Chap 1 - Levy of and Exemptions from customs duty Flashcards
What are the provisions relating to effective date of notifications issued under section 25 of the customs act, 1962?
General rule - date of effect of the notification will be the date of its issue for publication in the Official Gazette.
Where the exemption notification does not mention the date of its effect, the notification comes into effect from the date of its issue by the Central Government for publication in the Official Gazette - Even when there is a small delay in the publication, the notification will still deem to have the effect accordingly.
Where the exemption is through a special order, the above rules do not apply. Special orders are issued separately for each case and communicated to the beneficiary directly by the Government. The beneficiary can claim refund for the period reckoned from the date of its issue.
Sub-section 2A empowers the Government to issue clarifications to the notifications within one year from the issue of the notification and such clarifications will have retrospective effect.
what are the important/brief provisions relating to customs(import of goods at a concessional rate of duty) rules, 2017 available for the benefit of the importer?
Application - Rule 2 - These rules shall apply to an importer, who intends to avail the benefit of an exemption notification issued under section 25(1) of the Customs Act, 1962
Information about intent to avail benefit of exemption notification [Rule 4]: provide the information to the Deputy Commissioner of Customs or, as the case may be, Assistant Commissioner of Customs having jurisdiction over the premises where the imported goods shall be put to use for manufacture of goods or for rendering output service
Procedure to be followed [Rule 5] - Should execute a continuity bond with such surety or security as deemed appropriate by the Deputy/ Assistant Commissioner of Customs having jurisdiction over the premises
Importer who intends to avail the benefit of an exemption notification to give information regarding receipt of imported goods and maintain records [Rule 6]
Re-export or clearance of unutilised or defective goods [Rule 7] - Re export has to be made within 6 months and the value of re exported goods shall not be less than the former.
For the clearance of unutilised or defective goods - Duty has to be paid at the time of clearing of such goods.
Recovery of duty in certain case [Rule 8]:
Where an importer imported certain inputs for manufacture of a final product, where certain imported goods were damaged during transit and could not be used in manufacture. We know that the final product is covered under the exemption notification for manufacture of specified goods, now will the benefit of the above notification can be claimed in respect of the entire lot of inputs imported including the goods damaged in transit?
The facts of the case are similar to the case of BPL Display Devices Ltd. v. CCEx., Ghaziabad (2004) 174 ELT 5 (SC) wherein the Supreme Court has held that the benefit of the notifications cannot be denied in respect of goods which are intended for use for manufacture of the final product but cannot be so used due to shortage or leakage.
The Apex Court has held that no material distinction can be drawn between loss on account of leakage and loss on account of damage - The intention to use is important rather than actual usage.
Therefore, the importer can claim the benefit of the notification in respect of the entire lot of the inputs imported including those that were damaged in transit
Where an importer imported some goods which are eligible for the exemption notification as mentioned in the rules, and if a certificate needs to be issued to the commissioner((Deputy/assistant) for claiming the aforesaid exemption, but was not presented due to the failure of public functionaries and not of the importer, would the benefits still be available to the importer for non production of the aforesaid certificate?
This issue has been addressed by the Supreme Court in the case of Commissioner of Customs v. Tullow India Operations Ltd. (2005) 189 ELT 401 (SC). The Apex Court has observed that if a condition is not within the power and control of the importer and depends upon the acts of public functionaries.
non-compliance of such a condition, subject to just exceptions cannot be held to be a condition precedent which would disable it from obtaining the benefit for all times to come.
public functionary is supposed to grant the essentiality certificate within a reasonable time so as to enable the importer to avail of the benefits under the notification, so importer cannot be blamed for the lapse by the respective authorities concerned.
What is the taxable event for levy of customs duty under the provisions of section 12 of the customs act? - Both import and Export?
Imports
Goods cleared for home consumption:
- The Supreme Court observed that import of goods will commence when they cross the territorial waters, but continues and is completed when they become part of the mass of goods within the country
- the taxable event being reached at the time when the goods reach the customs barriers and bill of entry for home consumption is filed.
In case of goods cleared for warehousing
- In case of warehoused goods, the custom barriers would be crossed when they are sought to be taken out of customs and brought to the mass of goods in the country.
Exports:
Export of goods is complete when the goods cross the territorial waters of India.
What is the scenario where clearances from DTA to SEZ are chargeable to export duty under the SEZ act, 2005 or the customs act, 1962?
In the case of Tirupati Udyog Ltd. v. UOI 2011 (272) E.L.T. 209 (A.P.), it is held that the clearances of goods from DTA to Special Economic Zone are not chargeable to export duty either under the SEZ Act, 2005 or under the Customs Act, 1962 on the basis of the following observations.
