Contents

Particulars Pg No.
Chapter 2 - Types of Duty 1
Answers 8
Chapter 3 - Classification of Imported & Exported Goods 19
Answers 23
Chapter 5 - Importation & Exportation of Goods 27
Answers 40
Chapter 6 - Warehousing 60
Answers 62
Chapter 7 - Refund 65
Answers 69
Chapter 8 - Foreign Trade Policy 75
Answers 77
 CA Final May/Nov 24

Chapter 2 – Types of Duty

Multiple Choice Questions

1. Anti-dumping duty is calculated as follows:

(a) Higher of margin of dumping or injury margin
(b) Lower of margin of dumping or injury margin
(c) Higher of export price or normal value
(d) Lower of export price or normal value (1 Mark Sep 22)

2. Social welfare surcharge is payable on-

Basic customs duty
IGST
Anti-dumping duty
GST compensation cess
Choose the most appropriate option.
(a) Only (i)
(b) (i) + (ii) + (iii)
(c) (i) + (ii) + (iv)
(d) (i) + (iii) (1 Mark April ’23)

3. Safeguard duty cannot be imposed if:

(a) the article on which it is proposed to be imposed originates
from a developed country provided its share of imports is not
more than 3% of total imports of that article in India.
(b) the article on which it is proposed to be imposed originates
from a developing country provided its share of imports is not
more than 5% of total imports of that article in India.
(c) the article on which it is proposed to be imposed originates
from more than one developing country and its aggregate share
of imports from developing countries each with less than 3%
share taken together does not exceed 9% of total imports of
that article into India.
(d) the article is imported by a person in special category State.
(May 23)

4. Countervailing duty under section 9 of the Customs Tariff Act, 1975

shall not be levied unless it is determined that the subsidy provided
by the exporting country on manufacture of an article:
(i) relates to export performance.
(ii) relates to use of domestic goods over imported goods
(iii) is conferred on all persons engaged in the manufacture of said
article.

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 CA Final May/Nov 24

Choose the most appropriate option.

(a) (i), (ii) or (iii)

(b) Only (iii)
(c) (ii) or (iii)
(d) (i) or (ii) (Nov 23)

Theory

5. With reference to the Customs Tariff Act, 1975, discuss the validity of
the imposition of customs duties in the following cases:- (MTP JULY
2021)
(a) Both countervailing duty and anti-dumping duty have been
imposed on an article to compensate for the same situation of
dumping.
(b) Countervailing duty has been levied on an article for the reason
that the same is exempt from duty borne by a like article when
meant for consumption in the country of origin.
(c) Definitive anti-dumping duty has been levied on articles
imported from a member country of World Trade Organization
as a determination has been made in the prescribed manner
that import of such article into India threatens material injury
to the indigenous industry.

6. With regard to the powers of the Customs officers to draw samples

under section 144 of the Customs Act, 1962, indicate
I. The purposes for which samples can be drawn;
II. When can the samples be drawn;
III. The provisions for disposal of the samples after the purpose is
over.

7. With reference to section 9A(1A) of the Customs Tariff Act, 1975,

mention the ways that constitute circumvention of antidumping duty
imposed on an article which may warrant action by the Central
Government. (RTP NOV 2019)

8. What will be the dates of commencement of the definitive anti-

dumping duty in the following cases under section 9A of the Customs
Tariff Act, 1975 and the rules made thereunder:
(i) where no provisional duty is imposed;
(ii) where provisional duty is imposed;
(iii) where anti-dumping duty is imposed retrospectively from a
date prior to the date of imposition of provisional duty. (5
Marks April 22)

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Practical Theory

9. Chaintop Industries has challenged the imposition of anti-dumping

duty retrospectively on the grounds that it is unconstitutional.
Explain whether it would succeed in its contention. (MTP JULY 2021)
(MTP MAY 2020)

10. During the year 2020, the customs authorities have noticed that there
is an increased quantity of Product XYZ being imported into the
country. Determine whether the Central Government should consider
levying safeguard duty or anti-dumping duty with appropriate
reasons. Also enumerate any exemptions/reliefs available from such
duty. (PAST EXAM NOV 2019)

11. Radhey Shyam Industries has challenged the imposition of anti-

dumping duty retrospectively on the grounds that it is
unconstitutional. Explain whether it would succeed in its contention.
(5 Marks March 22, Apr’21, May’20)

12. Royal Park Limited has imported Product ‘A’ for sale in India from
Country Alpha, which are liable for anti-dumping duty. You are
provided with the following details.
(i) Country Alpha does not sell Product ‘A’ in its domestic market.
However, it exports the same Product ‘A’ at USD 200 per piece to
another third country.
(ii) The Product ‘A’ is sold in domestic industry @ USD 175 per piece.
(iii) Royal Park Limited has imported Product ‘A’ at USD 100 per
piece.
(iv) Landed value of Product ‘A’ is USD 125 per piece.

Compute the anti-dumping duty payable by Royal Park Limited for

1,000 pieces of Product ‘A’ it has imported during the year assuming
conversion rate @ ₹ 75 per USD. (5 Marks March ‘23)

13. With reference to the Customs Act, 1962, decide the validity of the
following independent cases with proper legal provisions:
(i) Apex Rubber Limited is a 100% EOU located in a Special
Economic Zone. It imported certain items from China for its
production process. Customs officer proposed to impose anti-
dumping duty on such imports. The importer contends that no
anti-dumping duty can be imposed on imports by a 100% EOU
under any circumstances.
(ii) Customs Department proposed to impose anti-dumping duty
retrospectively in respect of certain items. Importer's
association claimed that anti-dumping duty cannot be levied

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 CA Final May/Nov 24

with retrospective effect under any circumstances. (5 Marks

Dec ‘21)

14. BCG Ltd. imported goods from Japan and intends to avail the benefit
of an exemption notification issued under section 25(1) of the
Customs Act, 1962 with regard to said goods. However, since it does
not have a manufacturing facility at all, it needs to send the goods so
imported for job work to a job worker. Its accountant advised it that
as per the Customs (Import of Goods at Concessional Rate of Duty)
Rules, 2017, BCG Ltd. is not permitted to send such goods for job
work. You are required to advise BCG Ltd. on the said issue
elaborating the relevant legal provisions under the customs law.
(Nov’22)

Number Based Questions

15. Determine the total duties payable under Customs Act if Mr. Rao
imported rubber from Malaysia at landed price (exclusive of duties) of
Rs.25 lakh. It has been notified by the Central Government that share
of imports of rubber from the developing country against total
imports to India exceeds 5%. Safeguard duty notified on this product
is 30%, IGST u/s 3(7) is 12% and BCD is 10%.

16. Determine the customs duty payable under the Customs Tariff Act,
1975 including the safeguard duty of 30% under section 8B of the said
Act with the following details available on hand:

Assessable value of Sodium Nitrite imported Rs.

from a developing country from 26thOctober, 2019 30,00,000
to 25th October, 2020 (both days inclusive)

Share of imports of Sodium Nitrite from the 4%

developing

country against total imports of Sodium Nitrite to

India

Basic custom duty 10%

Integrated tax 12%

Social welfare surcharge 10%

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 CA Final May/Nov 24

Note: Ignore GST compensation cess. (MTP NOV 2020) (MTP NOV 2019)

17. KTU Limited has imported certain goods for sale in India from Country
Z, which are liable for anti- dumping duty. Country Z sell the like
goods in its domestic market in the ordinary course of trade at USD
300 per piece. The imported goods are sold in domestic Indian industry
@ USD 275 per piece. KTU Limited has imported the goods at USD 180
per piece. Landed value of the imported goods is USD 190 per piece.

