INDIAN TAXATION
2. INDIAN CUSTOMS DUTY CALCULATION
I. CUSTOM DUTY CALCULATION
Custom Duty is on Import to India and Export...
IV. CLASSIFICATION FOR CUSTOMS AND RATE OF DUTY
Classification is as per CTA and based on Harmonized System of Nomenclatur...
Customs Valuation Inclusions

Commission and brokerage.

Packing cost.

Value of goods supplied by the buyer.

Service...
Chapter 20

Preparations of vegetables, fruit, nuts or other parts of plants

Chapter 21

Miscellaneous edible preparation...
Chapter 48

Paper and paperboard; articles of paper pulp, of paper or of paperboard.

Chapter 49

Printed books, newspaper...
Chapter 77

(Reserved for possible future use)

Chapter 78

Lead and articles thereof

Chapter 79

Zinc and articles there...
Demonstration of Customs Duties on Industrial Commodities.
Rate of Duty
Tariff

Item

Description of Goods

Unit

Preferen...
Schedule 2
Export Tariff and Appendix – I
Export tariff and corresponding exemption notifications and Appendix – I (Cess l...
Prepared by Divyanshu Dayal. Information for Purchase Manager. dayal1005@gmail.com
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2. Indian Taxation. Customs Duty.

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Customs Duty (Indian Context)

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2. Indian Taxation. Customs Duty.

