annual Union Finance Acts. The Customs Act, 1962 is the principal act which governs entry or exit of different categories of vessels, aircrafts, goods, passengers etc., into or outside the country. The Act extends to the whole of India. 

All goods imported into India have to pass through the procedure of customs for proper examination, appraisal, assessment and evaluation. This helps the custom authorities to charge the proper tax and also check the goods against the illegal import. Import and export of goods into and outside a country should undergo a customs clearance process. The importer and exporter of the goods should submit valid documents to clear this process. In this article, we look at some of the major steps and processes in clearing customs in India. Goods are imported in India or exported from India through sea, air or land. Goods can come through post parcels or as baggage with passengers. Procedures naturally vary depending on mode of import or export. Procedures discussed in this are applicable for imports by sea, air or land.

Export customs clearance procedures and formalities in IndiaPROCEDURES FOR IMPORT:

Bill of entry:

Goods imported into the country attract Customs duty and are also required to confirm relevant and corresponding legal requirements. Thus, unless the imported goods are not meant for Customs clearance at the port/airport of arrival such as those intended for transit by the same vessel/aircraft or transshipment to another Customs station or to any place outside India, detailed Customs clearance formalities have to be followed by the importers. In contrast, in terms of Section 52 to 56 of the Customs Act, 1962, the goods mentioned in the IGMor Import Report for transit to any place outside India or meant for transshipment to another Customs station in India are allowed transit without payment of duty. In case of goods meant for transshipment to another Customs station, simple transshipment procedure has to be followed by the carrier and the concerned agencies at the first port/ airport of landing and the Customs clearance formalities have to be complied with by the importer after arrival of the goods at the other Customs station where goods are intended to be delivered to the importer. There could also be cases of transshipment of the goods after unloading to a port outside India. For this purpose, a simple procedure is prescribed and no duty is required to be paid. 

Self-assessment of imported and export goods: 

Section 17 of the Customs Act, 1962 provides that an importer entering any imported goods under section 46 or an exporter entering any export goods under section 50 shall self-assess the duty. Thus, under self-assessment, it is the importer or exporter who will ensure that he declares the correct classification, applicable rate of duty, value, benefit of exemption notifications claimed, if any, etc. in respect of the imported / export goods while presenting Bill of Entry or Shipping Bill. In cases, where the importer or exporter is not able to determine the duty liability or make self assessment for any reason, except in cases where examination is requested by the importer under proviso to Section 46(1), a request shall be made to the proper officer for provisional assessment of duty under Section 18 (1)(a) of the Customs Act, 1962. In such a situation an option is available to the proper officer to resort to provisional assessment of duty by asking the importer / exporter to furnish security as deemed fit for payment of the deficiency, if any, between the duty as may be finally assessed or reassessed, as the case may be, and the duty provisionally assessed.

Examination of Goods:

All imported goods are required to be examined for verification of correctness of description given in the bill of entry. However, a part of the consignment is selected on a random selection basis and is examined. In case the importer does not have complete information with him at the time of import, he may request for examination of the goods before assessing the duty liability or, if the Customs Appraiser/Assistant Commissioner feels the goods are required to be examined before assessment, the goods are examined prior to assessment. The importer has to request for a first check examination at the time of filing the bill of entry or at data entry stage. The reason for seeking First Appraisement is also required to be given. On the original copy of the bill of entry, the Customs Appraiser records the examination order and returns the bill of entry to the importer/CHA with the direction for examination, who is to take it to the import shed for examination of the goods in the shed. Shed Appraiser/Dock examiner examines the goods as per examination order and records his findings. 

After assessment by the appraising group or for cases where examination is carried out before assessment, a bill of entry needs to be presented for registration for examination of imported goods in the import shed. The proper officer of customs examines the goods along with requisite documents. The shipments, found in order are given clearance order by the proper officer of customs in the Import Shed.

Execution of Bonds:

Wherever necessary, for availing duty free assessment or concessional assessment under different schemes and notifications, execution of end use bonds with Bank Guarantee or other surety is required to be furnished. These have to be executed in prescribed forms before the assessing Appraiser.

Payment of duty:

The duty can be paid in the designated banks or through TR-6 challans. Different Custom Houses have authorised different banks for payment of duty. It is necessary to check the name of the bank and the branch before depositing the duty. Bank endorses the payment particulars in challan which is submitted to the Customs.

Amendment of Bill of Entry: 

Bonafide mistakes noticed after submission of documents, may be rectified by way of amendment to the Bill of Entry with the approval of Deputy/Assistant Commissioner. The request for amendment may be submitted with the supporting documents. 

Prior Entry for Bill of Entry:  

For faster clearance of the goods, provision has been made in section 46 of the Act, to allow filing of bills of entry prior to arrival of goods. This bill of entry is valid if a vessel/aircraft carrying the goods arrives within 30 days from the date of presentation of the bill of entry. The importer is to file 5 copies of the bill of entry and the fifth copy is called Advance Noting copy. The importer has to declare that the vessel/aircraft is due within 30 days and they have to present the bill of entry for final noting as soon as the IGM is filed. Advance noting is available to all imports except for into the bond bill of entry and also during the special period.

Bill of Entry for bond/warehousing:

A separate form of Bill of Entry is used for clearance of goods for warehousing. All documents, as are required to be filed with a Bill of Entry for home consumption are also required with the Bill of Entry for Warehousing which is assessed in the same manner and duty payable is determined. However, since duty is not required to be paid at the time of warehousing, the purpose of assessing the duty at this stage is only to secure the duty by way of execution of Bond. The duty is paid at the time of ex-bond clearance of goods for which an Ex-Bond Bill of Entry is filed. In terms of Section 15 of the Customs Act, 1962, the rate of duty applicable to imported goods cleared from a warehouse is the rate in- force on the date of filing of the Ex-Bond Bill of Entry. 

PROCEDURE FOR EXPORTS:

Shipping bill: 

For clearance of export goods, the exporter has to obtain an Importer- Export Code (IEC) number from the DGFT prior to filing of Shipping Bill. Under the EDI System, IEC number is received online by the Customs System from the DGFT. The exporter is also required to register authorized foreign exchange dealer code (through which export proceeds are expected to be realized) and open a current account in the designated bank for credit of Drawback incentive, if any. All the exporters intending to export under the export promotion scheme need to get their licenses etc. registered at the Customs Station. For such registration, original documents are required. 

Waiver of GR form: 

Generally the processing of Shipping Bills requires the production of a GR form that is used to monitor the foreign exchange remittance in respect of the export goods. However, there are few exceptions when the GR form is not required. These exceptions include export of goods valued not more than US $25,000/- and export of gifts valued upto Rs.5 lakhs. 

Arrival of goods to the dock:

The goods brought for the purpose of examination and subsequent ‘let export’ are allowed entry to the Dock on the strength of the checklist and other declarations filed by the exporter in the Service Center. The Port authorities have to endorse the quantity of goods actually received on the reverse of the Checklist.

Customs examination of export goods:

After the receipt of the goods in the dock, the exporter/CHA may contact the Customs Officer designated for the purpose present the check list with the endorsement of Port Authority and other declarations as aforesaid along with all original documents such as, Invoice and Packing list, AR-4, etc. Customs Officer may verify the quantity of the goods actually received and enter into the system and thereafter mark the Electronic Shipping Bill and also hand over all original documents to the Dock Appraiser of the Dock who many assign a Customs Officer for the examination and intimate the officers’ name and the packages to be examined, if any, on the check list and return it to the exporter or his agent. The Customs Officer may inspect/examine the shipment along with the Dock Appraiser. The Customs Officer enters the examination report in the system. He then marks the Electronic Bill along with all original documents and checklist to the Dock Appraiser. If the Dock Appraiser is satisfied that the particulars entered in the system conform to the description given in the original documents and as seen in the physical examination, he may proceed to allow “let export” for the shipment and inform the exporter or his agent.

Drawal of samples:

Where the Appraiser Dock (export) orders for samples to be drawn and tested, the Customs Officer may proceed to draw two samples from the consignment and enter the particulars thereof along with details of the testing agency. There is no separate register for recording dates of samples drawn. Three copies of the test memo are prepared by the Customs Officer and are signed by the Customs Officer and Appraising Officer on behalf of Customs and the exporter or his agent.

Stuffing / loading of goods in containers: 

In case of container cargo the stuffing of containers at Dock is done under Preventive supervision. Further, loading of both containerized and bulk cargo is to be done under Preventive supervision. The Customs Preventive Officer supervising the loading of container and general cargo into the vessel may give “Shipped on Board” endorsement on the Exporters copy of the Shipping Bill.  

Amendments: 

Any correction/amendment in the check list generated after filing of declaration can be made at the Service Centre provided the documents have not yet been submitted in the EDI system and the Shipping Bill number has not been generated. Where corrections are required to be made after the generation of the Shipping Bill number or after the goods have been brought into the Export Dock, the amendments will be carried out in the following manner: 

(i) If the goods have not yet been allowed to “Let Export” the amendments may be permitted by the Assistant / Deputy Commissioner (Exports). 

(ii) Where the “Let Export” order has already been given, amendments may be permitted only by the Additional/Joint Commissioner in charge of Export. 

Drawback claim:  

After actual export of the goods, the Drawback claim is processed through the EDI system by the officers of the Drawback Branch on a first come first served basis. There is no need for filing separate drawback claims. The status of the shipping bills and sanction of DBK claim can be ascertained from the query counter set up at the service center. If any query has been raised or deficiency noticed, the same is shown on the terminal. A print out of the query/deficiency may be obtained by the authorized person of the exporter from the service center. The exporters are required to reply to such queries through the service center. The claim will come in the queue of the EDI system only after reply to queries/deficiencies are entered by the Service Center.

Export General Manifest(EGM):

All the shipping lines/agents need to furnish the Export General Manifests, Shipping Bill wise, to the Customs electronically within 7 days from the date of sailing of the vessel. Apart from lodging the EGM electronically the shipping lines need to continue to file manual EGMs along with the exporter copy of the shipping bills as per the present practice in the export department. The manual EGMs need to be entered in the register at the Export Department and the Shipping lines may obtain acknowledgements indicating the date and time at which the EGMs were received by the Export Department. The above is the general procedure for export under EDI Systems. However special procedures exist for specified schemes, details of which may be obtained from the Public Notice/Standing Orders issued by the respective Commissionerates.

Facility 24×7 Customs Clearance:  

In order to faster Customs clearance of imported and export goods to reduce dwell time and lower the transaction cost, CBE & C, vide Circular No. 19/2014-Customs, dated 31.12.2014 has made facility of 24×7 Customs Clearance for specified imports, namely, goods under ‘facilitated “Bills of Entry and specified exports, namely factory stuffed containers and goods exported under free shipping Bills have made available in 18 sea ports. Similarly, facility of 24×7 Customs clearance for specified imports, namely, goods covered by facilities Bills of Entry and all exports viz. goods covered by all shipping Bills has been extended at 17 air cargo complexes.

Sealing of Export Goods: electronic sealing facility:

Board has laid down a simplified procedure for stuffing and sealing of export goods by introducing self-sealing subject to certain conditions.

CONCLUSION:

In line with Government’s policy “Ease of Doing Business “ the Central Board of Excise and Customs  has taken-up the various measures to facilitate trade and commerce to bring hassle free working environment as well as  reduction of transaction costs of goods and services to make them competitive in the domestic and international market.  The various initiatives taken by the Board are welcome steps and this will reduce the prices of Goods and services in the GST regime. The initiatives for “ease of doing of business certainly will boost the economic growth of the country in the coming days.

 

Written by –Gokul Abimanyu.O.R

Edited By – Aaditya Bhatt Advocate, Chandni Joshi Advocate 

PROHIBITED AND RESTRICTED GOODS

PROHIBITED AND RESTRICTED GOODS

INTRODUCTION

Import and export are important contributors to any country’s Gross Domestic Product (GDP), which is a measure of the economy’s health and advancement. It is impossible for any country to establish a closed economy because no country is resource self-sufficient. Whether it’s due to unequal distribution of natural resources or territorial division of labor and specialisation, people’s desire to improve their quality of living eventually leads to overseas commerce. As a result, imports assist in alleviating shortages of vital consumer products, capital goods, and numerous inputs that are not readily available in the country. Sugar, ores and minerals, petroleum and crude products, chemical and allied products, and so on are examples of such things.