Compute the anti-dumping duty payable by KTU Limited for 800

pieces of these goods it has imported during the year assuming
conversion rate @ ₹ 72 per USD. ( RTP JULY 2021)

18. PCB Limited has imported printed circuit boards for sale in India from
Country X, which are liable for anti-dumping duty. You are provided
with the following details. (PAST EXAM NOV 2020)
(i) Country X does not sell these goods in its domestic market.
However, it exports the same printed circuit boards at USD 200
per piece to another third country.
(ii) The printed circuit board is sold in domestic industry @ USD 175
per piece.
(iii) PCB Limited has imported the printed circuit boards at USD 100
per piece.
(iv) Landed value of the printed circuit boards is USD 125 per piece

Compute the anti-dumping duty payable by PCB Limited for 1,000

pieces of printed circuit boards it has imported during the year
assuming conversion rate @ ₹ 75 per USD.

19. X Transport company imported Rolls Royce car for the purpose of
providing output services by way of transportation of passengers`
Following are the cost & other details-

Particu Amount (INR)

lars
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?

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 CA Final May/Nov 24

20. 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.

Note: Safeguard duty is @ 30%.

Whether your answer is different in case of import of Sodium Nitrite

from a developing country Rs. 80 crores?

21. 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%

22. 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 Customs Duty liability
and anti-dumping liability.

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 CA Final May/Nov 24

23. Determine the total duties payable under Customs Act if Mr. Bhairav
imported rubber from Malaysia at landed price (exclusive of duties) of
`25 lakh. It has been notified by the Central Government that share of
imports of rubber from the developing country against total imports
to India exceeds 5%. Safeguard duty notified on this product is 30%,
IGST u/s 3(7) is 12% and BCD is 10%. Ignore agriculture infrastructure
and development cess. (5 Marks Oct 22 & April ‘23)

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 CA Final May/Nov 24

Chapter 2 – Types of Duty (Answers)

Multiple Choice Questions

1. (b)
2. (a)
3. (c)
4. (d)

Theory

5.
(a) Not valid. As per section 9B of the Customs Tariff Act, 1975, no article
shall be subjected to both countervailing and anti-dumping duties to
compensate for the same situation of dumping or export
subsidization
(b) Not valid. As per section 9B of the Customs Tariff Act, 1975,
countervailing or anti-dumping duties shall not be levied by reasons
of exemption of such articles from duties or taxes borne by the like
articles when meant for consumption in the country of origin or
exportation or by reasons of refund of such duties or taxes.
(c) Valid. As per section 9B of the Customs Tariff Act, 1975, no definitive
countervailing duty or anti- dumping duty shall be levied on the
import into India of any article from a member country of the World
Trade Organisation or from a country with whom Government of India
has a most favored nation agreement, unless a determination has
been made in the prescribed manner that import of such article into
India causes or threatens material injury to any established industry
in India or materially retards the establishment of any industry in
India.

6. (I) The samples can be drawn for examination or testing, or for

ascertaining the value thereof, or for any other purposes of Customs
Act.
(II) The samples can be taken on the entry or clearance of any goods
or at any time while such goods are being passed through the
customs area.

(III) After the purpose for which a sample was taken is over, such
sample shall, if practicable, be restored to the owner, but if the owner
fails to take delivery of the sample within 3 months of the date on
which the sample was taken, it may be disposed of in such manner as
the Principal Commissioner of Customs or Commissioner of Customs
may direct.

7. As per section 9A(1A) of the Customs Tariff Act, 1975, following are
the ways that would constitute circumvention (avoiding levy of duty

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 CA Final May/Nov 24
Types of Duty (Answers)

by unscrupulous means) of antidumping duty imposed on an article

that may warrant action by the Central Government:
(i) altering the description or name or composition of the article
subject to such anti-dumping duty,

(ii) import of such article in an unassembled or disassembled

form,

(iii) changing the country of its origin or export, or

(iv) any other manner, whereby the anti-dumping duty so

imposed is rendered ineffective.

In such cases, investigation can be carried out by Central

Government and then anti dumping can be imposed on such
articles.

8. The Central Government has power to levy anti-dumping duty on dumped

articles in accordance with the provisions of section 9A of the Customs
Tariff Act, 1975 and the rules framed thereunder.
(i) In a case where no provisional duty is imposed, the date of
commencement of anti-dumping duty will be the date of publication
of notification, imposing anti-dumping duty under section 9A(1), in the
Official Gazette.
(ii) In a case where provisional duty is imposed under section 9A(2), the
date of commencement of anti-dumping duty will be the date of
publication of notification, imposing provisional duty under section
9A(2), in the Official Gazette.
(iii) In a case where anti-dumping duty is imposed retrospectively under
section 9A(3) from a date prior to the date of imposition of provisional
duty, the date of commencement of anti- dumping duty will be such
prior date as may be notified in the notification imposing anti -
dumping duty retrospectively, but not beyond 90 days from the date of
such notification of provisional duty.

Practical Theory

9. Section 9A(3) of the Customs Tariff Act, 1975 provides that the anti-
dumping duty can be imposed with retrospective effect provided the
Government is of the opinion that:-
a. there is a history of dumping which caused injury or that the
importer was, or should have been, aware that the exporter
practices dumping and that such dumping would cause injury,
and
b. the injury is caused by massive dumping of an article imported
in a relatively short time, which in the light of timing and
volume of the imported article dumped and other circumstances
is likely to seriously undermine the remedial effect of the anti-
dumping duty liable to be levied.

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 CA Final May/Nov 24
Types of Duty (Answers)

The duty can be levied retrospectively by issuing a notification but

not beyond 90 days from the date of notification.

Thus, Chaintop Industries would succeed in its contention only if all

of the above conditions are not satisfied.

10. In the given case, since Product XYZ is being imported into the
country in increased quantity, Central Government should consider
levying safeguard Duty and not anti-dumping duty.
Anti-dumping duty is imposed when any article is exported from any
country to India at less than its normal value, which is not the case
here.

However, safeguard duty can be imposed only when Central

Government is satisfied that such increased importation is
causing/threatening to cause serious injury to the domestic industry.

Exemptions/reliefs:

(a) Safeguard duty shall not be imposed on articles originating

from developing country if the share of imports of that article
from that country ≤ 3% of the total imports of that article into
India.

(b) Safeguard duty shall not be imposed on articles originating

from more than one developing country if the aggregate of imports
from developing countries each with less than 3% import share
taken together

≤ 9% of the total imports of that article into India.

(c) Safeguard duty shall not be applicable on articles imported

by a 100% EOU/ SEZ unit unless specifically made applicable;

(d) Safeguard duty shall not be applicable on articles imported

by a 100% EOU/ SEZ unit unless the article imported is either
cleared as such/ used in the manufacture of any goods that are
cleared, into DTA.

(e) Central Government may exempt notified quantity of any

article, when imported from any country into India, from
whole/part of the safeguard duty.

