Types of Duties

CUSTOMS – Types of Duties

Question - 1

An importer imported some goods for subsequent sale in India at $ 10,000 on Assessable value basis. Relevant
exchange rate and rate of duty are as follows:
Exchange rate Rate of Basic
Particulars Date
declared by the Customs Duty
CBIC
Date of submission of bill of entry 25th February Rs 58/USD 10%
20XX
Date of entry inwards granted to the 5th March Rs 58.75/USD 12%
vessel 20XX
Assume : Integrated Tax leviable u/s 3(7) of the Customs Tariff Act, 1975 is 18%. Calculate
Assessable value and Customs Duty in Indian rupees?

Answer:
Relevant rate of duty for the imported goods is 12% (i.e. Date of submission of bill of entry or Date of entry inwards
granted to the vessel whichever is latter)
Exchange Rate is Rs 58 per USD (i.e. the rate of CBIC as on the date of submission of Bill of Entry by the importer)
Assessable value = Rs 5,80,000 (i.e. USD 10,000 × Rs 58)
Basic Customs Duty = Rs 69,600 (i.e. Rs 5,80,000 × 12%)
Social Welfare Surcharge on
basic customs duty = Rs 6,960 (10% on 69,600) IGST @ 18
U/S of Customs Tarrif Act = Rs 1,18,180.8
Total Customs Duty = Rs 1,94,740.8 (including IGST)

Question 2

An importer imported some goods. Entry inwards granted to the vessel on 7th February, and the goods were cleared
from Chennai port for warehousing on 8th February, after assessment.The Bill of Entry was presented on
1st February for warehousing. Assessable value was US$ 10,000. Assume that no additional duty is payable. The
goods were warehoused at Chennai and were cleared from Chennai warehouse on 4th March. What is the duty
payable while removing the goods from Chennai warehouse on 4th March? Exchange rates and rate of Customs
Duties are as follows:
Exchange rate Basic Customs
Particulars Date
declared by the Duty
CBIC
Date of submission of bill of entry for warehousing 1sf 55/USD 10%
February
Date of entry inwards granted to the vessel 7th 59/USD 12%
February
Date of clearance of goods from warehouse 4th 60/USD 15%
March

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Assume IGST@ 12%. Answer:

Relevant rate of duty for the imported goods warehoused is 12% (i.e. Date of entry inwards granted to the vessel)
Exchange Rate is55 per USD (i.e. the rate of CBIC as on the date of submission of Bill of Entry by the
importer)
Solution:
Assessable value = 5,50,000 (i.e. USD 10,000 x 55)
Basic Customs Duty = 66,000 (i.e.5,50,000 x 12%)Social Welfare
Surcharge @ 10% = 6,600
IGST@ 12% = 74,712
Total Customs Duty = 1,47,312

Question 3

An assessee submitted the shipping bill on 1st January 2014. At that time the export duty was nil (i.e. duty
free). Let export order (i.e. entry outwards) was granted on 5th January 2014. However, due to some problems
goods could not be loaded into ship. On 25th March 2014, the shipping bills were voluntarily resubmitted by the
assessee with the request to permit the shipment by a different vessel. Subsequently, on 27th March 2014, let
export order was granted. However, in the mean time the duty at the rate of 12% ad valorem was levied with
effect from 1st March 2014. Examine, whether exporter is liable to pay duty?
Answer:
In the given case actual export took place only after revised shipping bill was submitted on 25th March 2014, for
which entry outwards granted on 27th March, 2014. Hence, the rate prevalent as on the date of entry
outwards granted to the vessel is relevant for determination of rate of duty. Therefore, assessee is liable to pay export
duty @12%.

Question -4
An Exporter exported goods valuing Rs 1,00,000 to United States of America (USA) by a vessel. Other details
are as follows:
Particulars Date of Rate of
submission export duty
Shipping Bill 1.8.20XX 10%
Entry outwards granted to the vessel by the proper officer of Customs 5.8.20XX 8%
Ship let for USA from the Indian port 7.8.20XX 15%
Ship crossed the territorial waters of India 8.8.20XX 12%
You are required to find the customs duty payable for exported goods?
Solution
Customs Duty = Rs 8,000 (i.e. Rs 1,00,000 × 8%) Note:
(i) As per section 16(1) of the Customs Act, 1962, taxable event arises only when proper officer makes an order
permitting clearance (i.e. entry outwards) granted - Esajee Tayabally Kapasi (1995)(SC). Therefore, relevant
rate is 8%
(ii) Export duties do not carry Social Welfare Surcharge @ 10%.

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Cost of imported goods ₹ 1,00,000

Add: Basic Customs Duty 10% (1,00,000 x 10%) Rs 10,000
Add: Agriculture Infrastructure
And Development Cess 7.5% Rs 7,500
(1,00,000 x 7.5%)
Add: Social Welfare Surcharge 10%
(10,000 + 7,500) x 10% Rs 1,750
Sub-total Rs 1,19,250
Add: IGST 18%
((1,19,250 x 18%) Rs 21,465
Add: GST Compensation Cess
(1,19,250 x 15%) Rs 17,888
Total cost of imported goods Rs 1,58,603

Question - 5
Compute the assessable value and Customs duty payable from the following information:
(i) F.O.B value of machine 8,000 UK Pounds
(ii) Freight paid (air) 2,500 UK Pounds
(iii) Design and development charges paid in UK 500 UK Pounds
(iv) Commission payable to local agents @ 2% of F.O.B in Indian Rupees

(v) Date of bill of entry 24.10.20XX

(Rate BCD 12%; Exchange rate as notified by CBIC Rs 68 per UK Pound)
(vi) Date of entry inward 20.10.20XX
(Rate of BCD 18%; Exchange rate as notified by CBIC Rs 70 per UK Pound).
(v) IGST payable 18%.

