Analysis of Customs Act

Presentation by Nithya Priya Mohammed Abdullah Vinoth Arulraj Sarath Santhosh Gloface Vijaya Bhavani Asia Khilji

Introduction
Customs Duty is imposed under the Customs Act formulated in 1962 by the Constitution of India under the Article 265, which states that no tax shall be levied or collected except by the authority of Law. So the Indian Customs Act was introduced that allow the Central Government to collect the taxes under the name of Custom Duty.

BACKGROUND
Custom Duties are usually levied with ad valorem rates and their base is determined by the domestic value of the imported goods calculated at the official exchange rate. Similarly, export duties are imposed on export values expressed in domestic currency. The Indian Customs Duties are major source of revenue for the Union Government and constitute around 30% of its tax revenues. Together with Central Excise duties, the contribution amount to nearly three-fourth of total tax revenue of the Union Government. Custom duty not only raises money for the Central Government but also helps the government to prevent the illegal imports and illegal exports of goods from India. The Central government has emergency powers to increase import or export duties whenever necessary after a notification in the session of Parliament.

Objectives of Customs Act

The customs duty is levied, primarily, for the following purpose: Restricting Imports for conserving foreign exchange. Protecting Indian Industry from undue competition. Prohibiting imports and exports of goods for achieving the policy objectives of the Government. Regulating export. Co-coordinating legal provisions with other laws dealing with foreign exchange such as Foreign Trade Act, Foreign Exchange Regulation Act, Conservation of Foreign Exchange and Prevention of Smuggling Act, etc.

Hierarchy of Customs Authorities

Chief Commissioner of Customs

Commissioner of Customs

Joint Commissioner of Customs

Deputy Commisioner of Customs

Assistant Commisisoner of Customs

Probationers

Mode of Levy of Customs Duty

Basically there are three modes of imposing Customs Duty: Specific Duties: - Specific custom duty is a duty imposed on each and every unit of a commodity imported or exported. For example, Rs.5 on each meter of cloth imported or Rs.500 on each T.V. set imported. In this case, the value of commodity is not taken into consideration. Advalorem Duties: Advalorem custom duty is a duty imposed on the total value of a commodity imported or exported. For example, 5% of F.O.B. value of cloth imported or 10% of C.LF. value of T.V. sets imported. In case of Advalorem custom duty, the physical units of commodity are not taken into consideration. Compound Duties: - Compound custom duty is the combination of specific and advalorem custom duties. In this case, the quantities as well as the value of the commodity are taken into consideration while computing tariff. For example, 5% of F.O.B. value plus, 50 paisa per meter of cloth imported.

Items to Import Laptop/Computers / ipad

Customs Duty 14.712%

You have to pay import taxes, also known as customs duty, on goods that are imported from a foreign country into India. This duty is often payable at the port of entry (like the airport).

DVD/CDs (movie) Other than movie DVD/CD Mobiles Electronic and Car Parts Sports Equipment Processor Gaming Consoles Digital/ Video Cameras

26.849% 14.712%
1.03% 26.849% 14.712%

4% 27% 26.849%

Import/ Export Procedure

Import Procedure
Arrival at customs port/airport only Import Manifest/ Report Grant of Entry inward by customs officer. Unloading of Reported Goods only Filing of import bills of enrty Assessment of Goods Approval of Assessment Customs Clearance from point of import policy Payment of Duty

Export Procedure
Initial steps to be taken by the Exporter Shipping bill to be submitted by the Exporter Declaration of exporter Duty Drawback formalities Entry of goods for exportation Clearance of goods for Exportation Check in customs Examination of goods before export Let Export order by customs authorities Grant of Entry outward

Methods for assessment of Duty

1. First appraisement system 2. Second appraisment system 3. EDI Assessment 4. Provisional Assessment 5. Assessment of duty where goods consist of Articles liable to different rates of duty 6. Goods Derelict, wreck, Jettison, Floatsam, etc

Penalty for improper importation of goods

in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding the value of the goods or five thousand rupees, whichever is the greater; in the case of dutiable goods, other than prohibited goods, to a penalty not exceeding the duty sought to be evaded on such goods or five thousand rupees, whichever is the greater; in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under section 77 (in either case hereafter in this section referred to as the declared value) is higher than the value thereof, to a penalty not exceeding the difference between the declared value and the value thereof or five thousand rupees, whichever is the greater; in the case of goods falling both under clauses (i) and (iii), to a penalty not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest; in the case of goods falling both under clauses (ii) and (iii), to a penalty not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest.

Penalty for attempt to export goods improperly

Any person who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 113, or abets the doing or omission of such an act, shall be liable, in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding three times the value of the goods as declared by the exporter or the value as determined under this Act, whichever is the greater; in the case of dutiable goods, other than prohibited goods, to a penalty not exceeding the duty sought to be evaded or five thousand rupees, whichever is the greater; in the case of any other goods, to a penalty not exceeding the value of the goods, as declared by the exporter or the value as determined under this Act, whichever is the greater.

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