If any items are restricted from entering the country, the government takes down import obstacles that must be overcome by the importer. To import such restricted products, certain procedures must be followed. Most prohibited items can be imported if the government of the importing country lifts the limitations by following the relevant processes and formalities. Prohibited items, on the other hand, are not permitted to be imported into such a country. While prohibited and restricted items may sound the same, there is an actual difference – prohibited items must never be sent in the post, while restricted items may be sent in the post, but restrictions will apply.

Ultimate List Of Prohibited Items For International Shipping -Shiprocket

REASONS FOR IMPOSING RESTRICTIONS

One of the main goals of imposing import restrictions or prohibitions on commodities is to ensure that the importing country’s economic situation is not weakened. Import restrictions do not imply that imports are prohibited. If a product’s import has a negative impact on the health of humans, animals, plants, or other species, the importing country’s government may limit its import. Import restrictions are determined by the government of the importing country’s foreign trade policy, which may be altered from time to time if necessary. The government of the importing country publishes a list of such prohibited products for import, which is updated on a regular basis. The importer may obtain information from authorities about their importing products, such as if they are subject to the importing nation’s limitation list.

Restricted in the context of shipping can signify one of two things:

  1.   It’s possible that an item is permitted, but only in a limited number.
  2.   A specific object can be mailed, but only if it fits certain requirements.

Sending batteries, for example, is restricted by kind (car batteries are prohibited), and the quantity must fall below a particular threshold for quality check. This means that batteries that are broken or malfunctioning are not allowed. Furthermore, lithium ion batteries may only be sent with an electronic device, but not linked to it.

Restriction can also mean that an item can only be sent if the competent authority has granted a license or authorization, however this usually applies to overseas shipping because rules and procedures differ from nation to country, it’s critical to check limits for the country you’re shipping to ahead of time, as well as apply for any necessary permissions. If you send a restricted material without a license, customs will confiscate your delivery. Due to import and safety rules, restrictions might vary greatly from country to country. Other explanations could include:

  •       Economics: Countries create trade barriers to protect their economy from the risks of international trading.
  •         Religious Values: Some countries with a strong faith have very strict rules on which texts are allowed to enter the country.
  •         The Environment: To protect the native ecosystem from alien pests or disease, hence why many countries carry restrictions on things like seeds and dried fruit.

IMPORT/EXPORT RESTRICTIONS AND PROHIBITIONS IN INDIA

Deliberate evasion of duty or breach of a prohibition or limitation imposed on the import or export of specific products is punishable under the Customs Act, 1962, or any of the associated laws executed by the Customs under the said Act. Thus, importers and exporters, as well as others involved in international trade, must be familiar with the provisions of the Customs Act of 1962, the Foreign Trade Policy, and other relevant allied Acts, and ensure that, before any imports or exports are carried out, they are aware of any prohibitions, restrictions, or requirements that must be met.

The term “Prohibited Goods” is defined as “any goods the import or export of which is subject to any prohibition under the Customs Act or any other law for the time being in force” under Section 2(33) of the Customs Act, 1962. As a result, the Customs Act of 1962 can be used to enforce a restriction under any other legislation. For example, the Central Government can make provisions for prohibiting, restricting, or otherwise regulating the import or export of goods under Sections 3 and 5 of the Foreign Trade (Development and Regulation) Act, 1992, which is reflected in the DGFT, Department of Commerce’s Foreign Trade Policy.

Some of the goods are absolutely prohibited for import and export whereas some goods can be imported or exported against a licence and/or subject to certain restrictions. An example is that certain products must conform to mandatory Indian Quality Standards (IQS), and exporters of certain products to India must register with the Bureau of Indian Standards for this reason (BIS). Importation of such products will be forbidden if the following criteria are met. If any of the standards are not met, the import of packaged products will be considered forbidden, and the commodities would be confiscated.

The Central Government has the authority to issue notifications under Section 11 of the Customs Act, 1962, declaring the export or import of any items as forbidden. The prohibition can be unconditional or conditional. A notification under Section 11 can be issued for a variety of reasons, including maintaining India’s security, preventing a shortage of goods in the country, conservation of foreign exchange, safeguarding balance of payments etc. The Customs Act of 1962, Sections 111(d) and 113(d), specify that any items that are imported or attempted to be imported, and exported or attempted to be exported, in violation of any ban imposed by or under the said Act or any other legislation in force, are subject to forfeiture. Improper importation is punishable under Section 112 of the Customs Act of 1962, and attempting to export goods improperly is punishable under Section 114 of the same Act. The adjudicating officer may impose a penalty of up to five times the value of the commodities in the case of restricted goods. It is, therefore, absolutely necessary for the trade to know what are the prohibitions or restrictions in force before they contemplate importing or exporting any goods.

Apart from customs act there are some other acts and rules that come into play for imposing restrictions or prohibitions among which some are:

  1.       The Prevention of Food Adulteration Act, 1954 and Food Safety and Standards Authority Act, 2006

Any product that does not meet the legislative requirements is not authorized to be imported into the country, according to the Prevention of Food Adulteration Act of 1954 (PFA). Similarly, the government has produced a number of laws, regulations, orders, notifications, and other documents outlining the procedures for dealing with imports of the aforementioned products. In addition, the Food Safety and Standards Authority Act of 2006 (FSSA) aims to replace a number of existing laws, notably the PFA Act, which governs the import of edible goods. The FSSAI was formed to set standards and regulate/monitor food manufacturing, import, processing, distribution, and sale.

  1.       Labelling of the goods imported into India:

A government notification of year 2000 mandates the labeling of commodities imported into India that fall under the scope of the 1977 Standards of Weights and Measures (Packaged Commodities) Rules. Before an import consignment of such items is cleared by Customs for home consumption, compliance with labeling standards must be confirmed, according to this Notification.

  1.       The Livestock Importation Act, 1898:

The Livestock Importation Act of 1898 governs the import of livestock and livestock products. The purpose of this Act, as well as the notifications/orders issued under it, is to restrict the import of livestock products in such a way that they do not have a negative impact on the country’s human and animal health populations.

  1.       Standards of Weights and Measures (Packaged Commodities) Rules, 1977:

When imported into India, all packaged products that are subject to the terms of the Standards of Weights and Measures (Packaged Commodities Rules, 1977) when made, packed, or marketed in the domestic market must comply with all provisions of the said rules. Before the import consignment of such commodities is cleared by Customs for domestic consumption, compliance must be ensured.

  1.       Drugs and Cosmetics Act, 1940 and Drugs and Cosmetics Rules, 1945:

According to Rule 133 of the Drugs and Cosmetics Rules, 1945, cosmetics may only be imported into India through the points of entry listed in Rule 43A of the Rules. Furthermore, certain categories of drugs are exempt from the limits imposed by Chapter III of the Drugs and Cosmetics Act, 1940, under Schedule “D” of the aforementioned Rules, read in accordance with Rule 43.

  1.       Import of Hazardous Substances:

Hazardous waste imports into India are governed by the Hazardous Wastes (Management and Handling) Amendment Rules, 1989. Furthermore, despite anything in the ITC (HS) Classifications of Export and Import Items, the import of hazardous waste or substances containing or contaminated with hazardous wastes as defined in Schedule 8 of the act is forbidden.

 

LIST OF SOME MAJOR PROHIBITED/RESTRICTED GOODS IN INDIA

 

  PROHIBITED GOODS                                 RESTRICTED GOODS   

Narcotic drugs and psychotropic substancesFirearms and ammunition
Pornographic and obscene materialLive birds and animals including pets
Counterfeit and pirated goods and goods infringing any of the legally enforceable intellectual property rightsPlants and their produce e g fruits, seeds
AntiquitiesEndangered species of plants and animals, whether alive or dead
Aero models (such as remote-controlled toy helicopters) that operate on high radio bandwidthsAny goods for commercial purposes for profit, gain, or commercial usage
Indian coins which are covered by the Antique and Art Treasure Act, 1972Radio transmitters not approved for normal usage
Maps and literature where Indian external boundaries have been shown incorrectly, in view of the Government of IndiaImporting Gold and Silver, other than ornaments
Chemicals mentioned in Schedule 1 to the Chemical Weapons Convention of U.N. 1993.Currency in excess of prescribed limits
Wildlife products;

·         Human skeleton

·         Specified sea-shells

·         Beef, tallow, fat/oil of animal origin

·         Exotic birds except for a few specified ones

·          Wild animals, their parts and products

·         Specified Live birds and animals

Telephone and telephony equipment of restricted frequencies

 

Author: Aditya Sharma

Editor: Adv. Aditya Bhatt & Adv. Chandni Joshi

 

RECOVERY OF DUES AND REFUND OF CUSTOM DUTY AND INTEREST UNDER CUSTOMS ACT, 1962

RECOVERY OF DUES AND REFUND OF CUSTOM DUTY AND INTEREST UNDER CUSTOMS ACT, 1962

INTRODUCTION

Customs duty is determined in terms of section 15 or section 16 of the Customs Act, 1962 in respect of imported or export goods. If the duty paid / levied is found to be less than due, the importer or exporter is required to pay the short levied / non levied or short paid / non paid amount of duty. In this regard, the Customs Act, 1962 empowers officers to issue a demand cum Show Cause Notice for recovery of the amount of duty short levied/ non levied from the importer/exporter. The Show Cause Notice is then adjudicated by the appropriate authority. 

Section 28 of the Customs Act, 1962 provides for the recovery of arrears and section 142 of the Act empowers the department to take coercive actions. 

On import or export of goods, at times, it is found that duty has been paid in excess of what was actually leviable on the goods. Such excess payment may be due to lack of information on the part of importer/exporter or non-submission of documents required for claim of lower value or rate of duty. Sometimes, such excess payment of duty may be due to shortage/short landing, pilferage of goods or even incorrect assessment of duty by Customs. In such cases, refund of excess amount of duty paid can be claimed by the importer or exporter. If any excess interest has been paid by the importer/exporter on the amount of duty paid in excess, its refund can also be claimed. Section 26 of the Customs Act, 1962 prescribes provision for refund of export duty, Section 26A of the Customs Act, 1962 deals with refund of import duty in certain cases and Section 27 of the Customs Act, 1962 prescribes claim for refund of duty in case of excess payment duty on importation. 

This article would throw light on the recovery of arrears and refund of custom duty and interest under the Customs Act of 1962. Customs Law and Procedures - Bhatt & Joshi Associates

LEGAL PROVISIONS FOR RECOVERY OF ARREARS

The main statutory provisions dealing with recovery of arrears in Customs are as follows:- 

(i) Section 28 of the Customs Act, 1962 provides for recovery of any duty which has not been levied or has been short levied or erroneously refunded or if any interest payable has not been paid, part paid or erroneously refunded by way of issue of demand and pursuing with the importer/exporter.

(ii) In case recovery is not effected under section 28, section 142 of the Customs Act, 1962 further empowers department to take coercive actions such as deducting any amount payable to the defaulter, restraining any movable or immovable property or referring the case to district collector for recovery of the dues as if it were an arrear of land revenue.

(iii) The process of recovery of arrears starts with confirmation of demand against the defaulter importer/exporter and includes a number of appellate forums wherein importer/exporter as well department can go for appeal.