(vi) Insurance charges actually paid but details not available.

Answer:
UK Pounds
FOB value = 8,000
Add: Design and Development = 500
(paid in UK)
Add: Commission to local agent = 160
(2%on8,000UKP)
FOB value as per customs = 8,660
Add: Air freight (8,660 x 20%) = 1,732
Add: Insurance (8,660 x 1.125%) 97.425
CIF value/Assessable value = 10,489.425
Assessable value (10,489.425 x 68) = 7,13,281
Statement showing customs duties

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Particulars Value Rs Working note

Assessable value 7,13,281
Add: BCD 85,593.72 (7,13,281 x 12%)
Add: SWS 8,559.37
Balance 8,07,434.09
Add: IGST 1,45,338.13
Landed value 9,52,772.22
Total Customs duties 2,39,491.22

Question: 6
Liberty International Group has imported a machine by air from United States. Bill of entry is presented on
18.07.20XX. However, entry inwards is granted on 7.08.20XX.
The relevant details of the transaction are provided as follows:
CIF value of the machine imported $ 13,000 Airfreight

paid $ 2,800

Insurance charges paid $200

Rate of exchange as
Announced by As on 18.07.20XX As on 7.08.20XX
CBIC 1 US $ = Rs 66 1US $ = Rs 65.80
RBI 1 US $ = Rs 66.10 1 US $ = Rs 66.10
Calculate the assessable value (in rupees) for the purposes of levy of customs duty as well as total customs
duty. BCD = Nil IGST = 18%

Make suitable assumptions wherever necessary.

Answer:

Particulars Amount in Remar Workings

US$ ks
CIF value 13,000
Less: Air freight 2,800 Air freight should not be
more
than 20% on FOB
Less: insurance 200
F O B value 10,000
Add: Air freight 2,000 Air freight restricted to 20% 10,000 x 20% = 2,000
on the
FOB value
Add: Insurance 200
C I F value/ Assessable 12,200 US$ (10,000 + 2,000 + 200)
Value
Amount in
Rs

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Assessable value 8,05,200 CBIC exchange rate as on US$12,200 x 66 = Rs 8,05,200

the date of submission of bill
of entry is relevant.
Add: BCD Nil
Add: SWS @10% Nil
Balance 8,05,200
Add: IGST 1,44,936 (8,05,200 x 18%)
Landed value 9,50,136

Question - 7
Compute the assessable value and total customs duty payable under the Customs Act, 1962 for an imported
machine, based on the following information: US $

(i) Cost of the machine at the factory of the exporter 20,000

(ii) Transport charges from the factory of exporter to the port for shipment 800
(iii) Handling charges paid for loading the machine in the ship 50
(iv) Buying commission paid by the importer 100
(v) Lighterage charges paid by the importer 200
(vi) Freight incurred from port of entry to Inland Container depot 1,000
(vii) Ship demurrage charges 400
(viii) Freight charges from exporting country to India 5,000

Date of bill of entry 20.02.20XX (Rate BCD 20%;

Exchange rate as notified by CBIC
Rs 60 per US $)
Date of entry inward 25.01.20XX (Rate of BCD 12%;
Exchange rate as notified by CBIC
Rs 65 per US $)
IGST payable under section 3(7) of the Customs Tariff Act, 1975 12% Also find the
ligible input tax credit to the importer.

Solution
Particulars US $ Remarks
Cost of the machine 20,000
Add: transport charges from factory of exporter to the port for shipment 800
Add: handling charges 50
FOB 20,850
Add: buying commission Nil Not addable
FOB of the Customs 20,850
Add: Insurance 234.5625 20,850 x 1.125%
Add: Freight 5,000
Add: Lighterage charges 200
Add: Ship demurrage 400
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Rs
Assessable Value 16,01,074 26,684.5625 USD x Rs 60
Add: BCD 20% 3,20,215 Rs 16,01,074 x 20%
Add: SWS @ 10% 32,021.5
Balance 19,53,310.5
Add: IGST 2,34,397.26
Landed value of imported goods 21,87,707.76
Total customs duty 5,86,633.76
CIF Value/Assessable Value 26,684.5625

Question - 8
X Transport company imported Rolls Royce car for the purpose of providing output services by way of
transportation of passengers Rs Following are the cost & other details-
Particulars Amount (INR)
Cost of vehicle (Assessable value) 300,00,000
Custom duty 10%
IGST 28%
Compensation cess 20%

X Transport company is eligible to take Input tax credit and have output IGST liability of INR 120 Lakh. Calculate tax
liability towards Custom duty & GST liability?
Answer:
Particulars Calculation Amount
(INR)
Cost of Vehicle-(A) 300,00,000
Custom duty-(B) 10% 30,00,000
SWS-(C) 10% on (B) 300,000
Total custom duty payable- (D) (B+C) 33,00,000
Total Cost after Custom duty-(E) (A+D) 3,33,00,0000
IGST-(F) 28% on (E) 93,24,000
Compensation cess-(G) 20% on (E) 66,60,000
Total cost-(H) (E+F+G) 4,92,84,000

• Input tax credit available to set off against output IGST is INR 93,24,000
• Compensation cess paid cannot be set off gainst output tax liability of IGST

Question 9
Determine the safeguard duty payable by X Ltd., under section 8B of the Customs Tariff Act, 1975 from the
following:
X Ltd imported Sodium Nitrite from a developing country from 26TH February, 2015 to 25th February, 2016 (both
days inclusive) Rs 50 crores.
Total imports of Sodium Nitrite (including developing country) is Rs 2,500 crores.
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Note: Safeguard duty is @ 30%.