11. Section 9A(3) of the Customs Tariff Act, 1975 provides that the anti-dumping
duty can be imposed with retrospective effect provided the Government is of
the opinion that: -
(a) there is a history of dumping which caused injury or that the importer
was, or should have been, aware that the exporter practices dumping and
that such dumping would cause injury , and

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 CA Final May/Nov 24
Types of Duty (Answers)

(b) the injury is caused by massive dumping of an article imported in a

relatively short time, which in the light of timing and volume of the
imported article dumped and other circumstances is likely to seriously
undermine the remedial effect of the anti-dumping duty liable to be levied.

The duty can be levied retrospectively by issuing a notification but not

beyond 90 days from the date of notification. Thus, Radhey Shyam Industries
would succeed in its contention only if all of the above conditions are not
satisfied.

12. The quantum of anti-dumping duty is:

(i) margin of dumping or

(ii) injury margin, whichever is lower.

Margin of dumping is the difference between export price and normal value
of the imported article and injury margin is the difference between the fair
selling price [non-injurious price (NIP)] due to the domestic industry and the
landed value of the dumped imports.

In the given case, anti-dumping duty per piece is:

(i) Margin of dumping is USD 100 [USD 2001 - USD 1002] or

(ii) Injury margin is USD 50 [USD 1753 – USD 1254] whichever is lower i.e. USD
50

Anti-dumping duty for 1,000 pieces (in rupees) = USD 50 × 1,000 pieces × ₹ 75
= ₹ 37,50,000.

1 When there are no sales of the like article in the domestic market of the
exporting country, normal value is taken as the comparable representative
price of the like article when exported from the exporting country to an
appropriate third country.

2 Export price is price of the article exported from the exporting country.

3 Fair Selling Price/Non-Injurious Price is that level of price, which the

industry is, expected to have charged under normal circumstances in the
Indian market. It has been most logically assumed that the “domestic
industry” referred to in point (ii) of the question refers to the domestic
Indian market.

4 Landed value

13.
I. The contention of the importer is partially correct.

Anti-dumping duty cannot be imposed on imports made by 100% EOU.

However, following circumstances are exception to the same:

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Types of Duty (Answers)

(i) where it is specifically made applicable in such notifications or

such impositions, as the case may be; or

(ii) where such article imported is either cleared as such into the DTA
or used in the manufacture of any goods that are cleared into the DTA,
and in such cases anti- dumping duty shall be levied on that portion of
the article so cleared or so used as was leviable when it was imported
into India.

II. The claim of the importer’s association is not correct. Anti-

dumping duty can be levied with retrospective effect not beyond 90 days
from the date of such notification, if Central Government is of the
opinion that:

(a) there is a history of dumping which caused injury or that the

importer was, or should have been, aware that the exporter practices
dumping and that such dumping would cause injury, and

(b) the injury is caused by massive dumping of an article imported in a

relatively short time which is likely to seriously undermine the remedial
effect of anti- dumping duty liable to be levied owing to timing and
volume of imported article dumped and other circumstances.

14. As per rule 6A of the Customs (Import of Goods at Concessional Rate

of Duty) Rules, 2017, the importer is permitted to send the goods for
job work. The said rule stipulates that the importer shall maintain a
record of the goods sent for job work during the month and mention
the same in the prescribed monthly statement. The importer shall
send the goods to the premises of the job worker under an invoice or
wherever applicable through an e-way bill, mentioning the description
and quantity of the goods. The maximum period for which the goods
can be sent to the job worker shall be 6 months from the date of the
invoice/e-way bill.
In case the importer is not able to establish that the goods sent for
job work have been used as per the particulars mentioned under rule
4 of the said rules, the Jurisdictional Custom Officer shall take
prescribed necessary action against the importer.

The job worker shall -

(i) maintain an account of receipt of goods, manufacturing process

undertaken thereon and the waste generated, if any, during such
process;

(ii) produce the account details before the Jurisdictional Custom

Officer as and when required by the said officer; and

(iii) after completion of the job work, send the processed goods
to the importer or to another job worker as directed by the importer

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Types of Duty (Answers)

for carrying out the remaining processes, if any, under the cover of an
invoice or an e-way bill.

Number Based Questions

15. Computation of total duties payable under the Customs Act

S. No. Particulars (Rs.)

1 Landed price 25,00,000

2 Add: Basic customs duty @ 10% 2,50,000

3 Add: Safeguard duty @ 30% on Rs. 25,00,000 7,50,000

4 Add: Social welfare surcharge (SWS) @ 10 % on Rs. 25,000

2,50,000 [While calculating SWS, safeguard duty is
excluded]

5 Add: Integrated tax 4,23,000

12% of Rs. 35,25,000 (Rs. 25,00,000 + Rs. 2,50,000 + Rs.

7,50,000 + Rs.

25,000)

[Integrated tax is levied on the sum total of the

assessable value of the imported goods, customs
duties and applicable SWS]

6 Total customs duties and tax payable 14,48,000

[Rs. 2,50,000 + Rs. 7,50,000 + Rs. 25,000 + Rs. 4,23,000]

16. Computation of customs duty and integrated tax payable thereon

Particular Amount(Rs.)

Assessable value of sodium nitrite imported 30,00,000

Add: Basic custom duty @ 10% (Rs. 30,00,000 × 10%) 3,00,000

Safeguard duty @ 30% on Rs.30,00,000 [Safeguard 9,00,000

duty is imposable in the given case since share of
imports of sodium nitrite from the developing
country is more than 3% of the total imports of
sodium nitrite into India (Proviso to section

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Types of Duty (Answers)

8B(2) of the Customs Tariff Act, 1975)]

Social welfare surcharge @ 10% x Rs.3,00,000 30,000

Total 42,30,000

Integrated tax (Rs.42,30,000 × 12%) [Note] 5,07,600

Total customs duty payable 17,37,600

(Rs.3,00,000 +Rs.9,00,000+ Rs.30,000+ Rs.5,07,600)

Note: It has been clarified by DGFT vide Guidance note that value
for calculation of integrated tax shall also include safeguard duty
amount.

17. The quantum of anti-dumping duty is:

(i) margin of dumping or

(ii) injury margin

whichever is lower.

Margin of dumping is the difference between export price and normal

value of the imported article. Injury margin is the difference between
the fair selling price [non-injurious price (NIP)] due to the domestic
industry and the landed value of the dumped imports.

Export price in relation to an article, means the price of an article

exported from the exporting country or territory. KTU Limited has
imported the goods at USD 180 per piece. Thus, export price is USD
180 per piece.

Normal value in relation to an article, means comparable price, in the

ordinary course of trade, for the like article when destined for
consumption in the exporting country or territory as determined in
accordance with the rules. Since Country Z sell the like goods in its
domestic market in the ordinary course of trade at USD 300 per piece,
thus normal value in the given case is USD 300 per piece.

Fair Selling Price (FSP) [Non-Injurious Price] is that level of price,

which the industry is, expected to have charged under normal
circumstances in the Indian market during the period defined. Since
the imported goods are sold in domestic Indian Industry @ USD 275

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Types of Duty (Answers)

per piece, thus Fair selling price in the present case is USD 275 per
piece.

Landed Value is taken as the assessable value under the Customs Act
and the applicable basic customs duties except CVD, SAD and special
duties. Landed value in the given case is USD 190 per piece.

