Customs in India, like in other countries are responsible to clear the imported or export goods after proper checking whether they are importable/exportable under various rules made by different ministries for different products as per licensing/approvals required and for collection of duties. Further, they implement various concessions, exemptions that are given to a certain class of products, depending upon their end-use, source country or under certain schemes of DGFT.
Customs looks at the valuation of the goods while importing and exporting because most of the import duties and export incentives are based on the value of the goods. Further, it is important from the perspective of proper foreign exchange outflow or inflow. Valuation of the goods is done under Section 14 of the Customs Act 1962, and as per Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 & Customs Valuation (Determination of Value of Export Goods) Rules 2007. Customs assess the goods and their value presented by the importer. Upon assessment the goods are allowed for clearance upon payment of duty.
Primarily the declared transacted value is accepted as value of the goods (except in specific cases). However the customs may not accept the declared value based on various reasons such as :-
Related party transactions
Significantly higher value of comparable identical/similar goods imported at or about the same time
Abnormal / specific and special discounts.
The misdeclaration/ non-declaration of specified parameters
Special Valuation Branch of the customs deals with cases involving related party transactions and follows a procedure as laid down in the circulars issued by CBEC from time to time. The procedure involves investigation spread over a period of time and requires the importer to reply to a set of questionnaire and also maintain documentation and furnish the information as and when required. After the investigation, the customs may accept or reject the value. On rejection, the value is re-determined based on the sequential methodology (identical/similar valuation, deductive valuation, computed valuation, residual valuation). At times such a re-determination may involve the imposition of fine and penalty depending on the reasons of rejection of the value.
AEO (Authorised Economic Operation) status is a certified standard authorisation issued by customs administrations in the European Union (EU). It certifies that a business has met certain standards in relation to safety, security, manage commercial records and compliance with customs rules.
There are multiple tiers of certification in the AEO Programme eg:
• AEO T1 – Verified on the basis of document submission only
• AEO T2 – In addition to document verification, onsite verification is also done
• AEO T3 – For AEO T2 holders who have enjoyed the status for 2 years only on the basis of document verification and for AEO T2 holders who has not enjoyed the status continuously or has introduced major changes in business, the applicant is subjected to physical verification
For logistics providers, custodians or terminal operators, customs brokers and warehouse operators there is only one tier:
AEO LO – In addition to document verification, onsite verification is done
Registered Export System (REX), is a new system of certification of origin of goods introduced by European Union (EU) for the purpose of their preferential trade arrangements with the developing countries. This will help EU to unilaterally grants tariff preferences to the developing countries.
This system will replace the existing system of certification of GSP certificates of origin Forms A by a new system of self-certification of origin of goods by the exporters. ….read more
Re-Exports and Re-Imports
Capital goods, equipment, components, parts and accessories, whether imported or indigenous, may be sent abroad for repairs, testing, quality improvement or up-gradation or standardization of technology and re-imported without a license/certificate/permission
Re-imports of goods for reasons of being defective or rejected etc. can be done wherein all the benefits that had been claimed are required to be reversed.
Export of Imported Goods :In the same or substantially the same form may be made without a license / certificate / permission provided that the item to be imported or exported is not mentioned as restricted for import or export in the ITC (HS). Goods, including those mentioned as restricted item for import (except prohibited items) may be imported under Customs Bond for export in freely convertible currency without a license / certificate / permission provided that the item is freely exportable without any conditionality / requirement of license / permission as may be required under ITC (HS) Schedule II. If the goods have to be exported after having been paid duty, for reasons of being defective or unusable etc, they can be exported under drawback.
Import on Export basis :New or second hand capital goods, equipment, components, parts and accessories, containers meant for packing of goods for exports, jigs, fixtures, dies and moulds may be imported for export without a license / certificate / permission upon payment of duty. The drawback of duties paid at the time of import is available depending upon the time of utilisation in the country. Alternatively, imports can be done on the execution of Legal Undertaking / Bank Guarantee and paying the applicable duty at the time of re-export.