Whether your answer is different in case of import of Sodium Nitrite from a developing country Rs 80 crores?
Answer:
Since, import from a developing country does not exceeds 3% (i.e. 2% only) of total import of that article in to
India, Safeguard duty is Nil.
In the given case safeguard duty will be payable by X Ltd.
Safeguard duty = Rs 24 crores (i.e. Rs 80 crores x 30%)
Since, import from a developing country exceeds 3% (i.e. 3.2%)

Question 10:
Determine the safeguard duty payable by X Ltd., Y Ltd., Z Ltd. and A Ltd. under section 8B of the Customs Tariff
Act, 1975 from the following:
Import of Sodium Nitrite from developing and developed countries from 26th February, 2015 to 25th February, 2016
(both days inclusive) are as follows:

Importers Country of Import Rs Scrores

X Ltd. Developing country 70
Y Ltd. Developing country 72
Z Ltd. Developing country 52
A Ltd. Developing country 50
Others Developed country 2,256
Total 2,500

Note: Safeguard duty 30%

Answer:
Importer Country of import Rs in crores % of imports
X Ltd. Developing country 70 2.8%
Y Ltd. Developing country 72 2.88%
Z Ltd. Developing country 52 2.08%
A Ltd. Developing country 50 2%
Others Developed country 2,256
Total 2,500 9.76%
Safeguard duty is as follows:
XLtd 21 70 x 30%
YLtd 21.60 72 x 30%
ZLtd 15.60 52 x 30%
A Ltd 15 50 x 30%

Articles originating from more than one developing countries and imports from each developing country is less than
3%, safeguard duty can be imposed if imports from all all such developing countries taken together exceeds 9% of total
imports of that article in India.

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Question 11
Determine the safeguard duty payable by X Ltd., Y Ltd., and Z Ltd., and A Ltd. under section 8B of the Customs
Tariff Act, 1975 from the following:
Import of Sodium Nitrite from developing and developed coutnries from 26th February, 2015 to 25th February,
2016 (both days inclusive) are as follows:
Importers Country of Import Rs Scrores
X Ltd. Developing country 70
Y Ltd. Developing country 82
Z Ltd. Developing country 52
A Ltd. Developing country 50
Others Developed country 2,246
Total 2,500
Note: Safeguard duty 30%

Answer:
Importer Country of import Rs in % of imports
crores
X Ltd. Developing country 70 2.8%
Y Ltd. Developing country 82 3.28%
Z Ltd. Developing country 52 2.08%
A Ltd. Developing country 50 2%
Others Developed country 2,246
Total 2,500 6.88% 3.28%

Safeguard duty is as follows:

XLtd Nil 70 x
30%
YLtd 24.60 82 x
30%
ZLtd Nil 52 x
30%
A Ltd Nil 50 x
30%
Articles originating from more than one developing countries (each with less than 3% import share), then the aggregate
of imports from all such countries taken together does not exceed 9% (i.e. in the given case 6.88%) of the total imports of
that article into India. Therefore, Safeguard duty is not applicable to X Ltd., Z Ltd., and A Ltd.

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Question:12
A commodity is imported into India from a country covered by a notification issued by the Central Government
under section 9A of the Customs Tariff Act, 1975. Following particulars are made available:
CIF value of the consignment: US$25,000
Quantity imported: 500 kgs.
Exchange rate applicable: Rs 60 = US$1 Basic
customs duty: 12%

Social Welfare Surcharge @ 10%

As per the notification, the anti-dumping duty will be equal to the difference between the cost of commodity
calculated @ US$70 per kg. and the landed value of the commodity as imported.
Appraise the liability on account of normal duties, cess and the anti-dumping duty.
Particulars US $
CIF value 25,000
Solution:
Value in Rs
Assessable value (i.e. 25,000 × Rs 60) 15,00,000
Add: Customs duty 13.2% on Assessable value 1,98,000
Landed value (or value of imported goods) 16,98,000
Anti-dumping duty (21,00,000 – 16,98,000) 4,02,000
Market value of imported goods (500 kgs x Rs 60 x US $70) = 21,00,000
Open Market Value 21,00,000
Add: IGST @12% on Rs 21,00,000 2,52,000
Total 23,52,000
Total customs duty payable is Rs 8,52,000 (i.e.1,98,000+ 4,02,000+ 2,52,000)

Note: In cases where imported goods are liable to Anti - Dumping Duty or Safeguard Duty, calculation of
Anti Dumping Duty or Safeguard duty would be as per the respective notification issued for levy of such
duty. It is also clarified that value for calculation of IGST as well as Compensation Cess shall also include
Anti - Dumping Duty amount and Safeguard duty amount

