Customs
Customs duty is a form of indirect tax which is imposed in both the situations i.e. import and export of goods and services. The tax which is imposed on the import of goods and services is known as Import duty and for export of goods and services is known as Export duty.
When the goods enter into territorial water of India, it is considered import of goods and customs duty is leviable. The taxable event occurs when the goods are crossed customs barrier. Customs duty is now an important source of Revenue for all countries, more so in developing countries including India.
It was an ancient “Customs” that whenever a merchant entered a kingdom with his merchandise he had to make a suitable offerings of gifts to the King. Later the different states switched over this custom into statutory levy and started collecting customs duty on goods imported into and sometime exported out of its state.
India is a member of World Customs Organisation and adopted number of International Customs Conventions and procedures such as Harmonised System of Nomenclature for classification purpose of the goods and WTO Code for the purpose of valuation. The Central Board of Indirect Taxes and Customs (in short CBIC), (Earlier named Central Board and Excise Customs) entered in an agreement with 3 institute of the country i.e. ICAI, ICWAI and ICSI for setting up Certified Facilitation Centre, which will be helpful to the taxpayer for assessment of their tax liability.
Government of India in the Budget of 2011, made legislative provision for importers and exporters, for self-assessment of their customs duty liability, however subject to check and re- assessment by the Customs Officers. CBIC, in international matters a new Directorate namely, Directorate of International Customs (DIC) has also constituted w.e.f. 01.07.2017, which will assist the CBIC in international matters pertaining to Customs and Integrated Goods and Service Tax (IGST) tariff matters. Another body is also created namely Directorate General of Analytics and Risk Management (DGARM) for Data Mining and Risk Management. This Directorate will function as an Apex Body of CBIC to provide National and Sub-National perspective for policy formulation.
Prior to 01.07.2017 multiple taxes such as CVD, basic custom duty, anti-dumping duty, and safeguard duty were imposed on every import of goods and services. Customs duty is being replaced by IGST, which means instead of Custom duty, IGST and Basic Customs Duty is applicable on every export and import of goods and services. On the import of goods, only the integrated tax along with the basic customs duty will be chargeable. Input Tax Credit of the Integrated tax (IGST) and GST compensation Cess, shall be available to the importer and later to the recipient in the supply chain, however the Basic Customs Duty (BCD) would not be available. In the Customs Act provision to conduct Audit of the private records of importers and exporters is introduced.
In GST regime, Import Export Code (IEC) would be replaced by PAN/GSTIN. The Customs duties will be exempted on imports made under export promotion Scheme under EPCG, DEFC (Advance License) and DFIA.
As per this tax system, the export of goods and services takes place from India to any other place outside India is considered as ‘Zero Rated Supplies’. It means that no GST will be applicable for the exporters. The Exporter may supply Goods or services or both under Bond or letter of undertaking without paying IGST subject to such conditions and without payment of Integrated Tax claim refund of unutilized tax credit. No amendments have been made to the drawback provisions under Customs Act, 1962 in the GST regime.