 

PROCEDURE FOR RECOVERY OF ARREARS OF CUSTOMS

  • Section 28 of the Customs Act, 1962 provides for recovery of any duty which has not been levied or has been short levied or erroneously refunded or if any interest payable has not been paid, part paid or erroneously refunded provided a notice demanding such duties/interests is issued within the time limit specified in that Section. Where the short levy is by reason of collusion or any willful misstatements or suppression of facts by the Importer the period for issuing the demand notice is five years from the relevant date specified in Section 28.
  • When the short levy is discovered or pointed out by Audit, a notice is served on the importer or the persons chargeable with duty to show cause as to why the amount due should not be recovered from him. Normally a period of 15 days is given to show cause why he should not pay the amount The basis and the working of the short levy is required to be clearly stated in the Show Cause Notice. Copies of relied upon documents are also furnished to the notice, to enable him to represent his case. All such notices are required to be sent by Registered Post or given to the Agent under receipt/acknowledgement after being entered in the less charge demand register maintained in the respective sections of the Custom House.
  • It is important that the demand should be served on the importer within the time limit under section 28 of the Customs Act as otherwise the demand shall become time barred and legally not recoverable. In the case of IAD or CRA objections, demands are issued immediately on receipt of the objection wherever it appears that there may be a short levy of duty as indicated in the objection.
  • Demands issued for short levy of duty as a result of audit objection, arising out of assessment etc. are to be finalised within 6 months from the date of issue of the demands and cases which could not be finalised should be reviewed for examining the reasons for delay and adopting suitable remedial measures.
  • Upon receipt of the reply from the Notice the matter is examined in detail and the Notice is offered an opportunity of Personal Hearing to explain his case before the adjudicating authority. After the Personal Hearing the adjudicating authority shall examine the material placed before him and shall come to the conclusion after taking into consideration the provisions of Law concerning the issue Generally, the issues involved are misdeclaration of the description of the goods resulting in wrong classification and levy of lesser duty, misdeclaration of value, quantity and weight having a bearing on duty, calculation error resulting in short levy of duty, non inclusion of certain components of value in the assessable value etc.
  • The adjudicating authority is required to take an independent decision as an quasi-judicial authority and pass appropriate orders either determining the amount of short levy in terms of section 28 (2) of Customs Act or dropping the proceedings where it is found that there–is no short levy in either case an appealable order is to be issued by the adjudicating authority. The duties, fines and penalties imposed, if any, are required to be paid immediately, unless the party files an appeal and obtains a stay from the competent authority.
  • As regards breach of condition of the notification after availing of the exemption thereunder, it has been held by the Apex Court that the obligation under a notification is a continuing one and the Customs authorities are well within their power to recover the duty whenever it comes to their notice that the importer has failed to fulfil the conditions. In such cases the demand can be issued irrespective of the time factor and the amount can be recovered in terms of the provisions of the Customs Act.
  • The confirmed demands are enforced and recoveries effected in accordance with the provisions under Section 142 of Customs Act, 1962. Where it is not possible to recover the amount by adjusting against any money which the department owes to such persons, or by detaining and selling any goods belonging to such persons which are under the control of the Department, action is initiated to recover the Government dues through the District Collector as if it were an arrears of land revenue. Powers are also vested with Customs for attaching/detaining and selling any movable or immovable property belonging to/or under control of such person, and these can also be resorted to.

REFUND OF CUSTOMS

The refund of any duty and interest, can be claimed either by a person who has paid the duty in pursuance to an order of assessment or a person who has borne the duty. Any person claiming refund of any duty or interest, has to make an application in duplicate in the form as prescribed in the Customs Refund Application(Form) Regulations, 1995, to the jurisdictional Deputy/Assistant Commissioner of Customs. Such application is to be made before the expiry of six months from the date of payment of duty and interest. However, in case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, application for refund can be made before the expiry of one year from the date of payment of duty and interest. The application for refund is required to be filed with documentary or other evidence including documents relating to assessment, sales invoice and other like documents to support the claim that the duty and interest was paid in excess, incidence of duty or interest has not been passed on by him to any other person, and the refund has not been obtained already. Where on scrutiny, the application is found to be complete in all respects, the Customs issues an acknowledgement in the prescribed Form as per the Customs Refund Application(Form) Regulations, 1995. However, in case the application is found to be incomplete, the Customs has to return the application to the applicant, pointing out the deficiency. The applicant has to re-submit the application after making good the deficiency, for scrutiny by Customs again for admissibility of the refund claim.

PROCESSING OF REFUND CLAIM

The application of refund found to be complete in all respects by Customs, is processed to see if the whole or any part of the duty and interest paid by the applicant is refundable. In case, the whole or any part of the duty and interest is found to be refundable, an order for refund is passed. However, in view of the provisions of unjust enrichment enshrined in the Customs Act, the amount found refundable has to be transferred to the Consumer Welfare Fund. Only in following situations, the amount of duty and interest found refundable, instead of being credited to the Consumer Welfare Fund, is to be paid to the applicant:

  1. if the importer has not passed on the incidence of such duty and interest to any other person;
  2. if imports were made by an individual for his personal use;
  3. if the buyer who has borne the duty and interest, has not passed on the incidence of such duty and interest to any other person;
  4. if amount found refundable relates to export duty paid on goods which has returned to exporter as specified in section 26;
  5. if amount relates to drawback of duty payable under section 74 and 75;
  6. if the duty or interest was borne by a class of applicants which has been notified for such purpose in the Official Gazette by the Central Government.

INTEREST ON DELAYED REFUND

The Customs has to finalize refund claims immediately after receipt of the refund application in proper form along-with all the documents. In case, any duty ordered to be refunded to an applicant is not refunded within 3 months from the date of receipt of application for refund,  the appliant shall be paid to that applicant interest at such rate, [not below five per cent] and not exceeding thirty per cent per annum as is for the time being fixed. The interest is to be paid for the period from the date immediately after the expiry of 3 months from the date of receipt of such application till the date of refund of such duty. For the purpose of payment of interest, the application is deemed to have been received on the date on which a complete application, as acknowledged by the proper officer of Customs, has been made. Where any order of refund is made by the Commissioner (Appeals), Appellate Tribunal or any Court against an order of the Assistant Commissioner/Deputy Commissioner of Customs, the order passed by the Commissioner (Appeals), Appellate Tribunal or by the Court, as the case may be is deemed to be an order for the purpose of payment of interest on delayed refund. The interest on delayed refund is payable only in respect of delayed refunds of Customs duty and no interest is payable in respect of deposits such as deposits for project imports, security for provisional release of goods etc.

INDIAN JUDGMENTS ON REFUND UNDER CUSTOMS ACT, 1962

The Hon’ble Supreme Court in the case of Priya Blue Industries Ltd v. Commissioner of Customs (Prev.), held that “Once an Order of Assessment is passed the duty would be payable as per that order. Unless that order of assessment has been reviewed under Section 28 and/or modified in an Appeal that Order stands. So long as the Order of Assessment stands the duty would be payable as per that Order of Assessment. A refund claim is not an Appeal proceeding. The Officer considering a refund claim cannot sit in Appeal over an assessment made by a competent Officer. The Officer considering the refund claim cannot also review an assessment order” 

In the case of Vimal Alloys Pvt. Ltd v. Commissioner of Customs, held that the amount paid by the importer could not be said to be duty. At best it was a deposit converted into duty. In that view, refunds filed beyond the prescribed period could not be said to be time-barred.

In the Case of Southern Petrochem. Indus. Corpn. Ltd. v. Collector of Customs, held that “ It is now well settled that the refund claim cannot be enlarged before the Appellate Forum after the expiry of statutory period under Section 27 of the Customs Act. Therefore, we have to reject the claim of the appellants for refund of additional duty and CV duty as available under Notification No. 132/88-C.E. as being a fresh claim, which is inadmissible in law, as having been made beyond the prescribed time limit under Section 27 of the Act

The Hon’ble Tribunal larger bench in the case of DCM Shriram Consolidated Ltd. v. Commissioner of Customs, held that “though refund claim was filed on 22-4-1997 the assessment was finalized on 16-2-2001 only and the refund, if any, has become due to them only from that date. Thus, interest, if any, will be payable from 3 months after 16-2-2001 and not from 22-4-1997 as at that time no refund was due to the Applicants.

PROCEDURE OF CUSTOMS UNDER CUSTOMS ACT, 1962

PROCEDURE OF CUSTOMS UNDER CUSTOMS ACT, 1962

INTRODUCTION:

Customs is an authority or tax collection wing appointed by the Government in every country for controlling and for collecting of tax on the flow of goods into and out of a country. ‘Customs Duty’ refers to the tax imposed on the goods when they are transported across the international borders. Custom Duty is an indirect tax, imposed under the Customs Act formulated in 1962. Following are the types of customs duty in India, 

  • Basic Customs Duty (BCD)
  • Countervailing Duty (CVD)
  • Additional Customs Duty or Special CVD
  • Protective Duty,
  • Anti-dumping Duty

The power to enact the law is provided under the Constitution of India under the Article 265, which states that ―no tax shall be levied or collected except by authority of law. Entry No. 83 of List I to Schedule VII of the Constitution empowers the Union Government to legislate and collect duties on import and exports.

The primary objective behind levying customs duty is to safeguard each nation’s economy, jobs, environment, residents, etc., by regulating the movement of goods in and out of any country. It is also to minimise the smuggling of demerit goods such as cigarettes and alcoholic beverages across borders since these items are usually highly taxed and their tax rates may also vary significantly across borders. The Quantum of Customs duty in India depends upon the provisions of Customs Act, 1962 and Customs Tariff Act, 1975 and related Customs Rules, Notifications, Circulars, case Laws and Annual Union Finance Acts. The Customs Act, 1962 is the principal act which governs entry or exit of different categories of vessels, aircrafts, goods, passengers etc., into or outside the country. The Act extends to the whole of India.

Indian Government Planning To Hike Customs Duties On Electronics - Gizbot News 

All goods imported into India have to pass through the procedure of customs for proper examination, appraisal, assessment and evaluation. This helps the custom authorities to charge the proper tax and also check the goods against the illegal import. Import and export of goods into and outside a country should undergo a customs clearance process. The importer and exporter of the goods should submit valid documents to clear this process. In this article, we look at some of the major steps and processes in clearing customs in India. Goods are imported in India or exported from India through sea, air or land. Goods can come through post parcels or as baggage with passengers. Procedures naturally vary depending on mode of import or export. Procedures discussed in this are applicable for imports by sea, air or land.

PROCEDURES FOR IMPORT:

Bill of entry:

Goods imported into the country attract Customs duty and are also required to confirm relevant and corresponding legal requirements. Thus, unless the imported goods are not meant for Customs clearance at the port/airport of arrival such as those intended for transit by the same vessel/aircraft or transshipment to another Customs station or to any place outside India, detailed Customs clearance formalities have to be followed by the importers. In contrast, in terms of Section 52 to 56 of the Customs Act, 1962, the goods mentioned in the IGMor Import Report for transit to any place outside India or meant for transshipment to another Customs station in India are allowed transit without payment of duty. In case of goods meant for transshipment to another Customs station, simple transshipment procedure has to be followed by the carrier and the concerned agencies at the first port/ airport of landing and the Customs clearance formalities have to be complied with by the importer after arrival of the goods at the other Customs station where goods are intended to be delivered to the importer. There could also be cases of transshipment of the goods after unloading to a port outside India. For this purpose, a simple procedure is prescribed and no duty is required to be paid. 

Self-assessment of imported and export goods: 

Section 17 of the Customs Act, 1962 provides that an importer entering any imported goods under section 46 or an exporter entering any export goods under section 50 shall self-assess the duty. Thus, under self-assessment, it is the importer or exporter who will ensure that he declares the correct classification, applicable rate of duty, value, benefit of exemption notifications claimed, if any, etc. in respect of the imported / export goods while presenting Bill of Entry or Shipping Bill. In cases, where the importer or exporter is not able to determine the duty liability or make self assessment for any reason, except in cases where examination is requested by the importer under proviso to Section 46(1), a request shall be made to the proper officer for provisional assessment of duty under Section 18 (1)(a) of the Customs Act, 1962. In such a situation an option is available to the proper officer to resort to provisional assessment of duty by asking the importer / exporter to furnish security as deemed fit for payment of the deficiency, if any, between the duty as may be finally assessed or reassessed, as the case may be, and the duty provisionally assessed.