In the given case, anti-dumping duty per piece is:

(i) Margin of dumping is USD 120 [USD 300- USD 180] or

(ii) Injury margin is USD 85 [USD 275 – USD 190] whichever is lower i.e.
USD 85

Anti-dumping duty for 800 pieces (in rupees) = USD 85 x 800 pieces x ₹
72 = ₹ 48,96,000.

18. The quantum of anti-dumping duty is:

(i) margin of dumping or

(ii) injury margin, whichever is lower.

Margin of dumping is the difference between export price and normal

value of the imported article and injury margin is the difference
between the fair selling price [non-injurious price (NIP)] due to the
domestic industry and the landed value of the dumped imports.

In the given case, anti-dumping duty per piece is:

(i) Margin of dumping is USD 100 [USD 200* - USD 100**] or

(ii) Injury margin is USD 50 [USD 175*** – USD 125****]

whichever is lower i.e. USD 50

Anti-dumping duty for 1,000 pieces (in rupees) = USD 50 × 1,000 pieces
x ₹ 75 = ₹ 37,50,000

*When there are no sales of the like article in the domestic market of
the exporting country, normal value is taken as the comparable
representative price of the like article when exported from the
exporting country to an propriate third country.

**Export price is price of the article exported from the exporting

country.

***Fair Selling Price/Non-Injurious Price is that level of price, which

the industry is, expected to have charged under normal circumstances
in the Indian market. It has been most logically assumed that the
“domestic industry” referred to in point

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Types of Duty (Answers)

(ii) of the question refers to the domestic Indian market.

****Landed value

19.
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

20. 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%)

21.
Importer Country of import ₹ 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

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 CA Final May/Nov 24
Types of Duty (Answers)

countries taken together exceeds 9% of total imports of that

article in India.

22.
Part I ₹

Total CIF Price/Assessable Value US $ = 10, 00,000

20,000 x ₹ 50

Basic duty @ 12% = 1,20,000

Sub total = 12,000

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

Value of imported goods = 11,32,000

Total Customs Duty payable is ₹ 1,32,000.

Part II

Rate as per Anti Dumping Notification is ₹ 15,00,000

[US $ 30 per kg x 1,000 Kgs x ₹ 50]

Part III

Computation of anti-dumping duty

Rate as per Anti Dumping Notification = ₹ 15,00,000 Less:

Value of imported goods as computed above = ₹ (11,32,000)
Anti Dumping Duty payable = ₹ 3,68,000

23. Computation of total duties payable under the Customs Act

S. Particulars (₹)
No.
1 Landed price 25,00,000
2 Add: Basic customs duty @ 10% 2,50,000
3 Add: Safeguard duty @ 30% on ₹ 25,00,000 7,50,000
4 Add: Social welfare surcharge (SWS) @ 10 % on 25,000
₹ 2,50,000 [While calculating SWS, safeguard
5 Add: Integrated tax 4,23,000
12% of ₹ 35,25,000 (₹ 25,00,000 + ₹ 2,50,000 + ₹
7,50,000 + ₹
25,000)
[Integrated tax is levied on the sum total of the
assessable value of the imported goods, customs
duties and applicable SWS]

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Types of Duty (Answers)

6 Total customs duties and tax payable 14,48,000

[₹ 2,50,000 + ₹ 7,50,000 + ₹ 25,000 + ₹ 4,23,000]

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 CA Final May/Nov 24

Chapter 3 – Classification of imported and exported

goods

Theory

1. What is the purpose of including General Rules of Interpretation of

First Schedule in Customs Tariff? Do they form part of the Tariff
Schedule? Explain the Akin Rule of interpretation. (MTP NOV 2018)
(MTP MAY 2018)

2. Briefly explain the provisions of rule 2(a) of Rules of Interpretation

of the First Schedule to the Customs Tariff Act, 1975 on
classification of incomplete/unfinished articles.

3. What is the purpose of including General Rules of Interpretation of

First Schedule in Customs Tariff? Do they form part of the Tariff
Schedule? Explain the Akin Rule of interpretation.

4. Write a note on “Project Imports” under the Customs Tariff Act,

1975.

5. Explain rule 3 of the rules for Interpretation of the Customs Tariff.

6. Briefly explain the meaning of abbreviation “%” in relation to the

rate of duty

Practical Theory

7. Your client manufactures Almond Milk which is an almond based

drink. The manufacturing process of almond milk is as follows:

• Selection of high quality California almonds;

• Blanching of almonds, roasting, and grinding into a paste
• Almond paste is blended with other ingredients like RO water,
salt, vitamins and minerals.
• Sterlization of mixture by ultra-high temperature processing
• Homogenization
• Packaging in a septic package

As per the Rate Notification for goods issued under GST,

following entries are relevant: Rate:12%
Entry 41 – 2009 - Fruit juices (including grape must) and
vegetable juices, unfermented and not containing added spirit,

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 CA Final May/Nov 24

whether or not containing added sugar or other sweetening

matter

Entry 48 – 2202 9920 – Fruit pulp or fruit juice based drinks

Entry 50 – 2202 9930 – Beverages containing milk

Rate: 18%

Entry 24A – 2202 9100 or 2202 99 90 - Other non-alcoholic

beverages other than tender coconut water Your client is
confused with the correct classification of Almond Milk under
GST. He has approached you for your opinion so as to enable
him to discharge the tax correctly.

Following additional information may be relevant:

As per First Schedule to the Customs Tariff Act, 1975, the
following entries of Chapter 20, 22 and 8 are relevant:

Chapter 20 - Preparations of vegetables, fruit, nuts or other

parts of plants

Tariff Item Description of goods

2009 Fruit juices (including grape must) and vegetable
juices, unfermented and not containing added
spirit, whether or
not containing added sugar or other sweetening
matter
- Juice of any other single fruit or vegetable :
2009 8100 -- Cranberry (Vaccinium macrocarpon, Vaccinium,
Oxycoccos,
Vaccinium vitis-idaea ) juice
2009 89 -- Other
2009 89 10 --- Mango
2009 89 90 --- Other
2009 90 00 - Mixtures of juices

Chapter 22 - Beverages, spirits and vinegar

Tariff Item Description of goods

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 CA Final May/Nov 24

2202 - Waters, including mineral waters and aerated

waters, containing added sugar or other
sweetening matter or flavoured, section-iv 172
chapter-22 and other non-alcoholic beverages,
not including fruit or vegetable juices of heading
2009
2202 10 --- Aerated Waters
10

2202 10 --- Lemonade

20
2202 10 --- Other
90
- Other
2202 91 -- Other Non-alcoholic Beer
00
2202 99 -- Other
2202 99 --- Soya milk drinks, whether or not sweetened or
10 flavored
2202 99 --- Fruit pulp or fruit juice based drink
20
2202 99 --- Beverages containing milk
30
2202 99 --- Other
90

Chapter 8 - Edible fruit and nuts; peel of citrus fruit or melons

Tariff Item Description of goods

0802 Other nuts, fresh or dried, whether or not
shelled or
peeled
- Almonds:
0802 11 00 -- In Shell
0802 12 00 -- Shelled

Further, explanatory notes to Chapter 20 specify that:

The fruit and vegetable juices of this heading are generally obtained
by pressing fresh, healthy and ripe fruit or vegetables. This may be
done (as in the case of citrus fruits) by means of “mechanical
extractors" operating on the same principle as the household
lemon-squeezer, or by pressing which may or may not be preceded
either by crushing or grinding (for apples in particular) or by
treatment with cold or hot water or with steam (e.g., tomatoes,
black currants and certain vegetables such as carrots and celery).