Question 13
Mr. X an importer imported certain goods CIF value was US $ 20,000 and quantity 1,000 Kgs. Exchange rate was
1 US $ = Rs 50 on date of presentation of Bill of Entry. Customs Duty rates are — (i) Basic Customs Duty 12%
(ii) SWS @ 10% There is no excise duty payable on these goods if manufactured in India. As per Notification
issued by the Government of India, anti-dumping duty has been imposed on these goods. The anti-dumping duty will
be equal to difference between amount calculated @ US $ 30 per kg and ‘landed value’ of goods. Compute Cus-
toms Duty liability and anti-dumping liability.
Solution:

Part I Rs
Total CIF Price/Assessable Value US $ 20,000 x Rs 50 = 10, 00,000
Basic duty @ 12% = 1,20,000
Sub total = 12,000

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Add: SWS 10% on 1,20,000 = 2,400

Value of imported goods = 11,32,000
Total Customs Duty payable is Rs 1,32,000.

Part II Rate as per Anti Dumping Notification is Rs 15,00,000 [US $ 30 per kg x 1,000 Kgs x Rs 50] Part
III
Computation of anti-dumping duty
Rate as per Anti Dumping Notification = Rs 15,00,000

Less: Value of imported goods as computed above = Rs (11,32,000)

Anti Dumping Duty payable = Rs 3,68,000

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 Valuation

CUSTOMS - Valuation
1.
ABC Technologies Ltd., has imported certain equipment from Japan at an FOB cost of 2,00,000 Yen
(Japanese).
The other expenses incurred by M/s. ABC Technologies in this connection are as follows:
i. Freight from Japan to India Port 20,000 Yen
ii. Insurance paid to Insurer in India Rs10,000
iii. Designing charges paid to Consultancy firm in Japan 30,000 Yen
iv. M/s. ABC Technologies had expended Rs1,00,000 in India for certain development activities with
respect to the imported equipment
v. ABC Technologies had incurred road transport cost from Mumbai port to their factory in Karnataka
Rs30,000
vi. The Central Board of Indirect Taxes and Customs had notified for purpose of section 14(3)* of the
Customs Act, 1962 exchange rate of 1 Yen = Rs0.3948. The interbank rate was 1 Yen = Rs0.40
vii. M/s ABC Technologies had effected payment to the Bank based on exchange rate 1 Yen =
Rs0.4150
viii. The commission payable to the agent in India was 5% of FOB cost of the equipment in Indian
Rupees
Arrive at the assessable value for purposes of customs duty under the Customs Act, 1962 providing brief notes
wherever required with appropriate assumptions.

Solution:
Statement showing computation of Assessable Value for the imported goods

Amount
ParticulaParticulars Remarks Working Note
(Yen)
Free on Board (FOB) 2,00,000
Designing charges 30,000 Addable into the assessable value
Development charges — Not addable into the assess-able
value, because these are post
shipment expenses
Road transport charges — Not addable into the assess-able
value, because these are post
shipment expenses
Commission 10,000 Addable into the assessable value 2,00,000 × 5% = 10,000
FOB value of the Customs 2,40,000
Amount in
(Rs)
Total 94,752 Exchange rate of the Central 2,40,000 Yen × 0.3948
Board of Indirect Taxes and
Customs (CBI&C) is relevant
Insurance 10,000 Addable into the assessable value
Freight 7,896 Addable into the assessable value 20,000 × 0.3948
Assessable Value (i.e. C I F 1,12,648
value)

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2.
particulars furnished by them, arrive at the assessable value for the
purpose of customs duty payable:
(i) F.O.B. cost of the machine 10,000 U.K.
Pounds
(ii) Freight (air) 3,000
U.K. Pounds
(iii) Engineering and design charges paid to a firm in U.K. 500 U.K.
Pounds
(iv) License fee relating to imported goods payable by the buyer as a condition of sale
20% of F.O.B. Cost
(v) Materials and components supplied by the buyer free of cost valued
Rs20,000
(vi) Insurance paid to the insurer in India Rs6,000
(vii) Buying commission paid by the buyer to his agent in U.K. 100 U.K. Pounds

Other Particulars:
(i) Inter-bank exchange rate as arrived by the authorized dealer: Rs72.50 per U.K.
Pound.
(ii) CBIC had notified for purpose of Section 14 of the Customs Act, 1962,
exchange rate of Rs70.25 per U.K. Pound.
Importer paid Rs5,000 towards demurrage charges for delay in clearing the machine from the Airport
Solution:
Solution:
UK Ponds
FOB value = 10,000
Add: Engineering and Design charges = 500
(paid in UK)
Add: License fee = 2,000
(20% on 10,000 UKP)
Sub-total = 12,500
Value in
(Rs)
Sub-total (12,500 UKP x Rs70.25) = 8,78,125
Add: Material supplied by the buyer freely = 20,000
FOB value as per customs = 8,98,125
Add: Air freight (8,98,125 x 20%) = 1,79,625
Or 3,000 USD × Rs70.25 = Rs2,10,750 whichever is less
Add: Insurance = 6,000
Assessable value (i.e. CIF value) = 10,83,750

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A consignment of 800 metric tonnes of edible oil of Malaysian origin was imported by a charitable
organization in India for free distribution to below poverty line citizens in a backward area under the
scheme designed by the Food and Agricultural Organization. This being a special transaction, a nominal price
of US$ 10 per metric tonne was charged for the consignment to cover the freight and insurance charges.
The Customs House found out that at or about the time of import of this gift consignment, there were
following imports of edible oil of Malaysian origin:
S. No. Quantity imported in metric tonnes Unit price in US $ (CIF)
1. 20 260
2. 100 220
3. 500 200
4. 900 175
5. 400 180
6. 780 160