Examination of Goods:

All imported goods are required to be examined for verification of correctness of description given in the bill of entry. However, a part of the consignment is selected on a random selection basis and is examined. In case the importer does not have complete information with him at the time of import, he may request for examination of the goods before assessing the duty liability or, if the Customs Appraiser/Assistant Commissioner feels the goods are required to be examined before assessment, the goods are examined prior to assessment. The importer has to request for a first check examination at the time of filing the bill of entry or at data entry stage. The reason for seeking First Appraisement is also required to be given. On the original copy of the bill of entry, the Customs Appraiser records the examination order and returns the bill of entry to the importer/CHA with the direction for examination, who is to take it to the import shed for examination of the goods in the shed. Shed Appraiser/Dock examiner examines the goods as per examination order and records his findings. 

After assessment by the appraising group or for cases where examination is carried out before assessment, a bill of entry needs to be presented for registration for examination of imported goods in the import shed. The proper officer of customs examines the goods along with requisite documents. The shipments, found in order are given clearance order by the proper officer of customs in the Import Shed.

Execution of Bonds:

Wherever necessary, for availing duty free assessment or concessional assessment under different schemes and notifications, execution of end use bonds with Bank Guarantee or other surety is required to be furnished. These have to be executed in prescribed forms before the assessing Appraiser.

Payment of duty:

The duty can be paid in the designated banks or through TR-6 challans. Different Custom Houses have authorised different banks for payment of duty. It is necessary to check the name of the bank and the branch before depositing the duty. Bank endorses the payment particulars in challan which is submitted to the Customs.

Amendment of Bill of Entry: 

Bonafide mistakes noticed after submission of documents, may be rectified by way of amendment to the Bill of Entry with the approval of Deputy/Assistant Commissioner. The request for amendment may be submitted with the supporting documents. 

Prior Entry for Bill of Entry:  

For faster clearance of the goods, provision has been made in section 46 of the Act, to allow filing of bills of entry prior to arrival of goods. This bill of entry is valid if a vessel/aircraft carrying the goods arrives within 30 days from the date of presentation of the bill of entry. The importer is to file 5 copies of the bill of entry and the fifth copy is called Advance Noting copy. The importer has to declare that the vessel/aircraft is due within 30 days and they have to present the bill of entry for final noting as soon as the IGM is filed. Advance noting is available to all imports except for into the bond bill of entry and also during the special period.

Bill of Entry for bond/warehousing:

A separate form of Bill of Entry is used for clearance of goods for warehousing. All documents, as are required to be filed with a Bill of Entry for home consumption are also required with the Bill of Entry for Warehousing which is assessed in the same manner and duty payable is determined. However, since duty is not required to be paid at the time of warehousing, the purpose of assessing the duty at this stage is only to secure the duty by way of execution of Bond. The duty is paid at the time of ex-bond clearance of goods for which an Ex-Bond Bill of Entry is filed. In terms of Section 15 of the Customs Act, 1962, the rate of duty applicable to imported goods cleared from a warehouse is the rate in- force on the date of filing of the Ex-Bond Bill of Entry. 

 

PROCEDURE FOR EXPORTS:

Shipping bill: 

For clearance of export goods, the exporter has to obtain an Importer- Export Code (IEC) number from the DGFT prior to filing of Shipping Bill. Under the EDI System, IEC number is received online by the Customs System from the DGFT. The exporter is also required to register authorized foreign exchange dealer code (through which export proceeds are expected to be realized) and open a current account in the designated bank for credit of Drawback incentive, if any. All the exporters intending to export under the export promotion scheme need to get their licenses etc. registered at the Customs Station. For such registration, original documents are required. 

Waiver of GR form: 

Generally the processing of Shipping Bills requires the production of a GR form that is used to monitor the foreign exchange remittance in respect of the export goods. However, there are few exceptions when the GR form is not required. These exceptions include export of goods valued not more than US $25,000/- and export of gifts valued upto Rs.5 lakhs. 

Arrival of goods to the dock:

The goods brought for the purpose of examination and subsequent ‘let export’ are allowed entry to the Dock on the strength of the checklist and other declarations filed by the exporter in the Service Center. The Port authorities have to endorse the quantity of goods actually received on the reverse of the Checklist.

Customs examination of export goods:

After the receipt of the goods in the dock, the exporter/CHA may contact the Customs Officer designated for the purpose present the check list with the endorsement of Port Authority and other declarations as aforesaid along with all original documents such as, Invoice and Packing list, AR-4, etc. Customs Officer may verify the quantity of the goods actually received and enter into the system and thereafter mark the Electronic Shipping Bill and also hand over all original documents to the Dock Appraiser of the Dock who many assign a Customs Officer for the examination and intimate the officers’ name and the packages to be examined, if any, on the check list and return it to the exporter or his agent. The Customs Officer may inspect/examine the shipment along with the Dock Appraiser. The Customs Officer enters the examination report in the system. He then marks the Electronic Bill along with all original documents and checklist to the Dock Appraiser. If the Dock Appraiser is satisfied that the particulars entered in the system conform to the description given in the original documents and as seen in the physical examination, he may proceed to allow “let export” for the shipment and inform the exporter or his agent.

Drawl of samples:

Where the Appraiser Dock (export) orders for samples to be drawn and tested, the Customs Officer may proceed to draw two samples from the consignment and enter the particulars thereof along with details of the testing agency. There is no separate register for recording dates of samples drawn. Three copies of the test memo are prepared by the Customs Officer and are signed by the Customs Officer and Appraising Officer on behalf of Customs and the exporter or his agent.

Stuffing / loading of goods in containers: 

In case of container cargo the stuffing of containers at Dock is done under Preventive supervision. Further, loading of both containerized and bulk cargo is to be done under Preventive supervision. The Customs Preventive Officer supervising the loading of container and general cargo into the vessel may give “Shipped on Board” endorsement on the Exporters copy of the Shipping Bill.  

Amendments: 

Any correction/amendment in the check list generated after filing of declaration can be made at the Service Centre provided the documents have not yet been submitted in the EDI system and the Shipping Bill number has not been generated. Where corrections are required to be made after the generation of the Shipping Bill number or after the goods have been brought into the Export Dock, the amendments will be carried out in the following manner: 

(i) If the goods have not yet been allowed to “Let Export” the amendments may be permitted by the Assistant / Deputy Commissioner (Exports). 

(ii) Where the “Let Export” order has already been given, amendments may be permitted only by the Additional/Joint Commissioner in charge of Export. 

Drawback claim:  

After actual export of the goods, the Drawback claim is processed through the EDI system by the officers of the Drawback Branch on a first come first served basis. There is no need for filing separate drawback claims. The status of the shipping bills and sanction of DBK claim can be ascertained from the query counter set up at the service center. If any query has been raised or deficiency noticed, the same is shown on the terminal. A print out of the query/deficiency may be obtained by the authorized person of the exporter from the service center. The exporters are required to reply to such queries through the service center. The claim will come in the queue of the EDI system only after reply to queries/deficiencies are entered by the Service Center.

Export General Manifest(EGM):

All the shipping lines/agents need to furnish the Export General Manifests, Shipping Bill wise, to the Customs electronically within 7 days from the date of sailing of the vessel. Apart from lodging the EGM electronically the shipping lines need to continue to file manual EGMs along with the exporter copy of the shipping bills as per the present practice in the export department. The manual EGMs need to be entered in the register at the Export Department and the Shipping lines may obtain acknowledgements indicating the date and time at which the EGMs were received by the Export Department. The above is the general procedure for export under EDI Systems. However special procedures exist for specified schemes, details of which may be obtained from the Public Notice/Standing Orders issued by the respective Commissionerates.

Facility 24×7 Customs Clearance:  

In order to faster Customs clearance of imported and export goods to reduce dwell time and lower the transaction cost, CBE & C, vide Circular No. 19/2014-Customs, dated 31.12.2014 has made facility of 24×7 Customs Clearance for specified imports, namely, goods under ‘facilitated “Bills of Entry and specified exports, namely factory stuffed containers and goods exported under free shipping Bills have made available in 18 sea ports. Similarly, facility of 24×7 Customs clearance for specified imports, namely, goods covered by facilities Bills of Entry and all exports viz. goods covered by all shipping Bills has been extended at 17 air cargo complexes.

Sealing of Export Goods: electronic sealing facility:

Board has laid down a simplified procedure for stuffing and sealing of export goods by introducing self-sealing subject to certain conditions.

CONCLUSION:

In line with Government’s policy “Ease of Doing Business “ the Central Board of Excise and Customs  has taken-up the various measures to facilitate trade and commerce to bring hassle free working environment as well as  reduction of transaction costs of goods and services to make them competitive in the domestic and international market.  The various initiatives taken by the Board are welcome steps and this will reduce the prices of Goods and services in the GST regime. The initiatives for “ease of doing of business certainly will boost the economic growth of the country in the coming days.

VALUATIONS OF CUSTOM DUTY UNDER CUSTOMS ACT, 1962. 

VALUATIONS OF CUSTOM DUTY UNDER CUSTOMS ACT, 1962. 

 

Introduction:

 

Customs is an authority or tax collection wing appointed by the Government in every country for controlling and for collecting of tax on the flow of goods into and out of a country. ‘Customs Duty’ refers to the tax imposed on the goods when they are transported across the international borders. Custom Duty is an indirect tax, imposed under the Customs Act formulated in 1962. Following are the types of customs duty in India, 

  • Basic Customs Duty (BCD)
  • Countervailing Duty (CVD)
  • Additional Customs Duty or Special CVD
  • Protective Duty,
  • Anti-dumping Duty

India for customs duty on computer-aided design files for 3-D printing |  A2Z Taxcorp LLP

The power to enact the law is provided under the Constitution of India under the Article 265, which states that ―no tax shall be levied or collected except by authority of law. Entry No. 83 of List I to Schedule VII of the Constitution empowers the Union Government to legislate and collect duties on import and exports.

The primary objective behind levying customs duty is to safeguard each nation’s economy, jobs, environment, residents, etc., by regulating the movement of goods in and out of any country. It is also to minimise the smuggling of demerit goods such as cigarettes and alcoholic beverages across borders since these items are usually highly taxed and their tax rates may also vary significantly across borders. The Quantum of Customs duty in India depends upon the provisions of Customs Act, 1962 and Customs Tariff Act, 1975 and related Customs Rules, Notifications, Circulars, case Laws and Annual Union Finance Acts. The Customs Act, 1962 is the principal act which governs entry or exit of different categories of vessels, aircrafts, goods, passengers etc., into or outside the country. The Act extends to the whole of India. This article would help us understand the valuations of customs duty under the Customs Act of 1962. 

 

  • Legal provisions for valuation under Customs Act, 1962:

 

Section 2(41) of the Customs Act, 1962 defines ‘Value’ in relation to any goods to mean the value thereof determined in accordance with the provisions of sub-section (1) of Section 14 thereof. Sub-section (1) of Section 14, in turn, states that when a duty of customs is chargeable on any goods by reference to their value, the value of such goods shall be deemed to be: –

“The price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in the course of international trade, where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or offer for sale”.

The provisions of sub-section (1) of Section 14 apply for the valuation of both imported goods and export goods. However, a common valuation law at international level applies only to imported goods and its basic principles are laid down in Article VII of General Agreement on Tariffs and Trade (GATT), 1948, currently known as GATT 1994 (administered by the WTO). The Indian valuation law under Section 14(1) of the Indian Customs Act is based on the principles of Article VII of the GATT. This is, however, a deemed value allowing uplifting (loading) of declared value in a given case even when it represents the actual price of transaction. The Agreement on Customs Valuation (ACV), which came into force on 1st January 1981, lays down well defined methods of valuation to be strictly followed so as to ensure uniformity and certainty in valuation approach and to avoid arbitrariness. Sub-section 1A of the Indian Customs Act, 1962 requires that the value of imported goods shall be determined under the Rule made in this behalf. The Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 lays down the methods of valuation based on the ACV. Transaction value, which is the price paid or payable for the imported goods, is the primary basis for valuation. If the transaction value method is not applicable in a specific case, the other methods of valuation prescribed in the Rules (based on ACV) have to be followed in a hierarchical order, subject to certain exceptions

Under the Customs Act, 1962, the Central Government has also been empowered to fix Tariff Values for any product. If Tariff Value is fixed for any goods, then ad-valorem duties are to be calculated with reference to such Tariff Value. The tariff values may be fixed for any class of imported or export goods having regard to the trend of value of such or like goods and the same has to be notified in the official gazette. As far as export goods are concerned, provisions of sub-section (1) of Section 14 provide a complete code of valuation by itself and there are no separate valuation rules for that purpose.