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 CA Final May/Nov 24

8. "The laptop supplied along with software loaded on hard disk drive
has to be classified as laptop and valuation has to be made as one
unit. The classification also has to be determined accordingly."
Examine this statement with reference to classification and
valuation of laptop under Customs Act, 1962 read with relevant
rules and relevant judicial pronouncement, if any. (5 Marks May
‘22)

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Chapter 3 Classification of Imported and Export Goods

(Answers)

Theory

1. The Customs Tariff has a set of six General Rules for Interpretation
of the First Schedule and three General Explanatory Notes. The six
General Rules of Interpretation and three General Explanatory
Notes are integral part of the Tariff Schedule. The purpose of their
inclusion in Customs Tariff is to standardize the manner in which
the nomenclature in the schedule is to be interpreted so as to
reduce classification disputes.

Rule 4 of the Rules of Interpretation is called as akin rule. This rule

lays down that goods which cannot be classified in accordance
with rules 1, 2 and 3 of the Rules of Interpretation shall be
classified under the heading appropriate to the goods to which
they are most akin. In other words, akin rule’ is a residual rule
which is to be applied when classification is not possible by
applying any of the earlier rules. It is a rule of last resort.

2. The provisions of rule 2(a) of Rules of Interpretation of the First

Schedule to the Customs Tariff Act, 1975 on classification of
incomplete/unfinished articles are as under:-
If any particular heading refers to a finished/complete article, the
incomplete/unfinished form of that article shall also be classified
under the same heading provided the incomplete/unfinished goods
have the essential characteristics of the finished goods.
Reference to an article will also include the article complete or
finished (or failing to be classified as complete or finished) presented
un-assembled or dis-assembled.

3. The Customs Tariff has a set of six General Rules for Interpretation
of the First Schedule and three General Explanatory Notes. The six
General Rules of Interpretation and three General Explanatory
Notes are integral part of the Tariff Schedule. The purpose of their
inclusion in Customs Tariff is to standardize the manner in which
the nomenclature in the schedule is to be interpreted so as to
reduce classification disputes.
Rule 4 of the Rules of Interpretation is called as akin rule. This rule
lays down that goods which cannot be classified in accordance
with rules 1, 2 and 3 of the Rules of Interpretation shall be
classified under the heading appropriate to the goods to which
they are most akin. In other words, akin rule’ is a residual rule

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 CA Final May/Nov 24
Classification (Answers)

which is to be applied when classification is not possible by

applying any of the earlier rules. It is a rule of last resort.

4. Project Imports are the imports of machinery, instruments, and

apparatus etc., falling under different classifications, required for
initial set up of a unit or for substantial expansion of an existing
unit.
Heavy customs duty on imported machinery for projects make the
initial project cost very high and project may become unviable.
Hence, concept of ‘project import’ is introduced to bring machinery
etc. required for initial setup or substantial exemption at
concessional customs duty.
In a project several different items are required, each of which is
importable at different rates of customs duties. Thus, this simple
method is adopted, as otherwise, classifying each machinery and its
parts in different heads and valuing them would have been
cumbersome and would have delayed clearances, which would cause
demurrages. Further, individual exemption notification will apply
even for items grouped under the said heading of the customs tariff
liable to duty at the project rate as per recent Supreme Court
judgement.
The items eligible for project import are specified in Heading 9801 of
the Customs Tariff Act, 1975.
The spare parts, raw material and consumables stores upto 10% of
the value of goods can be imported. Few of the eligible projects are:
(i) Industrial plant
(ii) Irrigation project
(iii) Power project
(iv) Mining project
(v) Oil & mineral exploration project
(vi) Other projects as notified by the Central Government

5. The application of this rule arises when the goods consists of more
than one material or substance.
When by application of rule 2(b) or for any other reason, goods are,
prima facie, classifiable under two or more headings, classification
shall be effected as follows:
Rule 3(a) – Specific over general
(i) The heading which provides the most specific description shall
be preferred to headings providing a more general description.
(ii) However, when two or more headings each refer to part only
of the materials or substances contained in mixed or
composite goods or to part only of the items in a set up for

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 CA Final May/Nov 24
Classification (Answers)

retail sale, those headings are to be regarded as equally

specific in relation to those goods, even if one of them gives a
more complete or precise description of the goods.

Rule 3(b) – Essential character principle: Mixtures, composite goods

consisting of different materials or made up of different
components, and goods put up in sets for retail sale, which cannot
be classified with reference to (a), shall be classified as if they
consisted of material which gives them their essential character, in
so far as this criterion is applicable.

Rule 3(c) – Latter the better: When goods cannot be classified by

reference to (a) or (b), they shall be classified under the heading
which occurs last in numerical order among those which equally
merit consideration.

6. The abbreviation “%” in any column of the Schedule in relation to

the rate of duty means that the duty shall be computed at the
percentage specified on the value of the goods as defined in section
14 of the Customs Act.

Practical Theory

7. The first step in the classification of Almond Milk is to determine if

the same would fall under Chapter 20 or 22 of the First Schedule of
Customs Tariff Act, 1975. On a plain reading of Heading of Chapter
20 along with Explanatory Notes, it emerges that Chapter 20 is
applicable to juices of ripe fruits and vegetables. Therefore, it is
important to determine if the “almond” qualifies to be a fruit or
not.

While in common parlance, we refer ‘almonds’ as dry fruits,

however if we analyze Chapter 8 of the First Schedule of Customs
Tariff Act, 1975, it appears that ‘almonds’ are referred to as ‘nuts’
under sub- heading 0802.

Therefore, the ‘almonds’ do not classify as ‘fruit’ for the purpose of

classification under the HSN system. Accordingly, the classification
under Chapter 20 is completely ruled out.

Now, the 3 entries relevant under Chapter 22 are:

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Classification (Answers)

(a) 2202 99 30 – Beverages containing milk – Admittedly, as per

the process specified above, the Almond Milk does not contain any
milk. Therefore, this entry is also ruled out.

(b) 2202 9100 or 2202 99 90 - Other non-alcoholic beverages

other than tender coconut water – The Almond milk will be
classifiable under 2202 99 90 as Others.

Therefore, the Almond Milk will be chargeable to 18% GST.

This view is also supported by CBIC’s Circular No. 113/32/2019 GST

dated 11.10.2019 which states that:

“Almond Milk is made by pulverizing almonds in a blender with

water and is then strained. As such almond milk neither
constitutes any fruit pulp or fruit juice. Therefore, it is not
classifiable under tariff item 2202 99 20. Almond milk is classified
under the residual entry in the tariff item 2202 99 90 and attract
GST rate of 18%”

8. Operating Software preloaded in the laptop forms an integral part

of the laptop.

In a judicial pronouncement by Supreme Court10, the

Question as to whether the laptop supplied alongwith
the software loaded on hard disk drive is to be
classified as laptop has been Answered in affirmative.

The Court observed that a laptop cannot work without operating

system like windows. Therefore, the
laptop along with software has to be classified as laptop and for
valuation also, the laptop along with software has to be classified
as one unit / laptop.