The rate of exchange on the relevant date was 1 US $ = Rs 63.00 and the rate of basic customs
duty was 15% ad valorem. There is no IGST. Calculate the amount of duty leviable on import.
Solution:
Calculation of amount of

duty payable:— exchange

rate of $ 1 = Rs63
CIF Value (800 metric × 160 USD × Rs63) (i.e. Assessable = Rs80,64,0
Value) 00
15% Basic Customs duty on Rs80,64,000 = Rs12,09,60
0
Add: SWS 10% 12,09,600 = Rs1,20,960
Total custom duty payable = Rs13,30,56
0

Notes: more than one transaction value for identical goods are given, we are
supposed to take the lowest price of the quantity which is nearest to the
quantity of import.
4.
X Ltd., imported 500 units of minerals from High Seas for sale in India. Selling price exclusive of
duties and taxes. Freight from port to depot in India is Rs 10,150 and Insurance Rs 1,250.

Sale quantity Unit price Rs

400 units 100
300 units 90
150 units 100
500 units 95
250 units 105
350 units 90

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Solution:
Solution:
Total quantity Unit
Sold price
650 90
500 95
600 100
250 105

The greatest number of units sold at

a particular price is 650 units;

Therefore, the unit price in the

greatest aggregate quantity is Rs90.

(Rs)

Selling Price = 45,000 (i.e. 500 units ×

Rs90)
Less: Freight (post shipment) = (10,150)
Less: Insurance (post shipment) = (1,250)
Assessable Value = 33,600

Total Customs Duty = Rs4,435 (i.e. 33,600 × 13.20%)

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3. Baggage

1.
Mr. Gopal, an Indian entrepreneur, went to London to explore new business opportunities on 01.04.20XX. His wife
also joined him in London on 01.12.20XX. The following details are submitted by them with the Customs
authorities on their return to India on 30th April (next year).-
(a) used personal effects worth Rs95,000
(b) a music system worth Rs34,000
(c) the jewellery brought by Mr. Gopal for Rs44,000 and the jewellery brought by his wife worth Rs25,000
Determine their eligibility with regard to duty free allowance.

Duty drawback under Customs

Solution:
As per the Baggage Rules, in case of passengers other than tourists there is no customs duty on used personal
effects and general free allowance is Rs50,000 per passenger. Thus, their duty liability is nil for the personal
effects and a music system.
However, the additional duty-free allowance, that is jewellery allowance is applicable to non-tourist passenger of
Indian origin who had stayed abroad for period exceeding one year. The additional jewellery allowance is as
follows:-
Gentleman Passenger - Rs50,000 Lady Passenger - Rs1,00,000

Thus, there is no duty liability on the jewellery brought by Mr. Gopala, he had stayed abroad for period exceeding
one year. However, his wife is not eligible for this additional jewellery allowance as she had stayed abroad for a
period less than a year. Thus, she has to pay customs duty on the amount of jewellery brought by her. However, she
is eligible to avail GFA of Rs50,000.

2.
After visiting USA for a month, Mrs. and Mr. X (Indian residents aged 40 and 45 years respectively)
brought to India a laptop computer valued at Rs 80,000, used personal effects valued at Rs 90,000 and as
personal computer for Rs 52,000. What is the customs duty payable? Ignore Agriculture infrastructure and
development cess.
Solution:
As per Baggage Rules, 2016, an Indian resident arriving from any country other than Nepal, Bhutan or Myanmar is
allowed duty free clearance of-
(i) Used personal effects and travel souvenirs without any value limit.
(ii) Articles [other than certain specified articles] upto a value of Rs50,000 carried as
accompanied baggage [General duty-free baggage allowance].
Further, such general duty-free baggage allowance of a passenger cannot be pooled with the general duty free
baggage allowance of any other passenger.
One laptop computer when imported into India by a passenger of the age of 18 years or above (other than member
of crew) as baggageis exempt from whole of the customs duty [Notification No. 11/2004 Cus. dated 08.01.2004].
Accordingly, there will be no customs duty on used personal effects (worth Rs 90,000) of Mrs. and Mr. X and laptop
computer brought by them will be exempt from duty.

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Duty payable on personal computer after exhausting the duty free baggage allowance will be Rs
52,000 – Rs50,000 = Rs2,000.
Effective rate of duty for baggage =38.5% [including social welfare surcharge @ 10%] Therefore, total customs
duty = Rs770

3.
Mrs. & Mr. Kapoor visited Germany and brought following goods while returning to India after 6 days stay
abroad on 8th November 20XX.
(i) Their personal effects like clothes, etc., valued at Rs1,35,000.
(ii) A personal computer bought for Rs1,36,000.
(iii) A laptop computer bought for Rs95,000.
(iv) Two liters of liquor bought for Rs1,600.
(v) A new camera bought for Rs87,400.
(vi) Plasma T.V. for Rs1,25,000
What is the customs duty payable ?