Reading section 12(1) of the Customs Act, 1962 along with sections 2(18), 2(23) and 2(27) makes it apparent that customs duty can be levied only on goods imported into or exported beyond the territorial waters of India.
Since both the SEZ unit and the DTA unit are located within the territorial waters of India, supplies from DTA to SEZ would not attract section 12(1) [charging section for customs duty]
Where there is no restrictive clause in the exemption notification regarding the usage of the imported goods for manufacturing or for rendering of output services, then can the same be used for further export of goods using the imported goods and sale of any surplus in the DTA?
The facts of the case are similar to the case of Commissioner v. Hanil Era Textile Ltd. 2005 (180) ELT A044 (SC)
in the absence of a restrictive clause in the notifications that imported goods are to be solely or exclusively used for manufacture of goods for export, there is no violation of any condition of notification.
Hence the sale of any surplus in the DTA, is allowed especially when the goods cannot be stored.
According to the provisions of section 25, what is the meaning of general exemptions an special exemptions?
Who has the power of remission of duty on goods lost, destroyed or abandoned as per section 23?
Without prejudice to the provisions of section 13, where it is shown to the satisfaction of the Assistant Commissioner of Customs or Deputy Commissioner of Customs that any imported goods have been lost (otherwise than as a result of pilferage) or destroyed, at any time before clearance for home consumption.
the Assistant Commissioner of Customs or Deputy
Commissioner of Customs shall remit the duty on such goods. [Sub-section (1)].
What are some important points to be noted in relation to remission of duty on goods lost, destroyed or abandoned as per section 23?
it comes into play after the duty has been paid and even after an order for home consumption has been passed, but before the goods are actually cleared, and then it is found that they have been lost/destroyed.
In that case the provision is not that goods will not be liable to duty, but duty paid on such goods shall be remitted by the Assistant/Deputy Commissioner of Customs.
The remission of duty is permissible only in the case of total loss of goods. This implies that the loss is forever and beyond recovery - Due to natural causes like flood and fire etc.
The loss referred to in sub-section (1) may be at the warehouse also.
The onus of the proof of loss or destruction is with the importer who has to satisfy the assistant commissioner or deputy commissioner and thereupon pass orders accordingly.
What are some important points in relation to pilferage under section 13 and what are the differences between section 23 and 13 in relation to the remission or non payment of customs duty?
Section 13 provides that if imported goods are pilfered after unloading thereof but before the proper officer has made an order for clearance for home consumption or deposit in a warehouse.
no duty is payable on the goods, unless the pilfered goods are restored to importer
In such a case, duty on pilfered goods is payable by the Port authorities. Also, the importer does not have to prove pilferage - since it is very apparent at the time of unloading itself by way of breaking of seal or missing places of the package etc.
However, the loss must be only due to pilferage. Section 13 is not applicable for warehoused goods.
What are the provisions under section 20 for Re-importation of goods which were earlier exported for different purposes and under different schemes accordingly?
Those re- imported goods shall be treated on par with any other imported goods, subject to certain concessions provided from the duty payable.
Conditions to be satisfied for claiming the above two concession/exemptions :-
The time limit for re-importation is 3 years which can be extended further for a period up to 2 years.
In case of goods exported under DEEC/Advance Authorisation /DFIA or EPCG or Duty Entitlement Passbook Scheme (DEPB) or any reward scheme- 1 year plus extended by one more year.
Same goods - The exported goods and the re-imported goods must be the same and should not be subjected to any re-manufacturing or reprocessing through melting, recycling or recasting abroad
No change in ownership - In case of goods at S. No. 2, the ownership of the goods should not have changed
When the concessions mentioned above as per section 20 for re - importation will not be available?
- re-imported goods had been exported by 100% Export Oriented Undertaking (EOU) or a unit in Free Trade Zone (FTZ).
- re-imported goods had been exported from a public/private warehouse.
- re-imported goods which fall under Fourth schedule to the Central Excise Act, 1944 (tobacco products and petroleum products)
What are the description of goods which are covered under section 20 for Concessional duty payable in case of re-importation of goods exported under duty drawback, exported for repairs, etc?
What are the three stages of imposition of taxes and duties?
(a) Levy is the stage where the declaration of liability is made and the persons or the properties in respect of which the tax or duty is to be levied is identified and charged.
(b) Assessment is the procedure of quantifying the amount of liability. The liability to pay tax or duty does not depend upon assessment.
(c) The final stage is where the tax or duty is actually collected. The collection of tax or duty may for administrative or other reasons be postponed to a later time.
What are the cases under which abatement OF DUTY ON DAMAGED OR DETERIORATED GOODS is available under section 22?
The wordings are bit confusing in this aspect. These are conditions based on different scenarios that could happen and should not be seen cumulatively.