Hence, the statement is correct.

10
vide CC v. Hewlett Packard India Sales (P) Ltd. 2007 (215) E.L.T. 484
(S.C.)

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 CA Final May/Nov 24

Chapter 5 - Importation, Exportation and

Transportation of Goods

Theory

1. State briefly the provisions of the Customs Act, 1962 relating to

payment of interest in case of provisional assessment.

2. What is meant by ‘boat notes’?

3. Discuss the provisions regarding transit of goods and transhipment

of goods without payment of duty under the Customs Act.

4. Explain in brief the duty exemption to baggage under section 79(1)

of the Customs Act, 1962.

5. What is the relevant date for determining the rate of duty and
tariff valuation in respect of goods imported/exported by post?

6. Explain the obligation cast on person-in-charge on arrival of

vessels or aircrafts in India under section 29 of the Customs Act,
1962.

7. Explain briefly the meaning of entry inwards and entry outwards

with reference to the customs law.

8. Which class of importers is required to pay customs duty

electronically? Name the dedicated payment gateway set up by the
Board (CBIC) to use e-payment facility easily by an importer.

9. Can the customs audit cover a person who is not an exporter or

importer?

10. A fishing trawler is operating 10 nautical miles from the baseline.

Is it entitled to duty-free stores?

11. What are the circumstances under which assessment is done

provisionally under section 18?

12. State the provisions of transhipment of goods without payment of

duty under section 54 of the Customs Act, 1962.

13. Explain the procedure prescribed in Customs Act, 1962 in case of

goods not cleared, warehoused or transhipped within 30 days after
unloading.

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14. Write short notes on:

(a) Export general manifest
(b) Boat note (or restriction on goods being water borne)

15. Discuss briefly:

(a) Temporary detention of baggage
(b) Relevant date for rate of duty and tariff valuation in respect of
goods imported and exported by post

16. What is the permissible time limit with respect to the following- :
(i) for filing a bill of entry
(ii) for paying the assessed duty
(iii) for delivery of arrival manifest or import manifest/report and
departure manifest or export manifest/report

17. State in brief the provisions of the Customs Act, 1962 relating to
filing of “Arrival manifest or import manifest/ Report”.

18. Write a brief note on the declaration made by the owner of

baggage.

19. State and summarise the provisions and procedure in the Customs
Act, 1962 governing preparation and filing of a bill of entry.

20. Under what situations the amount of duty and interest refundable
under section 18 of the Customs Act, 1962 shall be paid to the
importer/exporter instead of being credited to the Consumer
Welfare Fund?

21. State the procedure for clearance of goods imported by post.

22. Briefly explain the following with reference to the provisions of the
Customs Act, 1962:
(i) Bill of export
(ii) Import report
(iii) Imported goods
(iv) Entry (v) Prohibited goods
(v) Customs port
(vi) Goods
(vii) Stores
(viii) Conveyance
(ix) Dutiable goods
(x) Customs area
(xi) Adjudicating Authority

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(xii) Foreign going vessel or aircraft

(xiii) Assessment

23. With reference to the facility, ‘Clear first-Pay later’ extended to

importers under the customs law, answer the following questions:
(i) What is the objective of the facility?
(ii) Who is eligible to avail this scheme?
(iii) What are the due dates for payment of duty under this facility?
(iv) What are the circumstances when the deferred payment facility
will not be available?

24. Explain with reference to the Customs Act, 1962, the conditions to
be fulfilled for filing application to Settlement Commission

25. State the salient features of "Deferred duty payment facility" with
reference to Customs Act, 1962 and rules thereunder. (PAST EXAM
MAY 2018)

Practical Theory

26. M/s Pipli Imports Ltd. imported certain goods, which were unloaded
in the customs area on 01.10.2020. When order for clearance was
passed by proper officer on 05.10.2020, it was found that there was
some pilferage of such goods. As the imported goods were in the
custody of Port Trust, the Department demanded duty from the
custodian under section 45(3) of the Customs Act, 1962, on such
pilferage. The Port Trust denied such demand contending that it
was not an approved custodian falling under section 45 and
possession of goods by it was by virtue of powers conferred under
the Major Port Trust Act, 1963. Hence, it is not liable for customs
duty on pilfered goods. M/s Pipli Imports Ltd. has also asked the
Port Trust to make good the loss of goods. Examine, whether the
demands made by the Department and M/s Pipli Imports Ltd. are
justified in law, referring to decided case law

27. Mr. Anil and his wife (non-tourist Indian passengers) are returning
from Dubai to India after staying there for a period of two years.
They wish to bring gold jewellery purchased from Dubai. Please
enumerate provisions of customs laws for jewellery allowance in
their case.

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28. An importer filed a bill of entry after 60 days of filing Import

General Manifest. The Deputy Commissioner of Customs imposed a
penalty of Rs. 10,000 for late filing of the bill of entry. Since,
importer wanted to clear the goods urgently, he paid the penalty.
Can penalty be imposed for late filing of the bill of entry? Can bill
of entry be filed in advance? Examine the issue regarding period
available for filing bill of entry in the light of relevant statutory
provisions? (PAST EXAM MAY 2018)

29. Laxmi Company imported goods valued at Rs. 10,00,000 vide a Bill
of Entry presented before the proper officer on 15thDecember,
2019, on which date the rate of customs duty was 20%. The proper
officer decided that the goods should be subject to chemical or
other test and therefore, the same were provisionally assessed at a
value of Rs. 10,00,000 and Laxmi company paid provisional duty of
Rs. 2,00,000 on the same date. Laxmi Company wants to
voluntarily pay duty of Rs. 1,50,000 on 20th January, 2020.

(1) Can Laxmi Company provisionally pay the duty and what are
the conditions which are to be complied before such payment
is made?

(2) Determine the amount of interest payable, if any, under

section 18 of the Customs Act, 1962 assuming that the payment of
Rs. 1,50,000 as stated above is made on 20th January, 2020 and
that the final duty is assessed on 31st January, 2020 at Rs. 4,00,000
and the balance duty is paid on the same day.

30. After visiting USA for a month, Mrs. and Mr. Iyer (Indian residents
aged 35 and 40 years respectively) brought to India a laptop
computer valued at Rs. 70,000, used personal effects valued Rs.
1,40,000 and a personal computer for Rs. 58,000.

Calculate the custom duty payable by Mrs. & Mr. Iyer, if any.

31. ‘Queen Marry’, is a vessel containing the goods imported by XML

Ltd. The events relating to its entry into India and the discharge
and onward movement and storage of the goods are as follows.
 24th May Vessel entered the Indian territorial waters.
 25th May Import manifest was delivered to the customs
authorities
 27th May XML Ltd filed bill of entry for the goods
 29th May Entry inwards granted to the vessel

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The rate of customs duty on the goods was increased from 8% to

10% on 28th May. (ICAI Module)
At what rate should XML Ltd. pay the customs duty on the goods
imported by it?

32. Mr. Anil and his wife (non-tourist Indian passengers) are returning
from Dubai to India after staying there for a period of two years.
They wish to bring gold jewellery purchased from Dubai. Please
enumerate provisions of customs laws for jewellery allowance in
their case.

