Generally, the duty structure in India comprises of various components: basic customs duty, additional duties (countervailing duty and special additional duty) and education cesses, calculated on the basis of the tariff rate as specified for the Harmonized System Code (‘HS Code’) of classification except for few products which are subject to duties based on tariff value. In addition, there are various other duties such as the National Calamity Contingent Duty, Anti-Dumping duty, Safeguard duty and other cesses, applicable on selected imported products.
The Government intermittently issues notifications providing for duty concessions or exemptions on specified goods, subject to fulfilment of conditions.
To facilitate faster clearance, importers and exporters may self-assess the amount of customs duty payable on import or export. To facilitate the practice, an Electronic Data Interchange (‘EDI’) system is available at selected ports and airports, through which the document submission and assessment process can be completed online. In addition, benefits such as reduced examination and inspection, acceptance of pre-arrival import and export declarations and quicker approval for new warehouses are available to importers by registering under the Authorised Economic Operator (‘AEO’) programme.
The India customs landscape continues to develop to complement international trade. In India, the Foreign Trade Policy (‘FTP’) regulates trade by prescribing items which are restricted and prohibited from being imported into India. Further, Special Economic Zones/Free Trade Warehousing Zones are designated area which are treated as outside the customs territory and provide several fiscal and tax incentives to boost export.
There is an increasing volume of litigation on a range of customs and indirect tax matters due to the aggressive approach of the authorities. In order to identify and adhere to the various customs and indirect tax compliance processes, it is imperative that the companies understand the precise implications of imports and exports, the various customs schemes available and their corresponding compliance requirements. This helps ensure tax optimisation, timely compliance and avoidance of litigation and severe penalties, several of which now have been declared as cognizable and non-bailable.