Solution:
Solution: (Rs)
Their personal effects like clothes, etc., = exempt
A personal computer bought for = 1,36,000
A laptop computer bought for = exempt
Two liters of liquor bought for = 1,600
A new camera bought = 87,400
Total = 2,25,000
Less: General Free Allowance Rs50,000 + Rs50,000 = 1,00,000
Baggage taxable = 1,25,000
Plasma T.V. (fully taxable i.e. duty 100% of value) = 1,25,000
Total = 2,50,000

Customs Duty is Rs48,125 (i.e. 1,25,000 x 38.50%) payable by Mrs. & Mr. Kapoor GFA w.e.f. 1-4-2016 is Rs50,000 for

each individual. Therefore, total customs duty is Rs1,73,125/-

4.
Jagirdar, an IT professional and a person of Indian origin, is residing in Denmark for the last 14 months. He
wishes to bring a used microwave oven (costing approximately Rs1,24,200 and weighing 15 kg) with him during
his visit to India. He purchased the oven in Denmark 6 months back and he has been using that oven for his
personal use in his kitchen. He is not aware of Indian customs rules. Could you please provide him some advice
in this regard?

Solution:
Transfer of residence w.e.f. 1-4-2016:

A person, who is engaged in a profession abroad, or is transferring his residence to India can bring, used household
items as below:

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 Baggage

Passengers who have stayed GFA for personal household items

abroad upto Rs
3-6 months Rs60,000
6-12 months Rs1,00,000
1-2 years Rs2,00,000
Above 2 years Rs5,00,000

In the given illustration Jagirdar brings the used household articles worth Rs1,24,200 which is free of
duty. He is not liable to pay any duty.

Note:

(ii) Mr. Jagirdar can bring upto Rs2,00,000/- without payment of duty..

5.
Mr. Vijay, an Indian entrepreneur, went to London to explore new business opportunities on 01.04.2022.
His wife also joined him in London on 01.12.2022. The following details are submitted by them with the
Customs authorities on their return to India on 30.04.2023.—
(a) used personal effects worth Rs80,000
(b) a music system worth Rs35,000
(c) Jewellery brought by Mr. Vijay for Rs48,000 and Gold Bars (i.e. other than ornaments) brought
by his wife worth Rs20,000
Determine their eligibility with regard to duty free allowance.
Solution:
Statement showing customs duty in the hands of Mr. Vijay
Particulars Amount (Rs) Workings
Personal effects Nil Fully exempted from duty
Particulars Amount (Rs) Workings
Music system 35,000 Dutiable within the limit of GFA
Less: GFA -35,000 (w.e.f. 1-4-2016 GFA increased to Rs50,000)
Dutiable goods Nil
Jewellery 48,000
Less: exemption 48,000 Upto Rs50,000 is free from duty, since, he stayed outside
abroad for a period more than one year.
Dutiable goods Nil

Particulars Amount (Rs) Workings

Gold bars (other than 20,000 Fully taxable
jewellery)
Less: exemption Nil General free allowance not allowed.
Dutiable goods 20,000
Customs duty 7,700 (Rs20,000 × 38.50%)

6.

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 Baggage

Mr. Rajini an Indian Entrepreneur, went to China to explore new business opportunities on 05-04-2022.
The following details, regarding imports are submitted by him with the Customs authorities on return to
India on 20-02-2023.
(a) 2 Music systems each worth Rs23,000.
(b) Jewellery brought by Mr. Rajini worth Rs49,000 (18 Grams).
Write a brief note on his eligibility with regard to duty free baggage allowances as per the Baggage
Rules, 2016.
Solution:

Music system 23,000 × 2 = Rs46,000

Add: Jewellery = Rs49,000
Sub-total = Rs95,000
Less: GFA = Rs(50,000)
Dutiable goods = Rs45,000

Total duty payable is Rs17,325 (i.e. 45,000 × 38.5%)

Note:
Since, Mr. Rajini stay abroad does not exceeds one year, he will not be eligible for additional jewellery allowance under
the Baggage Rules, 2016.

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4. Duty Drawback
1.
An exporter exported 2,000 pairs of leather shoes @ Rs750 per pair. All industry rate of drawback in fixed on
average basis i.e. @ 11% of FOB subject to maximum of Rs80 per pair. The exporter found that the actual duty paid
on inputs was Rs1,95,000. He has approached you, as a consultant, to apply under Rule 7 of the drawback rules for
fixation of ‘special brand rate’. Advise him suitably.

Solution:
 Drawback Amount Rs1,65,000 (i.e. 2,000 × 750 × 11%) or Rs1,60,000 (i.e. Rs80 × 2,000) whichever is less.
 Therefore, duty drawback allowed is Rs1,60,000.
 All Industry duty drawback rate = @82.05% [(1,60,000/1,95,000) × 100%]
 Exporter is not eligible to apply for Special Brand rate.
 Therefore, exporter is eligible for claiming All Industry Duty Drawback.
Note: special brand rate of duty is applicable only when all industry rates do not cover 80% of the duties paid by
the exporter.

Illustration 2
ABC Ltd., who is an exporter, finds that the amount of drawback refunded to it is less than what it is entitled to, on
the basis of the rates of drawback announced by the Central Government. Briefly discuss whether ABC Ltd. can claim the
difference of drawback short refunded and procedure to be followed in this regard.

Solution:
Yes, ABC Ltd. is eligible for claiming the difference of the drawback on the basis of the amount of rate of
drawback determined by the Central Government of India for claiming the difference by filing a supplementary
claim in the prescribed form under rule 15 of the Customs Act and Central Excise Duties Drawback Rules, 1995
within a period of 3 months.