33. Gregory Peg of foreign origin has come on travel visa, to tour in
India. He carries with him, as part of baggage, the following:

Particulars Value in ₹
Travel Souvenir 85,000
Other articles carried on in person 1,50,000
120 sticks of cigarettes of ₹100 each 12,000
Fire arm with 100 cartridges (value includes the value of 1,00,000
cartridges at @ ₹ 500 per cartridge).
Determine customs duty payable, if the effective rate of customs
duty is 38.50% inclusive of social welfare surcharge, with short
explanations where required. Ignore Agriculture infrastructure and
development cess.

34. An importer filed a bill of entry after 60 days of filing Import

General Manifest. The Deputy Commissioner of Customs imposed a
penalty of ₹ 10,000 for late filing of the bill of entry. Since,
importer wanted to clear the goods urgently, he paid the penalty.
Can penalty be imposed for late filing of the bill of entry? Can bill
of entry be filed in advance? Examine the issue regarding period
available for filing bill of entry in the light of relevant statutory
provisions?

35. Laxmi Company imported goods valued at ₹ 10,00,000 vide a Bill of

Entry presented before the proper officer on 15thDecember, 2022,
on which date the rate of customs duty was 20%. The proper
officer decided that the goods should be subject to chemical or
other test and therefore, the same were provisionally assessed at a
value of ₹ 10,00,000 and Laxmi company paid provisional duty of ₹
2,00,000 on the same date. Laxmi Company wants to voluntarily
pay duty of ₹ 1,50,000 on 20th January, 2023.

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(1) Can Laxmi Company provisionally pay the duty and what are
the conditions which are to be complied before such payment is
made?
(2) Determine the amount of interest payable, if any, under section
18 of the Customs Act, 1962 assuming that the payment of ₹
1,50,000 as stated above is made on 20th January, 2023 and
that the final duty is assessed on 31st January, 2023 at ₹
4,00,000 and the balance duty is paid on the same day.

36. After visiting USA for a month, Mrs. and Mr. Iyer (Indian residents
aged 35 and 40 years respectively) brought to India a laptop
computer valued at ₹ 70,000, used personal effects valued ₹
1,40,000 and a personal computer for ₹ 58,000.

Calculate the custom duty payable by Mrs. & Mr. Iyer, if any. Ignore
Agriculture infrastructure and development cess.

37. Mrs. X, an Indian resident (36 years old) who was on a visit to
China, returned after 6 months. She was carrying with her the
following items:
(i) Personal effects ₹ 75,000
(ii) Laptop computer ₹ 60,000
(iii) Jewellery - 25 grams (purchased in China) ₹ 75,000
(iv) Music system ₹ 50,000

Compute the customs duty payable by Mrs. X with reference to the

Baggage Rules, 2016. Ignore Agriculture infrastructure and
development cess.

38. After visiting USA for a month, Mrs. and Mr. Iyer (Indian residents
aged 35 and 40 years respectively) brought to India a laptop
computer valued at ` 70,000, used personal effects valued `
1,40,000 and a personal computer for ` 58,000. Calculate the
custom duty payable by Mrs. & Mr. Iyer, if any. (5 Marks Oct 21,
Oct ’18, Mar’18, Mar’22)

39. An importer filed a bill of entry after 60 days of filing Import

General Manifest. The Deputy Commissioner of Customs imposed a
penalty of ` 10,000 for late filing of the bill of entry. Since, importer
wanted to clear the goods urgently, he paid the penalty. Can
penalty be imposed for late filing of the bill of entry? Can bill of

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entry be filed in advance? Examine the issue regarding period

available for filing bill of entry in the light of relevant statutory
provisions? (5 Marks April 22)

40. Mr. Bandhopadhya, an Indian entrepreneur, went to London to

explore new business opportunities on 01.04.2021. His wife also
joined him in London after three months. The following details are
submitted by them with the Customs authorities on their return
to India on 15.04.2022:
(a) used personal effects worth` 80,000,
(b) 2 music systems each worth ` 50,000,
(c) the jewellery brought by Mr. Bandhopadhya worth ` 48,000 [20
grams] and the jewellery brought by his wife worth` 96,000
[40 grams].

With reference to Baggage Rules, 2016, determine whether Mr. and

Mrs. Bandhopadhya will be required to pay any customs duty? (5
Marks Sep 22)

41. 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 ` 80,000, used personal
effects valued at ` 90,000 and as personal computer for `
52,000. What is the customs duty payable? Ignore
Agriculture infrastructure and development cess. (5
Marks Oct 22)

42. Joginder & Co. imported goods valued at ₹ 12,00,000 vide a bill of
entry presented before the proper officer on 15th December 2021,
on which date the rate of customs duty was 20%. The proper
officer decided that the goods should be subject to chemical test
and therefore, the same were provisionally assessed at a value of ₹
12,00,000 and Joginder & Co. paid provisional duty of ₹ 2,40,000 on

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the same date after fulfilling the requirements for provisional

assessment.

What are the conditions which are to be complied before payment

is made for the purpose of provisional assessment?

Determine the amount of interest payable, if any, under section 18

of the Customs Act, 1962 assuming that the payment of the final
duty is assessed on 31st January 2022 at ₹ 3,80,000 and the balance
duty is paid on the same day. (5 Marks May ’22)

43. Mr. Cliff Paul, a resident and citizen of USA, visits India on a
business tour. He made declaration to the proper officer about his
baggage under section 77 of the Customs Act, 1962 for the purpose
of clearance. During the scrutiny of the declaration, proper officer
found that some of the articles declared in baggage brought with
him were prohibited to be entered in India and were detained by
the officer.

Although Mr. Paul did not insist to clear those articles, value of
those articles was very high and it was a difficult situation for him.
You are required to advise any procedure prescribed under customs
law to overcome the situation. Give your advice on the basis of
relevant statutory provisions.(3 Marks May ‘22)

Number Based Questions

44. Mrs. X, an Indian resident who was on a visit to China, returned

after months. She was carrying with her the following items:

(i) Personal effects Rs. 75,000

(ii) Laptop computer Rs.60,000

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(iii) Jewellery - 25 grams (purchased in Rs. 75,000

China)

(iv) Music system Rs. 50,000

Compute the customs duty payable by Mrs. X with reference to the

Baggage Rules, 2016. (PAST EXAM NOV 2019)

45. Mr. Samuel, a US resident aged 35 years, has come to India on a

tourist visa for a month-long vacation.

He carries with him, as part of baggage, the following:

Particulars Amount

Travel Souvenirs 85000

Other articles carried in person 150000

80 stick of cigarettes of Rs. 100 each 8000

30 catrideges of fire arms valuing Rs.500 each 15000

One litre wine 15000

With reference to the Baggage Rules, 2016, determine whether Mr.

Samuel will be required to pay any customs duty? (RTP MAY 2020)

46. Mr. X has imported some items from abroad. Since he was unable
to make a self-assessment, he has sought for provisional
assessment pending technical testing on 29.04.2021. The technical
report was received on 05.05.2021. Discuss about the time limit
available to the officer for finalizing the provisional assessment as
per law and guide Mr. X as to when his provisional assessment will
be finalized. (PAST EXAM NOV 2020)
47. Gregory Peg of foreign origin has come on travel visa, to tour in
India. He carries with him, as part of baggage, the following:

Particulars Value in Rs.

