Knowledge Sharing:
Documentation: The documents, which are mainly required for customs clearance, are:
Classification of Import Items as per Custom Tariff Customs classification is the main thing by which the duty rate of the import item is determined. Customs classification is mainly done on the basis of the use of the item sought to be imported barring few cases where duty rate is determined from the material of construction. Reading together the wording of the relevant section notes, chapter notes and the tariff headings also determine classification. Therefore it is extremely important that the import items are classified properly for the purpose of paying duty correctly. The two main documents required for the same are -
clearance procedure Import clearance procedure has been computerized by Customs with the incorporation of E.D.I. system (Electronic Data Interchange system). Under this system the entire customs formalities are done through the computerized system. Importers are only required to submit one declaration in a specified format. After completion of the clearance formalities, computer generated duplicate & triplicate copy of the Bill of entry is given to the party. The duplicate copy of the Bill of entry is the importer’s copy to be kept by the party for future correspondence. The triplicate copy is the exchange control copy, which is required to be submitted to RBI for remittance purposes. Duty payment formalities have also changed. Nowadays, the duty payment advice is also generated through the computer. The duty amount is deposited in the bank. The fund is then electronically transferred to Customs account. Manual processing is still done for certain categories of import. For Example, All import clearance through Haldia.
Valuation - Imported Goods Most of the customs duties are ad- valorem. Therefore the goods are to be valued for the purpose of assessment. The relevant statutory provisions are section 14 of the customs tariff Act 1962 and customs valuation (Determination of price of imported goods) rules 1944 framed under section14 (1a) and brought into force w.e.f. 16.08.1988, commonly referred to as valuation rules. These rules follow the GATT and WTO provisions whereunder the transaction value or the invoice value is taken for the purpose of assessment. Unless the invoice price already includes ocean freight and insurance, these elements have to be added to make it CIF value: - 1. For Air cargo: Actual air freight, but not exceeding 20% of FOB value.
Landing charges is to be taken as 1% of CIF value to get the assessable value for the purpose of assessment. In case of collaboration agreement loading of 1% of the assessable value will be done and the customs will resort to provisional assessment till the valuation certificate is obtained. Warehousing If the importer does not want to use the entire stock immediately or he is not in a position to pay the full customs duty leviable on the goods, he can file an into bond Bill of entry for warehousing of the goods. Public warehouse run by central ware housing corporation or by state warehousing corporation has come up at all centres. In certain case customs allow licensing of private bonded warehouses. In our case customs have given us license to convert a portion of our godown at 1GR Jetty as private bonded warehouse. The goods can be cleared for Home consumption on payment of duty by filing Ex-bond Bill of Entry. Except for capital goods intended for 100% export oriented units, warehousing is allowed for a period of one year only suitably reducible for perishable goods and extendable for other goods by Commissioner of Customs for six months and by Chief Commissioner thereafter provided the goods are not likely to deteriorate during the extended period. Interest on warehouse goods at a flat rate of 24% is chargeable after completion of six months of warehousing period. Interest is not payable for over-stay if goods at the time of removal from warehouse were duty free.
Duty Entitlement Pass Book Scheme (DEPB) This scheme is patterned on the credit- debit system of central excise cenvat scheme. Under this scheme, exporters are granted duty credits on the basis of pre-notified entitlement rates, which will allow them to import non-capital items duty free In case of goods imported under DEPB scheme found unfit for consumption, the commissioner may allow their re-export and grant a DEPB entitlement certificate equal to 98% of DEPB credit debited at the time of their import. If export proceeds are not realized within six months or such extended period as may be allowed by RBI, or are short realized, the passbook holder should pay in cash an amount equivalent to the amount of credit obtained against such exports or against the value not realized. However post export DEPB is transferable without waiting for realization of export proceeds in respect of shipments against irrevocable letter of credit.
EPCG Scheme Import of capital goods at 5% concessional rate under EPCG scheme, subject to export obligation is now applicable to all sectors and to all capital goods without any threshold limit. No payment of additional customs duty and special additional duty applies. The scheme has also been extended to identified service sectors also. There is an across the board stipulation of FOB export obligation of 5 times of CIF value of imports (or 4times the CIF value of capital goods on a net foreign exchange basis) which is to be fulfilled in a period of eight years. Relocation of imported capital goods in the factory of the supporting manufacturers and service providers is permitted provided their name and address is endorsed on the license. A person holding EPCG license may also source capital goods from a domestic unit instead of importing them, at the same rate of duty. In return the domestic unit would become eligible for import of components for manufacture of capital goods. He can also replenish the components after supply of capital goods to the EPCG license holder. Where drawback is claimed, export does not count for discharge of export obligation under EPCG scheme. Project Imports In exercise of the powers conferred by section 157 of Customs Act 1962 and in suppression of the project import regulation 1965 this regulations have been made. These regulations shall apply for assessment and clearance of the goods falling under heading no.98.01 of the first schedule of the customs tariff Act 1975. The assessment under the said heading shall be available only to those goods which are imported against one or more specific contracts, which have been registered with the appropriate custom house in the manner specified in the regulation 5 and such contract or contracts has or have been so registered before any order is made by the proper officer of customs permitting the clearance of the goods for home consumption or in case of the goods cleared for home consumption without payment of duty subject to re-export in respect of fairs, exhibitions etc .duly sponsored or approved by the Govt. of India or Trade Fair Authority of India, as the case may be, before the date of payment of duty. The benefit of import under project is available for new expansion or substantial expansion of an existing plant, which will increase the existing installed capacity by not less than 25%. Under this scheme plant, equipment can be imported with spares (Subject to 10% of the value of the main equipment) under the same customs tariff heading thereby saving Customs duty.
:: Exports ::
TMILL can be a unique experience to the exporters as we are based in all major cities in India and also have associates worldwide. Presently all major ports have gone under the EDI system so the first thing that an importer/exporter should do is EDI registration. Exporters are also required to have BIN (Business Identification Number) for which they need to apply to DGFT in the prescribed format. The format gives the list of documents required from the shipper and also the documents required by the shipper. A few most frequently asked questions are also incorporated for general awareness. Documents can be arranged for the shipper if he desires so, as such the shipper may spell out their requirement as detailed below: Shipper to fill in details:
Point no. 9 & 10 to be filled by the TMILL, Shipper may give his option.
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The
Government encourages export mainly because it is one of the best sources of foreign
exchange earnings. Many a times an exporter who is specially new to the business faces
problems for exporting as they are not fully aware of the documents required for export of
a cargo.