BY CA SURESH DHOOT,

9869005638
CUSTOMS ACT, 1962
ACT
RULES
REGULATIONS
BY CA SURESH DHOOT,
9869005638
FUNCTIONS OF CUSTOMS
Collection of custom duty
Prevention of smuggling
Classification of goods
Valuation of import / export goods
Enforcement of provision in the interest of
economy
Export incentives
BY CA SURESH DHOOT,
9869005638
USE OF CUSTOM ACT
Restrict imports to conserve foreign
currency
Protect indian industry from world
competition
Prohibit import & export of goods as per
Government policy
Regulating exports
BY CA SURESH DHOOT,
9869005638
SCOPE & COVERAGE OF
CUSTOM LAW
Entry 83 of list I of Schedule VII of
Constitution talks about Duties of Custom
including export duties.

Section 12 of Custom Act provides levy of
duty on Import of goods in India as well as
Export of goods out of India, at rates
prescribed in Customs tariff Act, 1975 or
any other law for the time being in force.
BY CA SURESH DHOOT,
9869005638
TAXABLE EVENT
Section 2(23) of customs act defines
Import as bringing into india while

Section 2(18) of customs act defines
Export as taking out of india to a place
outside India.
BY CA SURESH DHOOT,
9869005638
INDIA INCLUDES
Territorial water theory

Land mass theory.

As per court ruling taxable event will be
when the goods reaches custom barriers/
custom station / custom frontiers when
goods mix with mass and when BOE is
filed.
BY CA SURESH DHOOT,
9869005638
TERRITORIAL WATER
Section 2(27) of customs act defines India
includes territorial water of india.
Territorial water includes sea bed, sub soil
underlying therein and air space over such
TW upto 12 NM from base line.
TW includes any Bay, Gulf, Harbour,
Creek, or Tidal river.
BY CA SURESH DHOOT,
9869005638
CONTIGUOUS ZONE
Water upto 24 NM from base line, Central
government has control over this area for

Prevention
Punishment regarding custom, fiscal,
immigration law etc.
BY CA SURESH DHOOT,
9869005638
EXCLUSIVE ECONOMIC ZONE
Extend upto 200 NM

In this zone the coastal state has exclusive
right to exploit it for economic purpose

Eg. Oil exploration, fishing etc.
BY CA SURESH DHOOT,
9869005638
HIGH SEA
Beyond 200 NM is high sea

All countries have equal right

Any country can use it for navigation, over
flight etc.
BY CA SURESH DHOOT,
9869005638
IMPORT / EXPORT
BY
LAND SEA AIRPORT
Conveyance 2(g)
TRAIN/TRUCK VESSELS AIRCRAFT
Person in charge- 2(31)
Chief direction of conveyance / Pilot /
Master (Captain of vessels)
BY CA SURESH DHOOT,
9869005638
GOODS
Section 2 (22) defines goods includes
Vessels, aircraft and vehicles
Stores
Baggage
Currency and negotiable instruments
Any other kind of moveable property
BY CA SURESH DHOOT,
9869005638
GOODS IMPORTED CLASSIFIED
INTO
Goods entered for home consumption
Goods entered for Warehousing
Goods in transit
Goods for transhipment
Goods imported with restrictions &
Goods which are banned
BY CA SURESH DHOOT,
9869005638
IMPORT PROCEDURE
Person in charge of conveyance submits
Import General Manifest (IGM). Submitted
in advance before arrival normally through
agents.(Section 30) Penalty Rs. 50000/-
Proper officer grants Entry Inward subject
to availability of berth. (Section 31)
Entry inward not required for unloading of
baggage, mail bags, animals, perishable
goods and hazardous goods.


BY CA SURESH DHOOT,
9869005638
Import procedure
Unloading of reported goods is only
permissible (section 32)
Under supervision of custom officer goods
unloaded (Section 34)
Unloading on sundays or holidays and
after working hours can be done only after
giving notice and paying prescribed fees
(Section 36)
BY CA SURESH DHOOT,
9869005638
Import procedure
Goods are in custody of of Port trust
authorities in case of major port and
International airport authorities of India
(IAAI) in case of airports but controls is of
Custom Officers
BY CA SURESH DHOOT,
9869005638
Import procedure
Importer submits Bill of entry
White colour for home consumption
against payment of duty and clears goods
Yellow colour for warehousing on giving
bond normally twice the duty value.
Green colour for ex bond clearance ie
clearance from warehouse on payment of
duty.

BY CA SURESH DHOOT,
9869005638
Import procedure
Noting of Bill of entry by custom officers
Various documents submitted along with
BOE by importer.
Custom officer examines goods,
determines value / assessment and orders
for payment of duty if home consumption
or orders for shifting to bonded warehouse
BY CA SURESH DHOOT,
9869005638
Import procedure
In case of home consumption goods will
be cleared on payment of duty and
demurrage charges.

