A Very good evening to all the mebers of CCI Family. Today i will discuss something regarding " CUSTOMS ".
The Concept -
It was an ancient " CUSTOM " that whenever a merchant entered a kingdom with his merchandise, he had to make a suitable offering of gifts to the king. In course of time, the modern state formalised this " custom " as custom duty which the state collects on goods imported into or exported out of the country. so from here the concept of custom was framed.
Types of custom duties leviable -
In India, custom duties are levied on the goods at the rate specified in schedule to the Custom Tariff Act, 1975. Export duties are levied at present on Leathers, iron ores and concentrates and chromium ores.
(1) Basic Custom Duty ( BCD ) - It may be at the standard rate or in case of import from some countries, at the prefrential rate. ( 5 to 40 % )
(2) Additional Custom Duty ( C.V.D ) - It is equal to central excise duty is leviable on goods or manufactured in india. The MRP based valuation prevailing under Central excise in extended to custom also. Now the value for calculating the additional duty equal to the excise duty, in respect of commodities covered under the Standards of weights and Measure Act .
Additional duty is commonly refered 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 defination of central excise act 1944.
It is calculated on a value base of aggregate of value of the goods including landing charges and BCD. Other duties such as anti dumping duty, safeguard duty of 4% are not taken into account.
Exemption/ Credit -
(1) - The special CVD of 4% is not leviable in case of imports under advance license, EOU and SEZ Schemes.
(2) - In case of import under EPCG Scheme it may ne noted that Notification No. 97/2004 governing imports under the said scheme itself provides for exemption from additional duty.
For your clarification " EPCG " Means -
EPCG(Export Promotion Capital Goods Scheme) is a scheme in which one can import the capital goods which may be for pre-production, production or post production as well as computer software systems, spares parts, fixtures, dies, moulds at very concessional rate of custom at 0% in some sectors and 3.09% for all sectors whereas the normal custom duty is 23.895%. Thus this scheme saved at least 20% of the duty value on the import. This scheme is subject to the export obligation equivalent to 6 times or 8 times (sector wise) of duty saved in the time frame of 6/8 years. This scheme is for manufactures as well as vendors, service providers as well.
(3) - In case of import of goods under DFRC Scheme, the element of 4% CVD shall be payable because the notification grants exemption from basic duty only.
Duty Free Replenishment Certificate ( DFRC ) is issued to a merchant-exporter or manufacturer-exporter for the import of inputs used in the manufacture of goods without payment of Basic Customs Duty, Surcharge and Special Additional Duty. However, such inputs shall be subject to the payment of Additional Customs Duty equal to the Excise Duty at the time of import.
So friends this was the part 1 of my series. Hope all of you will appreciate my effort.
Thanks & Regards
Sanyam Arora
CAclubindia
