CUSTOMS DUTY

Definition
A tax levied on imports (and, sometimes, on exports) by the customs authorities of a country to
raise state revenue, and/or to protect domestic industries from more efficient or
predatory competitors from abroad.
Customs duty is based generally on the value of goods or upon the weight, dimensions, or some
other criteria of the item (such as the size of the engine, in case of automobiles).

Types of Customs Duties

Export duties are levied occasionally to mop up excess profitability in international prices of
goods in respect of which domestic prices may be low at the given time. But the sweep of import
duties is quite wide. Import duties are generally of the following types:1.

Basic Duty :- it may be at the standard rate or, in the case of import from some
other countries, at the preferential rate.

2.

Additional customs duty :- equal to central excise duty leviable on like goods
produced or manufactured in India. Additional duty is commonly referred to as
Countervailing duty or C.V.D. It is payable only if the imported article is such as, if
produced in India, its process of production would amount to 'manufacture' as per the
definition in Central Excise Act,1944. Exemption from excise duty has the effect of
exempting additional duty of customs. Additional duty is calculated on a value base of
aggregate of value of the goods including landing charges and basic customs duty. Other
duties like anti-dumping duty, safeguard duty etc are not taken into account. In case of
goods covered by provisions of the Standards of Weights and Measures Act,1976, the
value base would be the retail sale price declared on the package of the goods less the
rebate as notified under the Central Excise Act,1944 for such goods

3.

True Countervailing duty or additional duty of customs :- is

levied to offset the disadvantage to like Indian goods due to high excise duty on their
inputs. It is levied to provide a level playing field to indigenous goods which have to bear
various internal taxes. Value base for this additional duty would be as in the case of
C.V.D, under Customs Tariff Act,1975 minus the retail sale price provision. This additional
duty will not be included in the assessable value for levy of education cess on imported
goods. Manufacturers will be able to take credit of this additional duty for payment of
excise duty on their finished products.

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4.

Anti-dumping Duty/ Safeguard Duty :- for import of specified goods with

a view to protecting domestic industry from unfair injury. It would not apply to goods
imported by a 100% EOU (Export Oriented Units) and units in FTZ (Free Trade Zones)
and SEZ (Special Economic Zones). On export of goods, anti-dumping duty is rebatable
only by way of a special brand rate of drawback. Safeguard duties do not require the
finding of unfair trade practice such as dumping or subsidy on the part of exporting
countries but they must not discriminate between imports from different countries.
Safeguard action is resorted to only if it has been established that a sudden increase in
imports has caused or threatens to cause serious injury to the domestic industry.

5.

Education cess :- at the prescribed rate is levied as a percentage of aggregate

duties of customs. If goods are fully exempted from duty or are chargeable to nill duty or
are cleared without payment of duty under prescribed procedure such as clearance
under bond, no cess would be levied.

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Roles and responsibilities
The principal roles of the Customs Service include:

exercising customs control on the commercial international exchange

assessing and collecting customs duties and taxes in the part calculated at the State's
border (VAT, excise)
fighting against smuggling activity and counteracting customs fraud.

While performing these roles, the Customs Service has been fulfilling a series of responsibilities,
the most important of which, certainly apart from the fiscal function, include protection of:

national industry - against a trade in goods which would affect adversely the
conditions of competition in the country,
natural environment - against an entry of hazardous substances and microorganisms,
world fauna and flora - against illegal predatory circulation of endangered species,
consumers - against the entry into the market of goods which are substandard with
relation to Polish norms or whose period of use has expired,
society - against the entry of goods, items or appliances which are hazardous to life,
health and safety of citizens or jeopardising the security of he country (e.g. weapons,
paralysing gases etc.),
State - against the loss of cultural heritage (primarily against the exportation of the
goods of cultural value),
authors, artists, industrial and commercial rights owners - against infringement of
intellectual property rights, trademark, patent rights etc.,

control in the area of:

State's customs policy instruments regulating the targets and volumes of international
trade (e.g. monitoring the execution of customs quotas),
enforcement of national and international regulations relating to prohibitions and
restrictions in the international trade, enforcement of regulations regarding
permissible load of vehicles to ensure proper use of roads by carriers, enforcement of
agreements concerning customs prevention with Poland being a party,
foreign currency control, including combating the so-called money laundering.

Customs Duty Calculation

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To record customs duties, you must first define tax components, tax dependency codes, tax
calculation codes, and set up the tax determination. After you have set up your customs duties
structure, the system will calculate and record customs duties.

Methods for Calculating Customs Duties

Percentage

The customs duty is a percentage of the customs duty assessable value of the item.
Customs duty assessable value is the total of:

CIF value of item in local currency.

This is the sum of total FOB item value, freight, insurance, and other charges.

Landing charges.
This is 1 percent of the CIF item value. The user can change this amount on the
BOE.

Any previously applied customs duties.

Amount

The customs duty is a flat amount. Enter the flat amount to be applied to the
PO schedule line in the Tax Amount field on the Tax Calculation Code page.

Quantity

The customs duty is a unit price multiplied by the number of units.

Enter the unit price in the Tax Amount field on the Tax Calculation Code page.
To calculate the customs duty, the system multiplies the tax amount by the item quantity on
the transaction.