  1. 1. INDIAN TAXATION 2. INDIAN CUSTOMS DUTY CALCULATION I. CUSTOM DUTY CALCULATION Custom Duty is on Import to India and Export out of India. Illustration of calculation of Customs Duty (Currency `) Sn Duty Description Duty (%) Amount Total Duty A B C Assessable Value Basic Customs Duty Sub-Total for Calculating CVD (A+B) 10 1,000.00 100.00 1,100.00 100.00 D E F G CVD ‘C’ x Excise Duty Rate Sub Total for Edu Cess (B + D) Edu Cess of Customs ‘E’ x 2% SAH Edu Cess of Customs ‘E’ x 1% H I J Subtotal for calculating Spl CVD ‘C+D+E+F+G’ Spl CVD u/s 3 (3) ‘H’ x 4% Total Payable K Total Duty 12 02 01 04 132.00 232.00 4.64 2.32 1238.96 46.56 1285.52 132.00 4.64 2.32 49.56 288.52 Notes: CENVAT credits on Custom Duties 1. Manufacturer can avail CENVAT credits on CVD and Spl. CVD i.e. ‘D’ & ‘I’ 2. Service Provider can avail CENVAT credits on CVD i.e ‘D’ 3. Trader who sell imported goods in India can avail credits on Spl. CVD i.e ‘I’ after charging VAT/ Sales Tax. II. SCOPE AND COVERAGE OF CUSTOM LAW The rate of duty is as prescribed in Customs Tariff Act (CTA) 1975, read with relevant exemption notifications. Import Duty is levied on almost all items, while export duty is levied only on few limited items. Custom Tariff Act (CTA) 1975 The Act contains two Schedules as mentioned hereunder:  Schedule 1 gives classification and rates of duties for imports.  Schedule 2 gives classification and rates of duties for exports. In addition, the CTA makes provision for duties like Additional Duty (CVD), Preferential Duty, Anti-Dumping Duty, Protective Duty etc. III. TYPES OF CUSTOM DUTIES 1. Basic Customs Duty 2. Education Cess on Customs Duty 3. Secondary and Higher Education Cess on Customs Duty 4. Additional Customs Duty (CVD- Countervailing Duty) 5. Additional Duty u/s 3(3) 6. Protective Duties 7. CVD on subsidized goods 8. Antidumping Duty 9. Safeguard Duty u/s 8B 10. Product specific Safeguard Duty on Imports from China u/s 8C in addition to the general provision of Safeguard Duty u/s 8B. It is not applicable for EOU ( Export Oriented Unit) and SEZ (Special Economic Zone) with exceptions u/s 8C(3) 11. National Calamity Contingent Duty (NCCD) 12. Export Duty Prepared by Divyanshu Dayal. Information for Purchase Manager. dayal1005@gmail.com
  2. 2. IV. CLASSIFICATION FOR CUSTOMS AND RATE OF DUTY Classification is as per CTA and based on Harmonized System of Nomenclature (HSN) Sections and Chapters in Custom Tariffs Customs Tariff is up to Chapter 99 Principles of Classification in Heading and Sub-Heading and Rule for Interpretation of Tariffs   Classification of Parts Classification of Containers/ Packing Cases: Packaging materials and containers are to be classified with the goods, except when the Packaging is for repetitive use.  Export Tariff under Customs Act: The Schedule 2 in CTA is ‘Export Tariff’ showing Export Duty leviable. Since most of the exports are exempted from export duty, the Schedule contains only 26 items, out of which 24 items are exempt by the way of a notification. Values for Custom Act Custom Duty is payable as percentage of ‘Value’ often called ‘Assessable Value’ or ‘Customs Value’. The Value may either be 1. Value as defined in section 14(1) 2. Tariff Value as prescribed in section 14 (2) Custom Value u/s 14(1) Criteria for deciding Customs Value or Assessable Value 1. Price at which such goods or like goods are ordinarily sold or offered for sale. 2. Price for Delivery at the time and place of importation or exportation. 3. Price should be in course of International Trade. 4. Rate of exchange as on date of presentation of Bill of Entry. These criteria are fully applicable in valuing export goods also. Major Requirements of Customs Value or Assessable Value Prices at which goods are being sold under an invoice is not the sole criteria for deciding ‘Value’ for Customs Duty purpose (Though it is a major criterion).  Price of such or like goods. ‘Such’ means identical in all respect. Rule 9 of the valuation says that if the buyer has supplied some materials, components, parts, tools, dies etc. or has spent on engineering, development or art work etc.; cost of such expenditure will be added to the price actually paid. ‘Like’ means if prices of the goods are not available, prices of identical goods or similar goods can be considered with applied conditions.  Goods should be ordinarily sold at that price.  Dual price in case of service parts and Original Equipment (OE).  Price offered for sale. Price should be for delivery at the place of importation. All expenses up to the destination port, including freight, transit insurance, unloading and handling charges are to be included.  Price should be for the delivery at the time of importation.  Price should be in international trade.  Buyer or Seller should not have interest in business of each other.  Price must be the sole consideration.  Price in case of High Sea Sale. Incase of High Sea Sale, price charged by the importer to the assessee would form the assessable value and not the invoice issued to the importer by foreign supplier. If the purchase is on High Sea Sale it will include importers service charges, demurrage, bank charges etc. Customs Duty will be payable on assessable value derived after adding these charges.  Rate of Exchange for customs evaluation. Exchange rate as applicable on date of presentation of Bill of Entry as prescribed by CBE&C (Board) (Central Board of Excise and Customs) should be considered. This rate is not same as ‘Inter Bank Closing Rates’ fixed by ‘Foreign Exchange Dealers Association’ or by ‘Reserve Bank of India’. The applicable exchange rate for valuation is prescribed periodically by CBE&C (Board) Prepared by Divyanshu Dayal. Information for Purchase Manager. dayal1005@gmail.com