The said 3 months period further extended for a period of nine months for filing a supplementary claim under rule
15, by making an application accompanied with fees of 1% of the FOB value of exports or Rs1000/- whichever is less.
Further, the said period may be extended by six months by Commissioner of Customs/ Commissioner of Customs
and Central Excise on an application accompanied with fees of 2% of the FOB value or Rs2000/- whichever is less.

Illustration 3
Calculate the amount of duty drawback allowable under section 74 of the Customs Act, 1962 in following
cases:
(a) Salman imported a motor car for his personal use and paid Rs5,00,000 as import duty. The car is re-exported
after 6 months and 20 days.
(b) Nisha imported wearing apparel and paid Rs50,000 as import duty. As she did not like the apparel, these are re-
exported after 20 days.
(c) Super Tech Ltd. imported 10 computer systems paying customs duty of Rs50 lakh. Due to some technical
problems, the computer systems were returned to foreign supplier after 2 months without using them at all.

Solution:

(a) The amount of duty drawback is Rs4,40,000 (i.e. Rs5,00,000 @ 88%), since these goods are used in India. Duty
drawback is Rsnil, assumed that wearing apparels are re-exported after being used.

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(b) Duty drawback is Rs49,00,000 (i.e. 50,00,000 × 98%), since these good are re-exported without being used.

Illustration 4
With reference to drawback on re-export of duty paid imported goods under section 74 of the Customs Act, 1962,
answer in brief the following questions:

(i) What is the time limit for re-exportation of goods as such?

(ii) What is the rate of duty drawback if the goods are exported without use?
(iii) Is duty drawback allowed on re-export of wearing apparel without use?

Solution:
(i) As per section 74 of the Customs Act, 1962, the duty paid imported goods are required to be entered for
export within two years from the date of payment of duty on the importation.This period can be extended by
CBIC if the importer shows sufficient reason for not exporting the goods within two years.
(ii) If duty paid imported goods are exported without use, then 98% of such duty is re-paid as drawback.
(iii) Yes, duty drawback is allowed when wearing apparels are re-exported without being used.

Illustration 5
Abdul Overseas Pvt. Ltd. was erroneously refunded a sum of Rs 30,000 in excess of actual drawback on 16-6- 2017.
A demand for recovery of the same was issued by the Department on 24.08.2017. Abdul Overseas Private Limited
returned the erroneous refund to the Department on 16-10-2017. You are required to calculate the amount of
interest chargeable from Abdul Overseas Pvt. Ltd. Provide brief reasons for your answer.

Solution:
Interest = Rs1,516/- (30,000 × 15% × 123/365)
Computation of duty drawback:

Illustration 6
‘A’ exported a consignment under drawback claim consisting of the following items—

Chapter Heading FOB

Particulars Drawback rate
value Rs
200 pieces of pressure stores mainly made of 74.04 16,000 4% of FOB
beans @ Rs80/piece
200 Kgs. Brass utensils @ Rs200 per Kg. 200 Kg. 74.13 40,000 Rs24/Kg.

Artware of brass @ Rs300 per Kg. 74.22 60,000 17.50% of FOB subject to a maxi
of Rs38 per Kg.
On examination in docks, weight of brass Artware was found to be 190 Kgs. and was recorded on shipping bill.
Compute the drawback on each item and total drawback admissible to the party.

Solution:
The drawback on each item and total drawback admissible to the party shall be
Drawback Amount
Particulars FOB value (Rs) Drawback rate
(Rs)

200 pcs, pressure stoves made of 16,000 4% of FOB 640

Brass

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200 Kgs. Brass utensils 40,000 Rs24 per Kg. 4,800

200 kgs. Artware of brass, whose
actual weight was 190 Kgs. only. 17.50% of FOB subject to maximum 7,220
(60,000 x 190/200) x17.5%=9975 of Rs38 per Kg.
190 kgs x Rs38 = Rs7,220 (Rs9,975 or Rs7,220 whichever is less)
Total Drawback admissible (in Rs) 12,660

Illustration 7
X Ltd has exported following goods to USA. Discuss whether any duty drawback is admissible under section 75 of the
Customs Act, 1962.

FOB Value of Exported

Product rate Market Price of goods Duty drawback
goods
A 2,50,000 1,80,000 30% of FOB
B 1,00,000 50,000 0.75% of FOB
C 8,00,000 8,50,000 3.50% of FOB
D 2,000 2,100 1.50% of FOB

Note: Imported value of product C is Rs9,50,000.

Solution:
Duty draw back amount for all the products are as follows:
Product A:
Drawback amount = 2,50,000 x 30% = Rs75,000 or Rs1,80,000 x 1/3 = Rs60,000 Allowable duty draw back does not

exceed 1/3 of the market value.

Hence, the amount of duty drawback allowed is Rs60,000
Product B:
Drawback amount allowed is Rs750 (i.e. Rs1,00,000 x 0.75%).
Since, the amount is more than Rs500 even though the rate is less than 1%.
Product C:
No duty drawback is allowed, since the value of export is less than the value of import (i.e. negative sale)

Product D
No duty drawback is allowed, since the duty drawback amount is Rs30 (which is less than Rs50).