 

  • Valuation of goods under the Customs Act, 1962:

 

Section 14 of the Customs Act, 1962 prescribes the mode of identifying the value of imported or export goods for the purpose of payment of customs duty. The provisions of section 14 are discussed below: 

TRANSACTION VALUE:

Sub-section (1) of section 14 lays down that for the purposes of the Customs Tariff Act, 1975, or any other law for the time being in force, the value of the imported goods and export goods shall be the transaction value of such goods. In case of export goods, the transaction value shall be the price actually paid or payable for the goods when sold for export from India for delivery at the time and place of exportation where the buyer and seller of the goods are not related and price is the sole consideration for the sale. However further conditions may be specified in the rules made in this behalf. In case of imported goods, the transaction value shall be the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation where the buyer and seller of the goods are not related and price is the sole consideration for the sale. However, in this case also further conditions may be specified in the rules made in this behalf. Such transaction value shall also include in addition to the price as aforesaid, any amount paid or payable for costs and services, including:

 

  • Commissions and brokerage,

 

  • Engineering,
  • Design work,
  • Royalties and licence fees,
  • Costs of transportation to the place of importation,
  • Insurance,
  • Loading,
  • Unloading and
  • Handling charges.

 

 

to the extent and in manner specified in the rules made in this behalf. Such rules may provide for: (a) the circumstances in which the buyer and the seller shall be deemed to be related; 

(b) the manner of determination of value in respect of goods when there is no sale, or the buyer and the seller are related, or price is not the sole consideration for the sale or in any other case; (c) the manner of acceptance or rejection of value declared by the importer or exporter, as the case may be, where the proper officer has reason to doubt the truth or accuracy of such value, and determination of value for the purposes of this section. 

CONVERSION DATES

For imported goods, the conversion in value shall be done with reference to the rate of exchange prevalent on the date of filing the bill of entry under section 46. For export goods, the conversion in value shall be done with reference to the rate of exchange prevalent on the date of filing shipping bill (vessel or aircraft) or bill of export (vehicle) under section 50. In case of Samar Timber Corporation v. ACC, it was held that the relevant date in respect of rate of duty payable is the date of presentation of Bill of Entry and not the date of re-presentation after correction. 

CURRENCY CONVERSION RATE

The rate of exchange is notified by three agencies- the Central Board of Excise and Customs (Board), the Reserve Bank of India and the Foreign Exchange Dealers’ Association of India. For the purpose of customs valuation, “rate of exchange” means the rate of exchange (1) determined by the Board, or (ii) ascertained in such a manner as the Board may direct for the conversion of Indian currency into foreign currency or foreign currency into Indian currency. Thus, for the purpose of valuation under customs laws, rate notified by CBEC (Board) shall be taken into account. The CBEC notifies the rates periodically, generally every fortnight. There are separate rates for imported goods (selling rate) and export goods (buying rate). 

TARIFF VALUE

Sub-section (2) of section 14 provides that the Board may fix tariff values for any class of imported goods or export goods, having regard to the trend of value of such or like goods by notification in the Official Gazette if it is satisfied that it is necessary to do so. Where any such tariff values are fixed, the duty shall be chargeable with reference to such tariff value. Provisions of sub-section (2) have an overriding effect on the provisions of sub-section (1).

 

  • Important case laws:

 

In the case of Commissioner of Central Excise, Mangalore v. Mangalore Refinery & Petrochemicals Ltd,  Revenue contended that demurrage charges paid by the assessee are includible in the assessable value for the levy of custom duty. The court decided that Demurrage charges are incurred after the goods reach Indian Ports, thus it is a post-importation event, relying on the case of Commissioner of Customs v. Essar Steel Ltd, the Apex Court has held that Demurrage charges are not includible in the assessable value of imported goods.

In the case of Commissioner of Cus., Visakhapatnam v. Aggarwal Industries Ltd, the importer entered into a contract for supply of crude sunflower seed oil U.S. $ 435 C.l.F./Metric ton. Under the contract, the consignment was to be shipped in the month of July, 2011. The period was extended by mutual agreement and goods were shipped on 5th August, 2011 at old agreed prices. In the meanwhile, the international prices had gone up due to volatibility in the market, and other imports during August, 2011 were at higher prices. Department sought to increase the assessable value on the basis of the higher prices as contemporaneous imports. The court held that the Department view is not correct. It is true that the commodity involved had volatile fluctuations in its price in the international market, but having delayed the shipment; the supplier did not increase the price of the commodity even after the increase in its price in the international market. There was no allegation of the supplier and importer being in collusion. Thus, the appeal was allowed in the favour of the respondent- assessee.

In the case of Gira Enterprises v. CCus., the appellant imported some goods from China. On the basis of certain information obtained through a computer printout from the Customs House, the Department alleged that during the period in question, a large number of such goods were imported at a much higher price than the price declared by the appellant. Therefore, the Department valued such goods on the basis of the transaction value of identical goods as per rule 4 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and demanded the differential duty along with penalty and interest from the appellant. However, the Department did not provide these printouts to the appellant. Decision: The Supreme Court held that mere existence of alleged computer printout was not proof of existence of comparable imports. Even if assumed that such printout did exist and content thereof were true, such printout must have been supplied to the appellant and it should have been given reasonable opportunity to establish that the import transactions were not comparable. Thus, in the given case, the value of imported goods could not be enhanced on the basis of the value of identical goods as Department was not able to provide evidence of import of identical goods at higher prices. 

Conclusion:

Customs duty is considered to be an indirect tax. It is a tax on the goods and it is not a tax on the person having or owning the goods. The charge of tax is attached to the goods. Unless the tax liability is discharged, the goods are not allowed to proceed further. It therefore becomes necessary for the importer, who desires to take clearance of the goods into town for home consumption, to discharge the duty liability. Similarly in case of baggage the passenger cannot take his goods, unless the duty liability is discharged.

Customs not an excuse: provisions of Customs Act to know while travelling and importing gold jewellery in India

Customs not an excuse: provisions of Customs Act to know while travelling and importing gold jewellery in India

Introduction

Many Indian residents live abroad and earn their living. On entering India, they have to go through a customs check. The passenger has to declare the contents of his baggage within the prescribed Indian Customs Declaration Form. At airports, the passenger has the choice of seeking clearance through the Green Channel or the Red Channel subject to the character of products being carried. This becomes very important to know especially while travelling and importing gold jewellery in India; Customs Law and Procedures - Bhatt & Joshi Associates

Provision of Red channel and Green channel

In many countries, customs procedures for arriving passengers at many international airports and a few road crossings are separated into red and green channels. 

Red Channel

Passengers with goods to declare (carrying goods above the permitted customs limits and/or carrying prohibited items) undergo the red channel.

Green Channel

Passengers with nothing declared (carrying goods within the permitted customs limits and not carrying prohibited items) undergo the green channel.

However, entry to a specific channel constitutes a legal declaration, if a passenger browsing the green channel is found to be carrying dutiable goods above the customs limits or prohibited items, he or she could also be prosecuted for creating a false declaration to customs (also amounting to smuggling), by virtue of choosing green channel despite carrying dutiable goods, especially more important in case of Gold Jewellery. It may be noted that wearing gold is permissible only upto ___; and rest will be considered as baggage and baggage rules will be applicable; 

Each channel may be a point of no return, once a passenger has entered a specific channel, they can’t return or revisit the other channel. Passengers walking through the Green Channel with dutiable/prohibited goods are susceptible to prosecution/ penalty and also for confiscation of products.

Filling customs declaration form

Fill a Customs Declaration Form(at the airport) or use ATITHI mobile app to file declaration of dutiable items as well as currency with Indian Customs even before boarding the flight to India.

Baggage rules in India differ for various categories of individuals. Tourists have one set of rules while people transferring residence to India or returning to India after an extended stint of employment abroad are subject to a different.

The Baggage Rules 2016

Passengers arriving from countries other than Nepal, Bhutan or Myanmar.

An Indian resident or a foreigner residing in India or a tourist of Indian origin, not being an infant arriving from any country other than Nepal, Bhutan or Myanmar, shall be allowed clearance free of duty articles in his bona fide baggage, that is to say,

 

  • used personal effects and travel souvenirs; and
  • articles other than those mentioned in Annexure-I, up to the value of fifty thousand rupees if these are carried on the person or in the accompanied baggage of the passenger: Provided that a tourist of foreign origin, not being an infant, shall be allowed clearance free of duty articles in his bona fide baggage, that is to say,
  • used personal effects and travel souvenirs; and
  • articles other than those mentioned in Annexure- I, up to the value of fifteen thousand rupees if these are carried on the person or in the accompanied baggage of the passenger: Provided further that where the passenger is an infant, only used personal effects shall be allowed duty-free. 

 

Explanation.- The free allowance of a passenger under this rule shall not be allowed to pool with the free allowance of any other passenger.

Passengers arriving from Nepal, Bhutan or Myanmar.

An Indian resident or a foreigner residing in India or a tourist, not being an infant arriving from Nepal, Bhutan or Myanmar, shall be allowed clearance free of duty articles in his bona fide baggage, that is to say, 

 

  • used personal effects and travel souvenirs; and
  • articles other than those mentioned in Annexure -I up to the value of fifteen thousand rupees if these are carried on the person or in the accompanied baggage of the passenger: Provided that where the passenger is an infant, only used personal effects shall be allowed duty-free: Provided further that where the passenger is arriving by land, only used personal effects shall be allowed duty-free. 

 

Explanation.- The free allowance of a passenger under this rule shall not be allowed to pool with the free allowance of any other passenger.

Here, Annexure 1 includes the following things. 

  • Firearms
  • Cartridges of firearms exceeding 50.
  • Cigarettes exceeding 100 sticks or cigars exceeding 25 or tobacco exceeding 125 gms
  • Alcoholic liquor or wines in excess of two litres. 
  • Gold or silver in any form other than ornaments.
  • Flat Panel (Liquid Crystal Display/Light-Emitting Diode/ Plasma) television. 

Provision related to the import of gold 

An Indian passenger who has been residing abroad for over one year is allowed to bring jewellery, free of duty in his bonafide baggage up to 20 grams with a value cap of Rs.50,000/- (in case of a gentleman passenger) or up to 40 grams with a value cap of Rs.1,00,000/- (in the case of a lady passenger).

 

 

  • Can a person send jewellery to any manufacturer in India as a sample?

 

  1. Gold jewellery or studded jewellery including samples thereof is not allowed to be imported by or sent to ordinary persons in India through courier route. However, the units in export processing zones or Export Oriented Units are allowed to import gems and jewellery, including samples thereof, through an authorised courier. However, the jewellery and its samples can be exported by all units through the courier.

NEED FOR ABSOLUTE CONFISCATION

The issue of absolute confiscation of goods and option of redemption thereof has been subjected to judicial interpretation in the past with rulings of the High Court and Tribunal on the same.

In case of Commissioner Of Customs … vs Uma Shankar Verma Calcutta High Court:

Para 10

“…..

has held that if the goods are prohibited then the option is with the Customs Authority to confiscate without giving any option to pay fine in lieu thereof but when the goods are not prohibited then the Customs Authority has no other option but to allow the grant of an option to the party to pay a fine instead of confiscation.

 ….”

 

In the case of Kuber Casting Private Limited v. Commissioner of Customs, Amritsar-( Tribunal-Chandigarh):

Para 5

“….

As the goods impugned are not restricted goods, therefore, they can be released on payment of redemption fine and penalty, the Tribunal held that the redemption fine and penalty imposed on the appellant is highly excessive and the goods cannot be held for confiscation on the charge of misdeclaration of Description.

….”