  3. 3. Customs Valuation Inclusions  Commission and brokerage.  Packing cost.  Value of goods supplied by the buyer.  Services/ documents/ know-how supplied by the buyer.  Royalty and License Fee.  Value of subsequent resale if payable to foreign supplier.  Other payments made to seller directly or indirectly.  Cost of transport upto port: If the cost of transport is not ascertainable, it will be taken @ 20% of FOB (Free Onboard) value of goods. However, cost of transport within India is not to be considered.  Landing charges: Cost of unloading and handling associated with delivery of imported goods in port (called landing charges) shall be added. These will be calculated @ 1% of CIF (Cost Insurance Freight) value i.e. FOB price + Freight + Insurance. Rule 9(2)(b).  Insurance cost: Insurance charges on goods are to be added. Rule 9 (2)(c). If these are not ascertainable, these will be calculated @ 1.125% of FOB value of goods. For more detailed explanation read the Customs Tariff Act 1975 or visit the website. http://www.cbec.gov.in/ (Central Board of Excise and Customs) Chapters in Customs Duty (http://www.cbec.gov.in/customs/cst2012-13/cst1213-idx.htm) Schedule-1 Chapters Commodities Chapter 1 Live animals Chapter 2 Meat and edible meat offal Chapter 3 Fish and crustaceans, molluscs and other aquatic invertebrates Chapter 4 Dairy produce; birds' eggs; natural honey; edible products of animal origin, not elsewhere specified or included Chapter 5 Products of animal origin, not elsewhere specified or included. Chapter 6 Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage Chapter 7 Edible vegetables and certain roots and tubers Chapter 8 Edible fruit and nuts; peel of citrus fruits or melons Chapter 9 Coffee, tea, mate and spices Chapter 10 Cereals Chapter 11 Products of the milling industry; malt; starches; inulin; wheat gluten. Chapter 12 Oil seeds and oleaginous fruits; miscellaneous grains, seeds and fruit; industrial or medicinal plants; straw and fodder. Chapter 13 Lac; gums, resins and other vegetable saps and extracts. Chapter 14 Vegetable plaiting materials; vegetable products not elsewhere specified or included. Chapter 15 Animal or vegetable fats and oil and their cleavage products; prepared edible fats; animal or vegetable waxes Chapter 16 Preparation of meat, of fish or of crustaceans, molluscs or other aquatic invertebrates Chapter 17 Sugars and sugar confectionery Chapter 18 Cocoa and cocoa preparations Chapter 19 Preparations of cereals, flour, starch or milk; pastrycooks' products Prepared by Divyanshu Dayal. Information for Purchase Manager. dayal1005@gmail.com
  4. 4. Chapter 20 Preparations of vegetables, fruit, nuts or other parts of plants Chapter 21 Miscellaneous edible preparations Chapter 22 Beverages, spirits and vinegar Chapter 23 Residues and waste from the food industries; prepared animal fodder Chapter 24 Tobacco and manufactured tobacco substitutes Chapter 25 Salt; sulphur, earths and stones; plastering materials, lime and cement Chapter 26 Ores, slag and ash Chapter 27 Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes Chapter 28 Inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or of; isotopes Chapter 29 Organic chemicals Chapter 30 Pharmaceutical products Chapter 31 Fertilisers Chapter 32 Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and other colouring matter, paints and varnishes; putty and other mastics; inks. Chapter 33 Essential oils and resinoids; perfumery, cosmetic or toilet preparations Chapter 34 Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial waxes, prepared waxes, polishing or scouring preparations, candles and similar articles, modelling pastes, "dental waxes" and dental preparations with a basis of plaster Chapter 35 Albuminoidal substances; modified starches; glues; enzymes Chapter 36 Explosives; pyrotechnic products; matches; pyrophoric alloys; certain combustible preparations. Chapter 37 Photographic or cinematographic goods Chapter 38 Miscellaneous chemical products Chapter 39 Plastics and articles thereof Chapter 40 Rubber and articles thereof Chapter 41 Raw hides and skins (other than furskins) and leather Chapter 42 Articles of leather; saddlery and harness; travel goods, handbags and similar containers; articles of animal gut (other than silk-worm gut) Chapter 43 Furskins and artificial fur, manufactures thereof Chapter 44 Wood and Articles of wood; wood charcoal Chapter 45 Cork and articles of cork Chapter 46 Manufactures of straw, of esparto or of other plaiting materials; basketware and wickerwork. Chapter 47 Pulp of wood or of other fibrous cellulosic material; recovered (waste and scrap) paper or paperboard. Prepared by Divyanshu Dayal. Information for Purchase Manager. dayal1005@gmail.com