Though rate of duty drawback is more than 1%, no duty drawback is allowed.
Illustration 8
Calculate the amount of duty drawback allowable under the Customs Act, 1962 in the following cases:
(a) Jaggi Mehta imported a car from U.K. for his personal use and paid Rs4,50,000 as import duty. However, the car
is re-exported immediately without bringing it into use.
(b) Meenakshi imported a music player from Dubai and paid Rs12,000 as import duty. She used it for four months but
re-exports the same after four months.
(c) XYZ Ltd. exported 1000 kgs of a metal of FOB value of Rs1,00,000. Rate of duty drawback on such export is
Rs60 per kg. Market price of goods is Rs40,000 (in wholesale market).

Solution:

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(a) Jaggi Mehta can claim duty drawback of Rs4,41,000 (98% of Rs4,50,000).
(b) Meenakshi can claim duty drawback of Rs10,200 (i.e. 85% of Rs12,000)
(c) XYZ Ltd. is not entitled to claim duty drawback in this case.
Since, market value of exported goods is less than the value of Duty Drawback

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 Miscellaneous

CUSTOMS - MISCELLANEOUS
1.
Distinguish between Pilfered goods and Lost/destroyed goods ?
Solution:

Pilfered Goods Lost/Destroyed Goods

1. Covered by section 13 Covered by section 23(1)
2. No duty payable on such goods Duty paid on such goods to beremitted
3. Department gets the compensation from custodian No such compensation
[Section 45(3)]
4. Petty theft by human being Loss/Destruction by fire, flood etc(Act of
God)
5. Restoration possible Restoration is not possible
6. Occurrence is after unloading and before Customs Occurrence may be at any time before clearance
clearance order for home consumption or for home consumption
warehousing
7. Occurrence in warehouse notrecognized Occurance in Warehouse is recognized
8. Duty need not be calculated Duty should be calculated for
determining the remission amount

9. No need to prove pilferage. Itis quite obvious Should be proved and remissionsought for

2.
Supreme Car Decors imported car music systems and GPS devices from Germany. The importer submits the following issues
for your consideration:
(a) 7 music systems were pilfered before unloading and before the proper officer has made an order for clearance
for home consumption.
(b) 10 GPS devices were pilfered after unloading and before the proper officer has made an order for clearance for
home consumption.
(c) 30 music systems were damaged after unloading and examination for assessment by the customs authorities but
before actual home clearance.
Supreme Car Decors seeks your expert advice with reason regarding the impact on customs duty on the said goods. (5 Marks)

Solution:
i. Duty is not leviable on the music systems pilfered before unloading since import duty is leviable only when import is completed;
import gets completed only when goods become part of the mass of goods within the country.However, it is also possible to
take a view that duty is payable on the music systems pilfered before unloading since an importer is not liable to pay duty leviable on
pilfered imported goods only if such goods are pilfered after unloading and before proper officer makes order for clearance for
home consumption.
ii. Supreme Car Decors is not liable to pay duty leviable on GPS devices pilfered since an importer is not liable to pay duty leviable on
any imported goods pilfered after unloading and before proper officer makes order for clearance for home consumption.

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iii. Abatement of duty on damaged imported goods is available if such imported goods are damaged accidentally after unloadin but
before examination for assessment by the customs authorities. In the given case, since imported music systems 4 are damaged
after examination for assessment by the customs authorities, abatement of duty on such goods is not available.

Question 3
Vipul imported certain goods in December, 2021. An ‘Thrice the duty bond’ bill of entry was presented on 14th
December, 2021 and goods were cleared from the port for warehousing. Assessable value on that date was US
$1,00,000. The order permitting the deposit of goods in warehouse for four months was issued on 21st
December, 2021. Vipul deposited the goods in warehouse on the same day but did not clear the imported
goods even after the warehousing period got over on 20th April, 2022 A notice was issued under section 72 of
the Customs Act, 1962, demanding duty, interest and other charges. Vipul cleared the goods on 14th May 2022.
Compute the amount of duty and interest payable by Vipul while removing the goods on the basis of following
information:
Rate of exchange per US$ (as notified by Central Board of Excise & Customs) Rs 65.20
Basic Customs Duty 15%

Solution:
Assessable vale Rs 65,20,000/-
Customs duty is Rs 7,17,200/- (USD 1,00,000 x Rs 65.20) x 11% = Rs 7,17,200 Interest payable is Rs
16,211/- (7,17,200 x 15/100) x 55 days/365 = Rs 16,211/-
No. of days delay:

Month No. of days delay

From 21st Dec 2021 to 31st Dec 2021 11
Jan 2022 31
Feb 2022 28
Mar 2022 31
April 2022 30
May 2022 14
Total 145
Less: No. of days for which no interest -90
No. of delay for interest 55

Import & Export Procedures

Question 4

A bill of entry was presented on 4th August, 20XX. The vessel carrying goods arrived on 11th August, 20XX.
Entry inwards was granted on 13th August, 20XX, and the bill of entry was assessed on that date and was also
returned to the importer for payment of duty on that date. The duty amounting to Rs 5,00,000 was paid by the
importer on 22nd August, 20XX.
Calculate the amount of interest payable under section 47(2) of the Customs Act, 1962, given that there were four
holidays during the period from 14th August to 22nd August, 20XX.

Answer:
Interest Rate = 15% p.a.
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No. of days delay = from 13th Aug 20XX to 22nd Aug 20XX = 10 days
Less: No. of holidays = – 4 days
Net No. of days delay for interest = 6 days
Interest = Rs 1,233
Rs 5,00,000 x 15/100 x 6/365 = Rs 1,232.88

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