Mandatory documents for export/import of goods from/into India:

  1. Mandatory documents required for export of goods from India: 
    1. Bill of Lading/ Airway Bill/ Lorry Receipt/ Railway Receipt/Postal Receipt 
    2. Commercial Invoice cum Packing List*
    3. Shipping Bill/Bill of Export/ Postal Bill of Export.
  2. Mandatory documents required for import of goods into India.
    1. Bill of Lading/Airway Bill/Lorry Receipt/ Railway Receipt/Postal Receipt in form CN-22 or CN 23 as the case may be.
    2. Commercial Invoice cum Packing List*
    3. Bill of Entry [Note: *(i) As per CBEC Circulars issued under the Customs Act, 1962 (ii) Separate Commercial Invoice and Packing List would also be accepted.]
  3. For export or import of specific goods or categories of goods, which are subject to any restrictions/policy conditions or require NOC or product-specific compliances under any statute, the regulatory authority concerned may notify additional documents for purposes of export or import. 
  4. In specific cases of export or import, the regulatory authority concerned may electronically or in writing seek additional documents or information, as deemed necessary to ensure legal compliance.

CONFISCATION OF GOLD NOT DECLARED

Since gold, figured at S. No. 4 of the Negative List it was considered to be a prohibited item liable for action under Section 124. However, by subsequent instructions later on, considering the import liberalization policies, directions were issued, not to order absolute confiscations of Gold, in cases where the passengers had even cleared the “Green Channel”, but were otherwise eligible for the import and had enough foreign exchange to cover the duty. The approach in the two Act viz, “Imports and Exports (Control) Act, 1947” and Foreign Trade (Development & Regulation) Act, 1992 have vastly changed objects and reasons.

In Shri Kamlesh Kumar In re, The Government of India in revision, it was held that such an option cannot be claimed as a right. This is because the condition regarding payment of duty in forign exchange is not satisfied (as goods were not declared) and hence these become ‘prohibited goods’. However, if a passenger is otherwise eligible to import gold, the option to pay redemption fine may be given considering all aspects. 

CONFISCATION EVEN IF DECLARATION MADE

In R Karuppan v. R Namachivayam 1998 ElT 214

Hon’ble Madras High Court (Divisional Bench) , it was held that goods can be confiscated and penalty imposed even if the passenger had voluntarily declared the goods in his baggage.

Section 125. Option to pay fine in place of confiscation

  • Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods an option to pay in place of confiscation such fine as the said officer thinks fit:

Provided that, without prejudice to the provisions of the proviso to subsection (2) of Section 115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon.

  • Where any fine instead of confiscation of goods is imposed under  subsection (1), the owner of such goods or the person referred to in Sub-section (1), shall, in addition, be liable to any duty and charges payable in respect of such goods.”

In Collector of Customs, Bombay vs M/s Elephanata Oil and Industries Ltd.

“Hon’ble Supreme Court held that from the perusal of Section 112 and 125 of Customs Act 1962 it is apparent that both operate in different fields, namely, one requires the imposition of penalty and other provides for confiscation of improperly imported goods section 111 provides that goods brought from the place outside India are liable to confiscation, discretion is given to the authority to impose the penalty. Further Section 125 empowers confiscation of such goods and thereafter, confiscated goods vest in the Central Government. The Section further empowers the authority to give an option to the owner or the person from which goods are seized to pay a fine lieu of such confiscation for return of goods and the fine is also limited up to the market price of the goods. Therefore, levy of fine in place of confiscation is in addition to levy of penalty impossible under Section 112.”

CONCLUSION

According to our respectful opinion, we think that the human body is not ‘baggage’, a gold ornament worn by a human body isn’t their luggage. Then, do we need to declare the ornaments worn by a person? 

“Section 2(3): “baggage” includes unaccompanied baggage but does  not include motor vehicles.”

In Vigneswaran Sethuraman v. Union Of India WP(C). No. 6281 of 2014 Hon’ble High Court Of Kerala At Ernakulam stated that:

that the body of a passenger is not ‘baggage’ Hence, gold ornaments worn by passengers need not to be declared. Baggage rules do not prohibit a foreign tourist entering into India from wearing a gold chain or other gold jewellery.

In Kartar Singh V. State of Punjab The Hon’ble Supreme Court of India has stated  and held that: :”It is the basic principle of legal jurisprudence that an enactment is void for vagueness if its prohibitions are not clearly defined. Vague laws offend several important values. It is insisted or emphasised that laws should give the person of ordinary intelligence a reasonable opportunity to know what is prohibited, so that he may act accordingly. Vague laws may trap the innocent by not providing fair warning. Such a law impermissibly delegates basic policy matters to policemen and also judges for resolution on an ad hoc and subjective basis, with the attendant dangers of arbitrary and discriminatory application. More so uncertain and undefined words deployed inevitably lead citizens to “steer far wider of the unlawful zone….than if the boundaries of the forbidden areas were clearly marked.” (emphasis supplied).

In Uma Balasaraswathi v. cc-1988 106 (CEGAT)

It has been held that if ornaments are worn by ladies and are not concealed anywhere, there cannot be any ‘misdeclaration’. 

 

In Shaik Jamal Basha v. Government of India

It was held that since gold is otherwise eligible for import, it is mandatory to give the option to pay a fine. Absolute confiscation cannot be ordered even if gold was found to be concealed. 

 

[Same view in sheikh shahabuddin v. CC2001 (137) ELT 127 (CEGAT)]

 

The customs act,1962 or the baggage rules,2016 does not stipulate that a foreign tourist or Indian Resident entering India cannot wear gold ornaments on his body. Gold is not a prohibited good; it is a restricted good and thus should be treated at par with the other dutiable goods. The Act and the Rules do not even remotely indicate that a foreign tourist or indian resident entering India cannot wear a gold chain on his person. In other words, foreign tourists entering India are in a boundless sea of uncertainty as to whether it is prohibited or not. As the Customs Act, 1962 and the rules framed thereunder contemplate confiscation and levy of penalty as also prosecution, the State has a duty to specify with a degree of certainty as to what is prohibited and what is not, without leaving it to the foreign tourist to guess what is prohibited and what is not.

Author: Pooja Shukla

EditorAdv. Aditya Bhatt & Adv. Chandni Joshi

Retraction Of statements and confessions

Retraction Of statements and confessions

Introduction

A Confession is an admission made by a person charged with a crime at any time stating or suggesting the inference that he committed that crime. Confession is received in criminal cases upon the principle that a person will not  make an untrue statement against his own interest. Confession may be divided into two categories; judicial confession and extra-judicial confession. 

  • Judicial confessions are those confessions which are made before a Magistrate or in Court in the due course of legal proceedings.
  • Extra-judicial confessions are those confessions which are made by the accused anywhere other than before a Magistrate or in Court and extrajudicial confession can be made to any particular person or to a group of persons.

The term confession has not been defined in the Indian Evidence Act, 1872 and it attains its first appearance in section 24 of the Indian Evidence Act.883 Police Confession Stock Photos, Pictures & Royalty-Free Images - iStock

Sections 24, 25, 26 and part of Section 27 of the Indian Evidence Act, 1872 deals with irrelevant confession. Apart from Section 27, relevant confessions have been dealt with under Sections 28, 29 and 30 of the Indian Evidence Act, 1872.

Evolving of the concept of retraction of statements and confession basically comes from the Article 20(3) of the constitution which states, No person accused of any offence shall be compelled to be a witness against himself’.

A retracted confession is a confession voluntarily made by a person and subsequently retracted. The credibility of such a confession is a matter to be decided by the court according to the facts and circumstances of each case and if the court is of the opinion that such confession is proved; the court is bound to act upon it so far as the person making the confession is concerned. The retracted confession may also form the basis of conviction and punishment if it is believed to be true and voluntary.

Retracted confession can also be used against the person making it if it is supported by independent and corroborative evidence. In the case of Pyare Lal v. State of Rajasthan. The Supreme Court held that a retracted form of confession can form the basis of a conviction if and only if the Court is satisfied that it was true and was made voluntarily.

Relevant and specific Provisions

Section 24 made all the confessions made by an accused under any form of inducement by the means of either threat or promise from any person as irrelevant in any criminal proceeding. It was held in the case State of Punjab v. Gurdeep Singh that if the circumstances are such that the Courts believe the witness and are satisfied that such a confession is made on a voluntary basis, an order of conviction can be found on the same.

 

The conditions of irrelevance under section 24 of Indian Evidence Act, 1872 are as follows:

  1. a) The confession must be a result of inducement or a threat or a promise;
  2. b) Inducement, etc. should proceed from a person in authority;
  3. c) It should be relating to the charge that is in question;
  4. d) It should obtain a worldly benefit or any form of disadvantage

 

The Confession must be a result of inducement or threat or a promise.

A confession will justly be admitted if and only if it is voluntary and any confession that is obtained by the means of a threat, promise or inducement cannot be admitted. An inducement to confess may be upon a promise of pardon. A promise or threat made to one accused will not render a confession made by another, who was present and heard the inducement, irrelevant.

 

Person in the authority

The particular inducement or threat caused must flow from a person who has authority. This refers to the government officials who are having a particular authority due to their position in the services. Every government official is the person who is capable of influencing the course of prosecution.

 

A confession is made relevant even it is obtained in the following circumstances:

  1. On promising the accused that the information obtained will be kept a secret or that it will not be used against him 

It may be recalled that an admission made in a civil case under promise that evidence of it shall not be given is not relevant, (Section 23) the policy being that litigants should be encouraged to compromise their differences. That policy has no relevance to criminal cases because here the public interest lies in prosecuting criminals and not compromising with them. Consequently, therefore, where an accused person is persuaded to confess by assuring him of the secrecy of his statements, the confession is nevertheless relevant.

  1. By practicing a deception on the accused for the purpose of obtaining his confession

When the confession is the outcome of a fraud being played with the accused, it stands relevant. Thus, where the two accused persons were left in a room where they thought they were all alone, but secret tape recorders were recording their conversation, the confessions thus recorded were held to be relevant. Similarly, where an accused was persuaded to submit for a medical examination for an innocent purpose which was in fact conducted for criminal purpose, his statements to the doctor and the doctors report were held to be relevant at the discretion of the Court. A confession secured by intercepting and opening a letter has also been held to be relevant.

 

  1. Circumstances when the accused was drunk

A confession obtained by intoxicating the accused is equally relevant. The law is concerned to see that the confession is free and voluntary and if this is so it does not matter that the accused confessed under the influence of drink. According to the English practice the judge will have discretion in the matter.

 

Section 30 deals with the consideration of proven confession affecting the person making it and others jointly under for the same trial for the same offence. It provides that When more persons than one are being tried jointly for the same offence and a confession made by one of such persons affecting himself and some other of such person is proved, the court may take into consideration such confession as against such other persons as well as against person who make such confession.

 

 In Reference to the case of State of Maharashtra v. Mohd. Ajmal Mohd. Amir Kasab,

The courts held that it is safe to place reliance on retracted confessions if it can be established that the confession is true and has been made voluntarily. It is also important to keep in mind that the confession has been corroborated sufficiently. The courts have the power to discard the exculpatory facts and consider the inculpatory facts.

 

The courts laid down the following essential principles:

  1. A confession can be acted upon only if the court is satisfied that it is true and has been made voluntarily.
  2. The confession must stand true to the facts and should not counter it.
  3. It is a rule of judiciousness as to not base a conviction on the basis of a confession that has not been corroborated.

 

Retraction of Statement made under the Customs Act or Income tax act

Statement Under Section 108 of Customs Act, 1962 is an admissible piece of evidence before court of law. Section 108 is a machinery section to gather evidence in case of violations/offence under Customs Act. The power of recording of statements and calling for documents is vested in Officers not lower than the rank of Superintendent and Appraiser (AO in short) in rank. Whoever is found involved in violation of customs law, his/ her statement can be recorded to gather evidence in order to bring the guilty home. 

Section 108 of the customs Act states that, 

(1).Any gazetted officer of customs duly empowered by the Central Government on this behalf, shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry which such officer is making under this Act.]

(2).A summons to produce documents or other things may be for the production of certain specified documents or things or for the production of all documents or things of a certain description in the possession or under control of the person summoned.