In case of warehousing goods will be
cleared on payment of duty, demurrage
charges, rent charges, interest and any
other charges.
BY CA SURESH DHOOT,
9869005638
Import procedure
Section 15 of custom act provides that the
rate of duty and tariff value applicable on
imported goods shall be the rate and
valuation in force, In case of home
consumption the date on which BOE is
presented or date of entry inward
whichever is later and in case of
warehousing when BOE is presented for
clearance from warehouse and in any
other case date of payment of duty.
BY CA SURESH DHOOT,
9869005638
Import procedure
Types of Bond
Provisional duty bond
Import trade control bond if importer is unable to produce
required import license or is unable to prove goods
imported is under OGL
Warehousing Bond
Duty free clearance for exhibition on recommendation of
India trade promotion council
Transhipment bond from gate way port to ICD
B 17 general purpose bond by EOU / STP / EHTP / SEZ
BY CA SURESH DHOOT,
9869005638
Import procedure
Each importer and Exporter has to get
Import Export code no. (IEC) from
directorate general of foreign trade
(DGFT) which is PAN based.

Self assessment on basis of Risk
Management System (RSM) for accredited
client having good track record and meet
specified criteria
BY CA SURESH DHOOT,
9869005638
Import procedure
Goods in transit
Section 53, In transit means goods
imported in any conveyance will be
allowed to remain on the conveyance and
to be transited without payment of duty to
any place out of india or any customs
station. It must be mentioned in import
manifest otherwise it will be treated as
prohibited.
BY CA SURESH DHOOT,
9869005638
Import procedure
Goods in Transshipment
Section 54 Goods for transshipment
means transfer of goods from one
conveyance to another conveyance with
out payment of duty for transportation to
any major port or to another country.

BY CA SURESH DHOOT,
9869005638
EXPORT PROCEDURE
Entry outward (Section 39)
Loading can start only after entry outward is granted by
proper officer. No entry outward required for baggage
and mail
Loading with permission (Section 40)
Export goods can be loaded only after shipping bill or bill
of export duly passed by custom officer is handed over
to person in charge of conveyance. (In case of baggage
and mail bags shipping bills not required)
Export manifest (Section 41)
Export general manifest / Export report should be
submitted before departure. This is not required if
conveyance is carrying only luggage of occupants.

BY CA SURESH DHOOT,
9869005638
Export Procedure
Exporter to obtain Business Identification
number from DGFT.
Open current account with designated
bank for duty draw back credit.
Register license / Advance license /DEPB
etc under Export promotion scheme.
Exporter to obtain Registration cum
membership certificate (RCMC) from
export promotion council.

BY CA SURESH DHOOT,
9869005638
Export procedure
Exporter has to submit Shipping bill along with
several documents.
Noting of shipping bill by custom officer.
Assessment / valuation / classification /
restriction / prohibition / examination by custom
officer
Pay export duty if any.
Let Export Order from custom officer.
Obtain ARE-1 form duly signed by custom
officer.
Claim duty drawback

BY CA SURESH DHOOT,
9869005638
Export procedure
Shipping bill for export of goods under claim for
duty draw back Green colour
Shipping bill for export of dutiable goods- Yellow
colour
Shipping bill for export of duty free goods- White
colour
Shipping bill for export of duty free goods ex
bond Pink colour
Shipping bill for export under DEPB scheme-
Blue colour
BY CA SURESH DHOOT,
9869005638
Export procedure
Custom authorities give serial number (called
Thoka number) to shipping bill when it is
presented.
RBI has prescribed GR (Guaranteed receipts) /
SDF (Statutory declaration form) form to be used
when shipping bills are processed manually in
custom house.
In case of export of software not in physical form
i.e. by direct data transmission / satellite links
SOFTEX form is to be used.
BY CA SURESH DHOOT,
9869005638
Export procedure
Section 16 of custom act, in case of export
relevant date for determination of rate of duty
and tariff valuation
(a) Section 50 Goods entered for export date on
which clearance for export is permitted by
custom officer . Section 51 after submission of
shipping bill. Permission is granted after
payment of export duty.
(b) In case of any other goods on payment of
export duty.
BY CA SURESH DHOOT,
9869005638
CUSTOM TARIFF ACT, 1975
Import duty 1
st
schedule to CTA, 1975
Two types 1. Preferential rate & 2.
standard rate.
Preferential rate applicable to goods
imported from MFN if country of origin is
produced.
Export duty 2
nd
schedule to CTA, 1975
BY CA SURESH DHOOT,
9869005638
TYPES OF DUTIES
Customs Act Basic Custom duty
(sec.12)
Finance act, 2004- Primary education cess
Finance bill 2007- Secondary and higher
education cess.

