Customs

It was an ancient ‘Custom’ that whenever a trader entered into a State with his merchandise, he had to make a suiIt was an ancient ‘Custom’ that whenever a trader entered into a State with his merchandise, he had to make a suitable offering to the King of that State. In course of time, this ‘Custom’ was incorporated in Statute Books as ‘Customs Duty’. All the modern States collects ‘Customs Duty’ on goods imported into that State. Sometimes ‘Customs Duty’ is also imposed on goods Exported out of that country. Customs Duty forms a significant source of revenue to the State Exchequer. In addition, it also serves as a tool to protect the domestic Industry.
In India, the Customs Law has been simplified to a great extent in the recent years. The rates of Customs Duty has also seen a significant downward trend. Nevertheless, complexities exist in several areas like Classification, Valuation, applicability of exemption notification, project imports and incentive for specific sectors.
Customs Classification
Customs Duty is imposed at the rates specified in Schedules to Customs Tariff. These schedules are based on the harmonized system of Nomenclature (HSN). Differential rates are applicable for different Tariff Entries. The Exemption Notifications are also based on Classification. Therefore, correct classification is a pre-condition for hassle- free compliances. In- depth Knowledge of all merchandise is essential for correct classification of goods. Intricate classification disputes are resolved in India by tax tribunals, High Courts and the Supreme Court of India.
Customs Valuation
Today, most of the multinationals have their presence in India. It may be in the form of subsidiaries or Joint Ventures. Indian Companies are also acquiring trans-national character. Valuation of the transactions between such Associate Enterprise has always remained a contentious issue, not only in Customs but also in Income Tax. Royalties, Licensing and right to use are other issues that have attracted attention of customs authorities. Such differences between the Tax Administration and the business communities require a skilful and capable handing with thorough knowledge of subject.
Exemptions
Numerous Exemptions are provided in Customs Law. These Exemptions are not only based upon the classification, but also on End Use of the goods, imports by Tax heavens like SEZ, EOU, STPI etc. These exemptions are also subject to fulfillment of various conditions. Thorough understanding of not only the Customs law but also of the Business Realities is must for apt realization of these incentives.
table offering to the King of that State.  In course of time, this ‘Custom’ was incorporated in Statute Books as ‘Customs Duty’.  All the modern States collects ‘Customs Duty’ on goods imported into that State.  Sometimes ‘Customs Duty’ is also imposed on goods Exported out of that country.  Customs Duty forms a significant source of revenue to the State Exchequer.  In addition, it also serves as a tool to protect the domestic Industry.

In India, the Customs Law has been simplified to a great extent in the recent years.  The rates of Customs Duty has also seen a significant downward trend.   Nevertheless, complexities exist in  several areas like Classification, Valuation, applicability of exemption notification, project imports and incentive for specific sectors.

Customs Classification

Customs Duty is imposed at the rates specified in Schedules to Customs Tariff.  These schedules are based on  the harmonized system of Nomenclature (HSN). Differential rates are applicable for different Tariff Entries.  The Exemption Notifications are also based on Classification. Therefore, correct classification  is a pre-condition for hassle- free compliances. In- depth Knowledge of all merchandise  is essential for correct classification of goods. Intricate classification disputes are resolved in India by tax tribunals, High Courts and the Supreme Court of India.

Customs Valuation 

Today, most of the multinationals have their presence in India.  It may be in the form of subsidiaries or Joint Ventures.  Indian Companies are also acquiring trans-national character.  Valuation of the transactions between such Associate Enterprise has always remained a contentious issue, not only in Customs but also in Income Tax.  Royalties, Licensing and right to use are other issues that have attracted attention of customs authorities. Such differences between the Tax Administration and the business communities require a skilful and capable handing with thorough knowledge of subject.

Exemptions

Numerous Exemptions are provided in Customs Law.  These Exemptions are not only based upon the classification, but also on End Use of the goods, imports by Tax heavens like SEZ, EOU, STPI etc.  These exemptions are also subject to fulfillment of various conditions.  Thorough understanding of not only the Customs law but also of the Business Realities is must for apt realization of these incentives.