In order to achieve the policy directives of the government,
the law provides for granting exemptions or concessions from
customs duties. These exemptions and concessions can be granted
in a number of ways. Some of these exemptions are briefly
discussed below:-
Preferential Rates : Preferential rates of customs duty
have been made applicable in respect of imports from certain
preferential countries such as Mauritius, Seychelles and
Tonga provided certain conditions are satisfied. The goods
in question must actually be manufactured or produced in
such preferential areas. Rules have been framed in order
to determine whether the goods have been manufactured or
produced in such areas. Determination of origin of the goods
is very essential in order to avail of the benefits of such
concessional rates of duty.
Concessional Rates under Trade Agreement : The Central Government
may enter into trade agreements with the governments of foreign
countries for concessional rates of customs duties. Rules
have been framed in order to determine whether the goods
have been manufactured or produced in such countries. Determination
of origin of the goods is very essential in order to avail
of the benefits of such concessional
rates of duty.
Remission on lost or pilfered goods : In case goods are
lost or destroyed at any time before clearance for home consumption,
duty payable may be remitted. If imported goods are pilfered
after unloading but before the order for clearance is passed,
no duty is payable on the goods unless the pilfered goods
are restored to the
importer.
Remission on relinquished goods : If the importer decides
to relinquish or abandon the goods, he shall not be liable
to pay any duty provided the relinquishment is done before
any order for clearance of goods for home consumption or
before order permitting deposits of goods for warehousing
is made. No remission is allowed if the relinquishment is
done after goods are removed from the customs area for
warehousing.
Re-imported goods : If goods manufactured or produced in
India are exported and after some period of time, they are
re-imported into India, full customs duty is payable on their
import as if they were not re-imports but are actual imports.
However, no duty is payable if the re-import is done within
3 years after their export from India. However, in respect
of re-imports of exports made by Free Trade Zone Units or
exports made under bond, such exemption from duty is not
available. This period of 3 years may be extended by the
Central Government in public interest. Any export benefit
or incentive claimed by the exporter on export will be revoked
on re-import and will
become payable as customs duty.
Abatement of duty on damaged goods : In case goods are damaged
in any of the following circumstances, a reduction or abatement
from duty will be allowed in proportion to the value of damaged
goods to value of
goods before damage or deterioration :-
- Damage before or during unloading in India.
- Damage by accident after unloading but before examination
of goods for assessment of goods by the concerned officer
provided the accident is not due to willful act, negligence
or default of the
exporter.
- Damage by accident in a warehouse before clearance of
goods provided that the accident is not due to willful
act or negligence or default of
importer.
Exemption by Notification : The Central Government may notify
by publication in the Official Gazette certain exemptions
and concessions. Such exemptions or concessions may be conditional
or absolute.
Exemption of imports for promotion of exports : In order
to make Indian exports competitive in the global markets,
it is necessary that the exporters obtain raw material and
other components at competitive prices. Therefore, the Central
Government has come out with several schemes whereby the
exporters are not burdened by customs and excise duties on
the raw material and other inputs which they use for manufacturing
goods to be exported. Some of the schemes are briefly discussed
below :-
Imports in Free Trade Zones Several Free Trade Zones have
been established in India at various places such as Kandla,
Noida, Cochin and SantaCruz in Mumbai. No excise duties are
payable on goods manufactured in these free trade zones provided
the goods are exported. Similarly, no customs duties are
payable on imported raw material and components used in the
manufacture
of goods exported.
100% Export Oriented Units (EOU) can import raw materials
without payment of any customs duty provided they export
their products. If they sell their product in India, duty
equal to excise duty if the products were manufactured by
another person in India or 50% of custom duty, whichever
is higher becomes
payable.
Advance Licence / Duty Exemption Entitlement Scheme (DEEC)
: Under this scheme, raw material and other components can
be imported without payment of customs duty for use in goods
to be exported against advance licence. Such licence may
either be quantity based (Qbal) or value based (Vabal). i.e
upto the quantity or value specified in the licence, duty
free
imports of specified materials can be made.
Advance Customs Clearance Permit : Under this scheme, the
foreign buyer may send raw material, components, packing
materials, pattern, jigs, tools, mouse, computer software
etc without payment of customs duty in India. The Indian
manufacturer can use the material sent for manufacturing
his products as required by the foreign buyers on job work
basis and export the final products without payment of any
duty.
Project Imports : This scheme is applicable for making imports
of several items falling under different classifications
for the purpose of setting up a single project. since in
a project, several different items are required, each of
which is importable at different rates of customs duties,
it becomes very complicated to make assessment for such project
imports. Therefore one consolidated rate of customs duty
has been made applicable for all items imported under a project
irrespective of the nature of the goods and their customs
classification.
The items eligible for project imports are specified in
heading 98.01 of the Customs Tariffs Act, 1975. These include
all items of machinery, components or raw materials for initial
setting up of a unit or substantial expansion, spare parts
within prescribed limits, etc. This scheme has been made
applicable to Industrial Plants, Irrigation Projects, Power
Projects, Mining Projects, Projects for Oil or Mineral Exploration
and other projects as may be notified by the Central
Government.