For each customs duty component you define the method to use for calculating customs duties.
Define the calculation method on the Tax Calculation Code page. Three methods exist for
customs duties:duties:

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Powers of officers of customs(1)
Subject to such conditions and limitations as the Board may impose, an officer of
customs may exercise the powers and discharge the duties conferred or imposed on him
under this Act.
(2)
An officer of customs may exercise the powers and discharge the duties conferred
or imposed under this Act on any other officer of customs who is subordinate to him.
(3)
Notwithstanding anything contained in this section, 1[a 2[Commissioner
(Appeals)] shall not exercise the powers and discharge the duties conferred or imposed
on an officer of customs other than those specified in Chapter XV and section 108.

Baggage
1. Declaration by owner of baggage - The owner of any baggage shall, for the purpose
of clearing it, make a declaration of its contents to the proper officer.
2. Determination of rate of duty and tariff valuation in respect of baggage -The rate of
duty and tariff valuation, if any, applicable to baggage shall be the rate and valuation in
force on the date on which a declaration is made in respect of such baggage under
section 77.
3. Bona fide baggage exempted from duty (1)

The proper officer may, subject to any rules made under sub-section (2), pass
free of duty-

(a)
Any article in the baggage of a passenger or a member of the crew in respect of
which the said officer is satisfied that it has been in his use for such minimum period as
may be specified in the rules;
(b)
Any article in the baggage of a passenger in respect of which the said officer is
satisfied that it is for the use of the passenger or his family or is a bona fide gift or
souvenir.
Provided that the value of each such article and the total value of all such articles does
not exceed such limits as may be specified in the rules.
(2)
The Central Government may make rules for the purpose of carrying out the
provisions of this section and, in particular, such rules may specify(a)
The minimum period for which any article has been used by a passenger or a
member of the crew for the purpose of clause (a) of sub-section (1);
(b) The maximum value of any individual article and the maximum total value of all the
articles, which may be passed free of duty under clause (b) sub-section (1);

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(c)
The conditions (to be fulfilled before or after clearance) subject to which any
baggage may be passed free of duty.
(3)
Different rules may be made under sub-section (2) for different classes of
persons.

Special Economic Zone (SEZ)

The Special Economic Zone (SEZ) policy in India first came into inception on April 1,
2000. The prime objective was to enhance foreign investment and provide an
internationally competitive and hassle free environment for exports. The idea was to
promote exports from the country and realising the need that level playing field must be
made available to the domestic enterprises and manufacturers to be competitive globally.

The policy relating to SEZs, so far contained in the foreign trade policy, was originally
implemented through piecemeal and ad hoc amendments to different laws, besides
executive orders. In order to avoid these pitfalls and to give a long-term and stable policy
framework with minimum regulation, the SEZ Act, '05, was enacted. The Act provides the
umbrella legal framework, covering all important legal and regulatory aspects of SEZ
development as well as for units operating in SEZs.
Since the rules will take care of many issues, the Special Economic Zone Act is likely to
take some more time and the government is unlikely to notify them before September 1.
The commerce and industry ministry is examining the domestic industry's comments on
draft SEZ rules. A meeting of development commissioners of all SEZs will be convened
soon to discuss the changes that need to be incorporated before they are notified to be
placed before the parliament for final approval.
The objective of the SEZ Act was to create a hassle-free regime and the rules would be
formulated keeping this in mind. The ministry is also holding talks with state governments
as they have to play an important role in the development of SEZs.
What is a Special Economic Zone(SEZ)?
Special Economic Zone (SEZ) is a specifically delineated duty-free enclave and shall be
deemed to be foreign territory for the purposes of trade operations and duties and tariffs.
In order words, SEZ is a geographical region that has economic laws different from a
country's typical economic laws. Usually the goal is to increase foreign investments.
SEZs have been established in several countries, including China, India, Jordan, Poland,
Kazakhstan, Philippines and Russia. North Korea has also attempted this to a degree.

A bill of lading
Is a document issued by a carrier which details a shipment of merchandiseand
gives title of that shipment to a specified party.[1] Bills of lading are one of three
important documents used in international tradeto help guarantee
that exporters receive payment and importers receive merchandise.[2] A straight bill
of lading is used when payment has been made in advance of shipment and requires a

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carrier to deliver the merchandise to the appropriate party. An order bill of lading is used
when shipping merchandise prior to payment, requiring a carrier to deliver the
merchandise to the importer, and at the endorsement of the exporter the carrier may
transfer title to the importer. Endorsed order bills of lading can be traded as a security or
serve as collateral against debt obligations.[3]

Document required for export trade

1. "Merchandise Passport,"
2. Certificate of Analysis:
3. Certificate of Free Sale
4. Dangerous Goods Certificate
5. Fisheries Certificate
6. Fumigation Certificate
7. Halal Certificate
8. Health Certificate
9. Ingredients Certificate
10.Inspection Certificate
11.Pre-Shipment Inspections
12.Insurance Certificate
13.Phytosanitary Certificate
14.Radiation Certificate
15.Weight Certificate
16.Consular Invoice
17.Canadian Customs Invoice
18.Dock Receipt and Warehouse Receipt
19.Import License
20.ISPM 15 (Wood Packaging) Marking
21.Shippers Letter of Instruction
22.TEMPORARY SHIPMENT DOCUMENTS

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23.ATA CARNET/Temporary shipment certificate
24.An ATA Carnet, a. k. a., "Merchandise Passport.
25.Customs Certificate of Registration