 

     Retraction or rebuttal of earlier statements/admitted facts can, inter alia, be:

  • In the form of statement which is recorded later on ; or
  • In the form of a letter; or
  • In the form of an affidavit filed.

It is a settled situation of law that affirmation made by the assessee u/s 132(4) is a significant piece of proof however the equivalent isn’t convincing. It is available to the assessee who made the admission to show that it is erroneous and the equivalent is given under mixed up conviction of actuality or law. 

 

  • In the case of Jyotichand Bhaichand Saraf and Sons (P.) Ltd. v DCIT ,the Hon’ble ITAT Pune held that however It is a settled position that confession made by assessee under area 132(4) of the IT Act is a significant piece of proof yet the equivalent isn’t decisive. It is available to the assessee who made the admission to show that it is wrong and the equivalent is given under mixed up conviction of truth or law.

 

  • In the case of Union of India v. Kisan Ratan Singh,

K.R. Shriram, J. observed, “If I have to simply accept the statement recorded under Section 108 as gospel truth and without any corroboration, I ask myself another question, as to why should anyone then go through a trial. The moment the Customs authorities recorded the statement under section 108, in which the accused confessed about his involvement in carrying contraband gold, the accused could be straightaway sent to jail without the trial court having recorded any evidence or conducting a trial.”

The Court also reiterated that in absence of any corroboration by an independent and reliable witness, a statement recorded under Section 108 in isolation could not be relied upon. 

  • It was observed in Haroom Hazi Abdulla v. State of Maharashtra that a “retracted confession must be looked upon with greater concern unless the reasons given for having made it in the first instance are on the face of them false.” There was a further observation that; retracted confession is a weak link against the maker and more so against a co-accused.” 
  •  In the case of  K.I. Pavunny v. Asst. Collector (HQ) Central Excise Collectorate, Cochin the Supreme Court held:

 

“Even though the Customs officers have been invested with many of the powers which an officer in charge of a police station exercises while investigating a cognisable offence, they do not, thereby, become police officers within the meaning of Section 25 of the Evidence Act and so the confessional statements made by the accused persons to Customs officials would be admissible in evidence against them.

“Confessions can be acted upon if the court is satisfied that they are voluntary and that they are true. The voluntary nature of the confession depends upon whether there was any threat, inducement or promise and its truth is judged in the context of the entire prosecution case. The confession must fit into the proved facts and not run counter to them. When the voluntary character of the confession and its truth are accepted, it is safe to rely on it. Indeed a confession, if it is voluntary and true and not made under any inducement or threat or promise, is the most patent piece of evidence against the maker. Retracted confession, however, stands on a slightly different footing. As the Privy Council once stated, in India it is the rule to find a confession and to find it retracted later. A court may take into account the retracted confession, but it must look for the reasons for the making of the confession as well as for its retraction, and must weigh the two to determine whether the retraction affects the voluntary nature of the confession or not. If the court is satisfied that it was retracted because of an after-thought or advice, the retraction may not weigh with the court if the general facts proved in the case and the tenor of the confession as made and the circumstances of its making and withdrawal warrant its user. All the same, the courts do not act upon the retracted confession without finding assurance from some other sources as to the guilt of the accused. Therefore, it can be stated that a true confession made voluntarily may be acted upon with slight evidence to corroborate it, but a retracted confession requires the general assurance that the retraction was an after-thought and that the earlier statement was true. This was laid down by this Court in an earlier case reported in Subramania Gounden v. The State of Madras.”

In case of Satinder Kumar , their lordships held that it is true that an admission made by an assessee constitutes a relevant piece of evidence but if the assessee contends that in making the admission he had proceeded on a mistaken understanding or on misconception of facts or on untrue facts such an admission cannot be relied upon without first considering the aforesaid contention.

Conclusion

Retraction of statements and confession is a result of Article 20(3) and thus, if the         accused is retracting the statements or any confession within the stipulated time period according to the  set provisions then it should be validated and considered. A retracted statement under Section 132(4) of the Act would require some corroborative material for the AO(Officers not lower than rank of Superintendent and Appraiser) to proceed to make additions on the basis of such statement.

From the standards of law set down as references thus above, it could be derived that admission is one significant piece of proof however it can’t be said that it is definitive. It is rebuttable. It is available to an assessee who made an admission to set up that the admission was involuntary and the equivalent was extricated under pressure and coercion.

Of course, where the retraction is not for any convincing reason, or where it is not shown by the Assessee that he was under some coercion to make the statement in the first place, or where the retraction is not followed by the Assessee producing material to substantiate his defense, the AO(Officers not lower than rank of Superintendent and Appraiser ) might be justified in make additions on the basis of the retracted statement. And thus, confessions and statements, whether retracted or not; should always result in the justice for all because justice is a Right and not a privilege. 

Author: Pooja Shukla

EditorAdv. Aditya Bhatt & Adv. Chandni Joshi

Customs Law and Procedures

Customs Law and Procedures

Introduction

Customs duty is a tax which the State collects on goods imported into or exported out of the boundaries of a country. Customs duties now form a significant source of revenue for all countries, more so in the case of developing countries like India. loopchain technology to be applied to Import Customs Clearance Procedure for the Korea Customs Service | by ICON Foundation | Hello ICON World | MediumIn India, customs duties are levied on the goods and at the rates specified in the Schedules to the Customs Tariff Act, 1975. The taxable event is import into export from India. Export duties are practically non-existent at present. They are levied occasionally to mop up excess profitability in international price of goods in respect of which domestic prices may be low at given time. But sweep of import duties is very wide, almost universal, barring a few goods like food grains, fertilizer, life saving drugs and equipment etc. Import duties generally consist of the following: 

  1. Basic duty. It may be at the standard rate or, in the case of import from some countries, at the preferential rate.
  2. Additional customs duty equal to central excise duty leviable on like goods produced or manufactured in India. It is commonly referred to as countervailing duty or C.V.D.
  3. Special additional duty of Customs at the rate of 4% in order to provide a level playing field to indigenous goods which have to bear sales tax. This duty is to computed on the aggregate of–
  1. assessable value; 
  2. basic duty of Customs;
  3. surcharge; and
  4. additional duty of Customs leviable under section 3 of the Customs Tariff Act, 1975 (c.v.d.)
  1. Additional duty of Customs at the rate of Re. 1/- per liter on imported motor spirit (petrol) and high speed diesel oil.

Anti-dumping duty/Safeguard duty for import to specified goods with a view to protecting domestic industry from unfair injury.

Import & Export through Courier

In order to regulate the import and export, of light weight goods into and out of the country the Government of India had framed Courier Imports (Clearance) Regulation in 1995 which were revised by framing an up to date Courier Imports and Exports (Clearance) Regulations in 1998. Private companies have been registered as authorised couriers in the International Airports at Mumbai, Delhi, Chennai, Calcutta, Bangalore, Hyderabad, Ahmedabad and Jaipur by the Customs Commissioner of the respective places.

TYPE OF GOODS THAT CAN BE SENT

 All types of goods can be sent through the courier mode into India and out of India except few articles. The goods which are prohibited for import through courier are:

  1. Animals & parts thereof or plants & parts thereof, 
  2. Perishable goods, 
  3. Publications containing maps showing incorrect boundaries of India,
  4. Gold or silver in any form,
  5. Precious and semi precious stones & Studded jewellery,
  6. Chemicals of chapter 28, 29 & 38 of the first schedule to Customs Tariff Act which need testing

Similarly, the export of the following goods are also restricted:

  1. Goods which are subject to levy of any duty on their export,
  2. Goods proposed to be exported with claim for Draw of Customs duty,
  3. Goods exported under Duty Entitlement Pass Book Schemes or Duty Exemption Scheme or Export Promotion Capital Goods Scheme, and
  4. Goods where the value of consignment is above Rs. 25,000/- and Waiver from the RBI not to bring in Foreign Exchange is not available, 

SAMPLES, GIFTS AND TRADE GOODS 

  1. Document of any form including messages, information or data recorded on papers, cards, photographs which are not subjected to any prohibition or restrictions can be imported and exported. 
  2. Bonafide commercial samples can be imported through courier provided the said samples are being received free of cost (see Import of Samples). Similarly, gifts from persons abroad up to the value of Rs. 5,000/- and all the life saving drugs and equipment which are not chargeable to any duty at present (see Notification 20/99-Cus) can also be sent to India through the courier mode. 
  3. Commercial goods which are dutiable can also be imported through the courier without any restriction of quantity subject to payment of duty by the courier company at the time of clearance of the said goods from the Customs. 

IMPORTANT CLARIFICATIONS

Whether the value of Rs. 5,000/- for the gift or the commercial samples means the value of the goods in India or the country of sender?

The value of Rs. 5,000/- is the export value of the goods excluding locally refundable taxes like VAT in the country from where the goods have been dispatched. In case of gifts and samples up to Rs. 5000/- it does not include freight or courier charges and insurance. However, in case of goods valued above Rs. 5000/- it freight and insurance would be added to calculate the duty payable. The sender may not necessarily be residing in the country from where the goods have been dispatched. A sender in the U.K. can send goods from South Korea to India. The value in South Korea would be taken into consideration.

What types of goods cannot be sent as gift or commercial samples through courier?

 All types of goods which are banned for import under the Foreign Trade (Development and Regulation) Act, 1992 are banned for import into India even as gifts or as commercial samples. The example of such goods are wild animals, wild birds or parts of wild animals and birds, narcotic drugs like opium, marijuana, ivory, arms like revolvers or pistols or other hand guns and ammunitions

 Can a person send jewellery to any manufacturer in India as sample?

 Gold jewellery or studded jewellery including samples thereof is not allowed to be imported by or sent to ordinary persons in India through courier route. However, the units in export processing zones or Export Oriented Units are allowed to import gems and jewellery, including samples thereof, through an authorised courier. However, the jewellery and its samples can be exported by all units through the courier.

 Why is there a prohibition for import of chemicals and perishable goods even of low value?

 It is not convenient to handle perishable goods through normal courier mode. The system of import or export of goods through courier is designed for very fast movement through the Customs. The chemicals imported may require testing of the same to ascertain its identity which would need some time and would also delay the processing of other consignments through courier. Therefore, the import of chemicals have been prohibited through courier route.

Chemicals can be sent through the same courier company who would submit it separately at the Air Cargo Complex for clearance. The Air Cargo Complex is invariably situated beside the Courier Terminal. However, the clearance is likely to take more time.

 Is there any limit of weight and size of the package that can be sent through the courier?

Packages up to 70 Kgs. of weight can be imported to India through courier mode. However, there is no such weight limit for export of goods through courier from India.

Why there is a restriction on goods to be exported with claim for Draw or any duty entitlement pass-book scheme of Export Promotion Capital Goods Scheme?

Under these schemes additional paper work is involved and, therefore, it delays clearance of this packet and in addition clearance of other packages is also delayed. However, these consignments can be cleared through the air-cargo complex by the same courier company. Invariably the air cargo complex and the courier terminal are situated side by side and, therefore, there is no inconvenience to the exporters.

HOW DUTY IS PAID, IF LEVIABLE?

 If the duty is small, the Courier Company makes the payment and collects it from the receiver at the time of delivery of the goods. If the duty assessed is high, they advise the party of the arrival of the goods and the party clears the goods directly from the Customs. The courier can get the goods detained, inform the client and with his consent make the payment of duty.

Machinery parts are sent abroad through couriers for repairs and reconditioning etc. what procedure is to be adopted during export of the said goods.

While sending the goods abroad, proper documents should accompany the package. The invoice may be attested by the Customs and a copy retained to enable Customs to identify the goods at the time of re-import of the said goods. The repairer may be advised to enclose a copy of sender invoice along with their own invoice. The repairer may be advised to clearly mention their repair charges for similar goods in the invoice, even if they have done it free. Along with invoice or on its body list of jobs carried out (fault list) may be given.

If part of the machinery cannot be repaired or replaced then during re-import such machinery has to bear duty as if it is being imported. The invoice should show separately cost of such parts/raw materials to enable proper valuation.