BY CA SURESH DHOOT,
9869005638
CUSTOM TARIFF ACT
Section 3(1) CVD FG
Section 3 (3) CVD RM
Section 3(5) CVD Sales tax
Section 6 Protective duty
Section 8B Safeguard duty
Section 8C safeguard duty for goods imported from
china
Section 9 CVD on subsidized articles
Section 9A Anti dumping duty
Domestic industry written application to designated
authority with evidence, Investigate, recommend and CG
implements
BY CA SURESH DHOOT,
9869005638
VALUATION
Section 14(1)
Deemed to be the price at which
- such goods / like goods are ordinarily
sold
- for delivery at time and place of removal
- Price is the sole consideration
- not related


BY CA SURESH DHOOT,
9869005638
CUSTOM VALUATION
Section 14(1A)
If any of the condition of section 14(1) is
not satisfied then Custom valuation rules
1988 will apply
BY CA SURESH DHOOT,
9869005638
CUSTOM VALUATION
Section 14(2)
CBEC may by notification fix tariff value for
any class of Import / export goods

Section 14(3)
Rate of exchange means as determined
by central government

BY CA SURESH DHOOT,
9869005638
CUSTOM VALUATION RULE,
1988
Rule 1. General text/ title / preamble
Rule 2. Definition
Rule 3. Try Rule 4 if cant then go
sequentially for Rule 5 to 8

BY CA SURESH DHOOT,
9869005638
CUSTOM VALUATION RULE
Rule 4. (1) Transaction value shall be the price paid or payable adjusted in accordance
with rule 9.

(2) Transaction Value is accepted if following condition (a) to (h) is satisfied

(a) Fully competitive price
(b) No abnormal discount
(c ) No special discount for exclusive dealers not accepted
(d) Quantifiable data must be available for adjustment u/r 9
(e) No restriction on use or disposal of goods
(f) No condition or consideration be attached for which value cannot be given
(g) No flow back of resale proceeds for which no adjustment can be made u/r 9
(h) Party shall not be related i.e. relationship has not influence the price
Related party Supplied to another party at same price
Deductive value
Computed value

(3) Relation as no influence on the price

BY CA SURESH DHOOT,
9869005638
CUSTOM VALUATION RULES
Rule 5.T.V. of identical goods adjusted to commercial bench mark
i.e. quantity, quality, Same brand, specification, reputation, grade
etc. e.g. two benches

Rule 6.T.V. of similar goods more or less functionally substituted
e.g. two pens

Rule 6A Allow party to opt for Rule 7A & then Rule 7
Rule 7 Deductive value basis i.e. Sale price in India less deduction
of taxes /duties/Local cost

Rule 7A Computed Value i.e. cost plus basis
Rule 8 residual method i.e. reasonable basis Available data.

BY CA SURESH DHOOT,
9869005638
CUSTOM VALUATION RULES
Rule 9 Addition Loading to price value
(1) Amount paid by buyer in relation to imported goods & not
included in price i.e. selling commission.
(Note buying commission i.e. commission paid on behalf of Importer
is not to be loaded.)
(2) Packing cost i.e. packing material supplied by to be loaded.
(3) Some material/mould /design/ drawings/ components supplied by
importer to be loaded
(4) Royalty technology transfer
(5) Freight 20% of FOB or actual whichever is less In case of
airfreight not more than 20% of FOB
(6) Insurance charges 1.25% of C & F
(7) Landing charges 1% of CIF or actual

BY CA SURESH DHOOT,
9869005638
CUSTOM VALUATION RULES
Rule 10 Declaration by importer GATT declaration Value
of goods Prosecution/confiscation/ penalty
Rule 10A Rejection of declaration on truth &accuracy it
means value cannot be determined u/r 4
Truth & accuracy is determined by calling information /
Expert opinion/contemporary power etc grounds of
rejection be given
Rule 11 Settlement of disputes resolve by applying u/s
14
Rule 12 Interpretation note shall apply

BY CA SURESH DHOOT,
9869005638
ASSESMENT
Section 17(1) deals with provision of
assessment of goods when BOE filed for home
consumption
Section 17(2)First information report BOE filed
, goods examined / tested by proper officer and
duty is assessed
Section 17(3) Second examination system
BOE filed, duty assessed on basis of information
provided, if correct OK, if not correct
Reassessment . Penalty proceedings
BY CA SURESH DHOOT,
9869005638
PROVISIONAL ASSESSMENT
Section 18
If further documents required
Needs report of such test performed on
goods