  5. 5. Chapter 48 Paper and paperboard; articles of paper pulp, of paper or of paperboard. Chapter 49 Printed books, newspapers, pictures and other products of the printing industry; manuscripts, typescripts and plans. Chapter 50 Silk Chapter 51 Wool, fine or coarse animal hair; horse hair yarn and woven fabric Chapter 52 Cotton Chapter 53 Other vegetable textile fibres; paper yarn and woven fabrics of paper yarn Chapter 54 Man-made filaments Chapter 55 Man-made staple fibres Chapter 56 Wadding, felt and nonwovens; special yarns; twine, cordage, ropes and cables and articles thereof Chapter 57 Carpets and other textile floor coverings Chapter 58 Special woven fabrics; tufted textile fabrics; lace; tapestries; trimmings; embroidery Chapter 59 Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind suitable for industrial use. Chapter 60 Knitted or crocheted fabrics Chapter 61 Articles of apparel and clothing accessories knitted or crocheted Chapter 62 Articles of apparel and clothing accessories, not knitted or crocheted Chapter 63 Other made up textile articles; sets; worn clothing and worn textile articles; rags Chapter 64 Footwear, gaiters and the like; parts of such articles Chapter 65 Headgear and parts thereof Chapter 66 Umbrellas, sun umbrellas, walking-sticks, seat-sticks, whips, riding-crops and parts thereof. Chapter 67 Prepared feathers and down and articles made of feathers or of down; artificial flowers; articles of human hair Chapter 68 Articles of stone, plaster, cement, asbestos, mica or similar materials Chapter 69 Ceramic products Chapter 70 Glass and glassware Chapter 71 Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal and articles thereof; imitation jewellery; coin Chapter 72 Iron and steel Chapter 73 Articles of iron or steel Chapter 74 Copper and articles thereof Chapter 75 Nickel and articles thereof Chapter 76 Aluminium and articles thereof Prepared by Divyanshu Dayal. Information for Purchase Manager. dayal1005@gmail.com
  6. 6. Chapter 77 (Reserved for possible future use) Chapter 78 Lead and articles thereof Chapter 79 Zinc and articles thereof Chapter 80 Tin and articles thereof Chapter 81 Other base metals; cermets; articles thereof Chapter 82 Tools, implements, cutlery, spoons and forks, of base metal; parts thereof of base metal Chapter 83 Miscellaneous articles of base metal Chapter 84 Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof Chapter 85 Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles Chapter 86 Railway or tramway locomotives, rolling-stock and parts thereof; railway or tramway track fixtures and fittings and parts thereof; mechanical (including electro-mechanical) traffic signaling equipment of all kinds Chapter 87 Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof Chapter 88 Aircraft, spacecraft, and parts thereof Chapter 89 Ships, boats and floating structures Chapter 90 Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof Chapter 91 Clocks and watches and parts thereof Chapter 92 Musical instruments; parts and accessories of such articles Chapter 93 Arms and ammunition; parts and accessories thereof Chapter 94 Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lamps and lighting fittings, not elsewhere specified or included; illuminated signs, illuminated name-plates and the like; prefabricated buildings Chapter 95 Toys, games and sports requisites; parts and accessories thereof Chapter 96 Miscellaneous manufactured articles Chapter 97 Works of art, collectors' pieces and antiques Chapter 98 Project imports, Laboratory chemicals, passenger's baggage, personal importation by air or post; ship stores Prepared by Divyanshu Dayal. Information for Purchase Manager. dayal1005@gmail.com
  7. 7. Demonstration of Customs Duties on Industrial Commodities. Rate of Duty Tariff Item Description of Goods Unit Preferential Areas Standard Chapter 26: Ores, slag and ash 2601 Iron ores and concentrates including roasted pyrites Iron ores and concentrates other than roasted pyrites 2601 11 Non agglomerated: 2601 Iron ores lumps (60% Fe or more) 2601 11 11 60% Fe or more but less than 62% Fe Kg 10% - 2601 11 12 62% Fe or more but less than 65% Fe Kg 10% - 2601 11 19 65% Fe and above Kg 10% - 2602 00 Manganese ores and concentrates, including ferroginous manganese ore and concentrates with a manganese content of 20% or more, calculated on dry weight: 2602 00 Manganese ores and Concentrates, including ferroginous manganese ore and concentrates with a manganese content of 20% or more, calculated on dry weight: 2602 00 10 Manganese ores ( 46% or more) Kg 5% - 2602 00 10 Manganese ores (44% or more but below 46%) Kg 5% - 2603 00 00 Copper ores and concentrates Kg 5% - 2604 00 00 Nickel ores and concentrates Kg 5% - u 7.5% - Chapter 84: Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof 8406 8406 Steam turbines and other vapour turbines 10 00 Turbines for marine propulsion Other turbines: 8406 81 00 Of an output exceeding 40 MW u 7.5% 8406 82 00 Of an output not exceeding 40 MW u 7.5% 8406 90 00 Parts Kg 7.5% 10 00 u 7.5% 8407 8407 Spark-ignition reciprocating or rotary internal Combustion piston engines Aircraft engines Chapter 27: Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes 2701 Coal; briquettes, ovoids and similar Solid fuels manufactured from coal Coal, whether or not pulverised, but not agglomerated : 2701 11 00 Anthracite Kg 10% 2701 12 00 Bituminous Coal Kg 55% 2701 19 2701 19 10 Coking Coal Kg 10% 2701 19 20 Steam Coal Kg 10% Other Coal Prepared by Divyanshu Dayal. Information for Purchase Manager. dayal1005@gmail.com
  8. 8. Schedule 2 Export Tariff and Appendix – I Export tariff and corresponding exemption notifications and Appendix – I (Cess leviable on certain articles on export under various enactments of the Government and exemption Notifications thereto.) http://www.cbec.gov.in/customs/cst2012-13/sch2-exptariff.pdf Prepared by Divyanshu Dayal. Information for Purchase Manager. dayal1005@gmail.com
  9. 9. Prepared by Divyanshu Dayal. Information for Purchase Manager. dayal1005@gmail.com

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