Refer to Notification No. 87/98-Cus (NT) dt. 9.11.98

Import of Gifts

All goods imported into India from abroad is liable to duties of Customs under

Section 12 of the Customs Act and also is liable to all the restrictions under the Foreign Trade (Development & Regulations) Act 1992. However, the Government has exempted gifts received from abroad by persons residing in India from the whole of duties of Customs and from restriction under FT (D&R) Act. At present, import of goods upto the value of Rs. 5,000/- is allowed as gift, duty free. This exemption is allowed only for bona fide gifts imported by air or post. For the purpose of calculation of this value of Rs. 5,000/- the air freight or postal charges paid are not added.

IMPORTANT CLARIFICATIONS

1. The value of Rs. 5,000/- is the value of the goods in the country from where the goods have been dispatched. The sender may not necessarily be residing in the country from where the goods have been dispatched.

2. The import has to be only through Air or through Post Parcel. 3. Any person abroad can send gifts. There is no specific restriction that only relatives can send the goods. Business associated, friends, relatives, companies or acquaintances can also send the gifts to residents in India.

ELEMENTS NECESSARY FOR DRAW UNDER SECTION 74 

The elements necessary to claim drawback are:

  1. The goods on which drawback is claimed must have been previously imported;
  2. Import duty must have been paid on these goods when they were imported;
  3. The goods should be entered for export within two years from the date of payment of duty on their importation (whether provisional or final duty). The period can be further extended to three years by the Commissioner of Customs on sufficient cause being shown.
  4. The goods are identified as the goods imported.
  5. The goods must be capable of being identified as imported goods.
  6. The goods must actually be re-exported to any place outside India.
  7. The market price of such goods must not be less than the amount of drawback claimed.
  8. The amount of drawback should not be less than Rs. 50/- as per Section 76-(1) (c) of the Customs Act. 

PROCEDURE TO CLAIM DRAW UNDER SECTION 74.

Drawback claims under Section 74 of the Customs Act are now being processed manually. To claim drawback under Section 74, the exporter should file the shipping bill under claim for drawback in the prescribed form and after assessment the goods are to be examined by the Customs officers for purposes of physical identification. After shipment, the claim is filed in the department, for sanction of drawback. The pre-receipted drawback payment order has to be forwarded to the drawback department upon which cheque is issued. If the information submitted by the exporter is insufficient to process the claim, a deficiency memo will be issued to the exporter seeking further information or documents to process the claim. On compliance the claims will be processed in the usual manner.

SUPPORTING DOCUMENTS REQUIRED FOR PROCESSING DRAW CLAIM UNDER SECTION 74 

  1. Triplicate copy of the Shipping Bill bearing examination report recorded by the proper officer of the customs at the time of export.
  2. Copy of the Bill of entry or any other prescribed documents against which goods were cleared for importation.
  3. Import invoice.
  4. Evidence of payment of duty paid at the time of importation of goods.
  5. Permission from the Reserve Bank of India for re-exports of goods, wherever necessary.
  6. Export invoice and packing list.
  7. Copy of the Bill of Lading or Airway bill. 
  8. Any other documents as may be specified in the deficiency Memo.

TIME LIMIT UNDER SECTION 74

In order to claim drawback under Section 74 the goods should be entered for export within two years from the date of payment of duty on the importation thereof. Provided that in any particular case the period of two years may on sufficient cause shown be extended by the by the Central Board of Customs and Central Excise by such period as it may deem fit.

The time limit have to be computed from the date of payment of duty up to the date of entry of goods for export under Sec 50 of the Customs Act for export by air or sea, under Section 77 for baggage items and Under Section 83 of the Customs Act for export by post

The claims should be filed in the manner prescribed under Rule 5 of Re-export of Imported Goods(Drawback of Customs Duties) Rules,1995, read with Public Notices issued by the Custom Houses. The time limit for filing the claim is three months from the date of let export order. If the exporter was prevented by sufficient cause from filing the claims within three months, the Asst. Commissioner of Customs can relax the time limit by three months.

The claim for drawback is processed under the following systems:

  1. Manual System
  2. EDI System
  3. By Post

PROCEDURE FOR CLAIMING DRAW UNDER SECTION 75 OF THE CUSTOMS ACT UNDER THE MANUAL SYSTEM: 

For the purpose of claiming drawback, the exporter is required to file a drawback-shipping bill in the prescribed Format as required under Rule 13 along with the necessary declaration. The goods after assessment are examined by the officers posted in the Examination Shed as required for each individual case. The examination report will indicate the nature of goods in terms of drawback schedule for classification and application of correct rate. Samples may have to be drawn for testing by lab in respect of chemicals, synthetic fabrics’ etc as specified from time to time to confirm the declarations in the export documents. The triplicate Copy if the drawback shipping bill which contain the examination report is the claim copy

SUPPORTING DOCUMENTS REQUIRED FOR PROCESSING THE CLAIM. 

  1. Triplicate of the Shipping Bill
  2. Copy of the Bank Certified Invoices.
  3. Copy of the Bill Lading/Airway Bill
  4. Sixtuplicate Copy of AR-4 wherever applicable
  5. Freight and Insurance certificate wherever the contract is CIF / C&F
  6. Copy of the Test report where the goods are required to be tested
  7. Copy of the Brand rate letters where the drawback claim is against the Brand rate
  8. Mate receipt
  9. Copy of the Contract or Letter of credit as the case may be
  10. Modvat Declaration wherever applicable
  11. Any declaration required as per foot note of the Drawback schedule
  12. Worksheet showing the drawback amount claimed
  13. DEEC Book and license copy where applicable.
  14. Transshipment certificate where applicable
  15. Proof of foreign agency commission paid if any
  16. Blank acknowledgement card in duplicate
  17. Pre–receipt for drawback amount on the reverse of Shipping Bill duly signed on the Rs1/- revenue stamp 

The claims are settled and passed by the appraiser if the amount sanctioned is below Rs 1,00,000/- and by the Assistant Commissioner, if the amount of drawback exceeds Rs1.00.000/-. After pre-audit, the cheques are issued to the designated banks for credit to the exporters account or handed over to the authorized representative of the exporter. For further details refer to the Public Notices issued by the concerned Custom Houses/ Central Excise Commissionerate. 

PROCESSING OF DRAW CLAIMS UNDER SECTION 75 OF THE CUSTOMS ACT UNDER THE EDI SYSTEM 

  1. Computerized processing of shipping bills is in vogue at over 19 ports in India. The shipping bills are processed under the Indian Customs EDI systems (ICES).
  2. Under the system, there would be no processing of paper documents except statutory declarations and endorsements until ‘let export’ order stage. Till such time exporters / CHAs are given access to file documents through the Service centre set up in the Custom Houses / Air Cargo complexes.
  3. Processing of drawback claims under the system will be applicable for all exports except in respect of the claims under Section 74 of the Customs Act and those relating to EPZ/100% EOU.
  4. For the excluded categories the export Shipping Bills will be filed manually and processed by AC Drawback, as hitherto. Under the EDI system there is no need for filing separate drawback claims. The shipping bill itself treated as drawback claim.
  5. In the EDI system the exporters are required to open their accounts with the Bank nominated by the Custom Houses/ ACC. This has to be done to enable direct credit of drawback amount to their accounts, obviating the need for issue of cheques.
  6. For export of goods under claim for drawback, the exporters will file S.D.F declaration in Annexure B in lieu of GR –1 FORM. The declaration in Annexure C would also be filed when the export goods are presented at the Export shed for examination and Let export. In addition they should file a declaration if any in the appendices applicable to the goods mentioned in the Public Notices issued by the Customs Houses / ACC for processing Shipping Bills under the EDI system.
  7. The rates of drawback under S.S Nos. are dependent upon conditions mentioned against them in the Drawback Schedule. To enable the EDI system to process the claims correctly exporters are advised to give the correct Sl.No. of relevant appendix applicable to their case. If the relevant declarations are not filed along with the Shipping Bill the system will not process the drawback claims. The exporters are therefore advised to file the declaration along with the Shipping Bills.
  8. After actual export of the goods, the drawback claims will be processed through the system on first come first served basis. The status of Shipping Bills and sanction of drawback claim can be ascertained from the query counter set up at the Service centre. If any query has been raised or deficiency noticed, the same will be shown on the terminal provided there. The exporter or his authorised representative may obtain a printout of the query/deficiency form the Service Centre if he so desires. The claim will come in Que. of the system as soon the reply is entered.
  9. Shipping Bills in respect of goods under claim for drawback against brand rates would also be processed in the same manner, except that drawback would be sanctioned only after the original brand letter is produced to AC Export and is entered in the system. The exporter should specify the S.S No 98.01 for such provisional claim
  10. All the claims sanctioned on a particular day will be enumerated in a scroll and transferred to the Nominated Bank through the system. The Bank will credit the drawback amount in their respective accounts of the exporters on the next day. Bank will send a fortnightly statement to the exporters of such credits made in their accounts.
  11. The steamer agents / Airlines will transfer the EGM electronically to the system so that the physical Export of goods is confirmed. The system will process the claims only on receipt of the EGM. 
  1. PROCEDURE FOR CLAIMING DRAW ON EXPORT BY POST- SECTION 75 OF THE CUSTOMS ACT 

For claiming drawback on goods exported by post, exporter is required to file his claim at the time of booking parcel with the postal authorities in the form prescribed in the Rules. The date of receipt of this form from the postal authorities by the Customs Authorities shall be treated as date of filing claim by the exporter for the purpose of Section 75 A of the Customs Act. Thus drawback is paid to the exporter within three months from the date of receipt of claim from the postal authorities. On receipt of the claim form, intimation is to be given to he exporter. Where claim form is incomplete a deficiency memo is issued within fifteen days of its receipt form the postal authorities. The exporter can resubmit this form after compliance with deficiencies within a period of 30 days. If such a claim is found to be in order, the same is acknowledged and the period of three months for payment of drawback in terms of Section 75 in such cases shall commence form the date of such acknowledgement.

TIME LIMIT UNDER SECTION 75

The claims should be filed in the manner prescribed under Rule 13, read with Public Notices issued by the Custom Houses. The time limit for filing the claim is three months from the date of let export order. If the exporter was prevented by sufficient cause FORM filing the claims within three months, the Asst. Commissioner of Customs can relax the time limit by three months and the Commissioner of Customs can relax the time limit for a period of nine months. Duties Rebated Under Drawback Scheme

Under the drawback scheme, the relief is given from the burden of duty incidence of Customs & Central Excise on basic inputs like raw materials. Components, Intermediates and packing materials used at various stages of production/manufacture. No relief of drawback is extended to duties suffered on capital goods, fuels and consumables used in relation to the manufacture of the export goods. It may also be noted that no relief of Sales Tax or Octroi or any other indirect tax is given by way of drawback. The finished stage of excise duties on the export product is also not reimbursed under this scheme and there are separate provisions for rebate of such finished stage duties under the Central Excises and Salt Act 1944 and the Rules framed thereunder.

Interest Payment

A new Section 75 A has been incorporated in the Customs Act to provide for payment of interest on delayed payment of drawback. Interest at the rate of 15% P.A. is payable to the exporters if the claim is not settled within three months from the date of issue of acknowledgement by the department. Acknowledgement under Rule 13(I) is issued only if the claim is complete in all respect. If the claim is deficient, the department within 15 days from the date of filing the claim will issue a deficiency memo. The exporter is required to comply with the deficiency memo within 30 days from the date of receipt of deficiency memo. The time limit in these cases will be completed after receipt of compliance and issue of acknowledgement card. Similarly, where an exporter has been paid erroneous or excess drawback and fails to repay the same within three months from the date of demand, he is liable to pay interest at the rate of 20% P.A.

Supplementary Chain

If the exporter finds that the amount of drawback paid is less than what he is entitled to, there is a provision for claiming supplementary drawback claims in the prescribed Format Under Rule 15 of the Drawback Rules, 1995. The time limit filing supplementary claim is three months from the date of original settlement.

CONCLUSION

Customs Duty is a tariff or tax imposed on goods when transported across international borders. The purpose of Customs Duty is to protect each country’s economy, residents, jobs, environment, etc., by controlling the flow of goods, especially restrictive and prohibited goods, into and out of the country.