Travel Souvenir 85,000

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 CA Final May/Nov 24

Other articles carried on in person 1,50,000

120 sticks of cigarettes of Rs.100 each 12,000
Fire arm with 100 cartridges (value includes the value of 1,00,000
cartridges at @ Rs. 500 per
cartridge).

Determine customs duty payable, if the effective rate of customs duty

is 38.50% inclusive of social welfare surcharge, with short explanations
where required.

48. Queen Marry’, is a vessel containing the goods imported by XML Ltd.
The events relating to its entry into India and the discharge and
onward movement and storage of the goods are as follows.
24.05.2020 Vessel entered the Indian territorial waters.
25.05.2020 Import manifest was delivered to the customs authorities
27.05.2020 XML Ltd filed bill of entry for the goods
29.05.2020 Entry inwards granted to the vessel
The rate of customs duty on the goods was increased from 8% to 10%
on 28.05.2020.

At what rate should XML Ltd. pay the customs duty on the goods
imported by it?

49. Mr. Krishna Bhansali, has imported some garments from Paris. He
is unable to make self-assessment under section 17(1) of the
Customs Act, 1962because of differential rates for different kinds
of material and hence has made a request in writing to the proper
officer for provisional assessment pending technical testing. Is he
eligible to apply for provisional assessment? Discuss.

50. Moris Lal has imported goods from Germany and is finally re-
assessed u/s 18(2) of the Customs Act, 1962 for two such
consignments. Particulars are as follows:

Date of provisional assessment 12th December, 2019

Date of final re-assessment 2nd February, 2020
Duty demand for 1st consignment Rs. 1,80,000
Refund for the 2nd consignment Rs. 4,20,000
Date of refund made by the department 28th April, 2020
Date of payment of duty demanded 5th February, 2020

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Determine the interest payable and receivable, if any, by Moris Lal on

the final re-assessment of the two consignments, with suitable notes
thereon.

51. Mr. Sujoy, an Indian entrepreneur, went to London to explore new

business opportunities on 01.04.2019. His wife also joined him in
London after three months. The following details are submitted by
them with the Customs authorities on their return to India on
15.04.2020:

(a) used personal effects worthRs.80,000,

(b) 2 music systems each worth Rs.50,000,
(c) the jewellery brought by Mr. Sujoy worth Rs.48,000 [20 grams] and
the jewellery brought by his wife worthRs.96,000 [40 grams].

With reference to Baggage Rules, 2016, determine whether Mr. and Mrs.
Sujoy will be required to pay any customs duty? (MTP MAY 2020) (MTP
MAY 2019)

52. Mahesh imported certain goods in May 2018 and ‘ínto bond’ bill of
entry was presented on 14th May 2018 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 4 months was issued on 21st May 2018. Mahesh deposited the
goods in warehouse on the same day but did not clear the imported
goods even after the warehousing period got over on 21st
September 2018. A notice was issued under section 72 of the
Custom Act, 1962, demanding duty and interest. Mahesh cleared
the goods on 14th October 2018. Customs duty paid on removal of
the goods is Rs. 7,17,000. You are required to compute interest
payable on such removal, explaining the provisions of the Customs
Act, 1962.

53. A vessel Bhishma, sailing from U.S.A to Australia via,, India carries
various types of products namely ‘A, B, C & D’.

‘A & B’ are destined to Mumbai Port. On account of submission of bill

of transhipment product ‘A’ transshipped to Chennai port as ultimate
destination in India and product ‘B’ transhipped to Srilanka.

Find the imported goods, Transhipment goods and transit goods?

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54. Padmavati, an Indian resident (36 years old) who was on a visit to
China, returned after 6 months. She was carrying with her the
personal effects and jewellery 25 grams (purchased in China) worth
₹ 75,000 each. Further, she was carrying a laptop computer worth
₹ 60,000 and a music system worth ₹ 50,000 with her. Compute the
customs duty payable by Padmavati with reference to the Baggage
Rules, 2016. Ignore Agriculture infrastructure and development
cess. (5 Marks March ‘23)

55. John Biden, aged 32, is a tourist of US origin. He has

come to India on a travel visa and carries with him
the following articles as part of baggage:

Particulars Value in ₹
Used personal effects 50,000
Travel souvenirs 50,000
Laptop 1,20,000
200 gms tobacco 1,000
[Valued @ ₹ 5
per gram]
50 cigars [Valued @ ₹ 100 each] 5,000
Fire-arms 80,000
With reference to the Baggage Rules, 2016, determine
customs duty payable. Ignore agriculture infrastructure and
development cess. (5 Marks April ’23)

56. Mr. X, an Indian resident, returns to India on 10.04.2021

after visiting France for 3 months. On his return to
India, he brings with him following articles:
(i) Used personal effects like clothes etc. valued at ` 1,75,000
(ii) Music system valued at 1,20,000
(iii) Jewellery valued at ` 1,30,000 measuring 20 grams brought
by Mr. 'X'
(iv) Laptop worth ` 1,20,000
(v) Wine 1 litre worth ` 6,000
(vi) Mobile phone worth ` 50,000
You are required to determine the taxable value of baggage
with reference to the Baggage Rules, 2016.
(5 Marks Dec ‘21)

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57. Kiara of Indian origin, came to India on tour with her baby of 1 year.
She brought following goods:

1. Personal effects 50,000

2. Used personal effects of infant 10,000
3. New camera 45,000
4. Mobile phone 12,500
5. Cigarette sticks 70 1,000
6. Wine - 2 litres 18,000
7. Travel souvenirs 5,000
8. Laptop 90,000

Indicate the taxability or taxable value in respect

of each item in the table and calculate customs
duty payable rounded off to the nearest rupee in
accordance with law. There is no need for any
notes to support the conclusions regarding
taxability or taxable amount. (5 Marks Nov 22)

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Chapter 5 – Importation and Exportation (Answers)

Theory

1. Interest is payable from the first day of the month in which the
provisional assessment began. Refer section 18.

2. Boat notes are issued to cover transport of cargo to or from

vessels that cannot come into the port. Refer ‘Restrictions on
goods being water-borne’. (section 35)

3. Refer sections 53 and 54.

4. Refer section 79 and Baggage Rules.

5. Refer Section 83.

6. Vessel / aircraft must call or land only at a notified customs port

or airport, unless otherwise permitted, and except in an
emergency. Refer section 29 of the Customs Act.

7. Entry inwards is permission to begin unloading of the imported

goods, and entry outwards is permission to begin loading of export
goods. Refer section 31 and section 39.

8. Authorised economic operators and those importers who are

paying ₹ 10,000 or more per bill of entry. They will pay through
ICEGATE. Refer para “Mandatory E-payment of duty”.
9. Yes, persons dealing with the goods can also be audited. Refer
section 99A and related regulations.

10. No. Refer definitions of Foreign going vessel and ‘India’.

11. Refer provisional assessment of duty under para 5.

12. Refer transit and transhipment of goods under para 11.

13. Refer section 48: The goods can be auctioned.

14. (a) EGM: Refer section 41;

(b) boat note: Refer section 35

15. (a) Refer section 80

(b) Refer section 83

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Import & Export (Answers)

16. (i) Refer section 46: 30 days prior to arrival, & not later than the
end of the day of arrival.
(ii) Refer section 47: day of filing bill of entry (self-assessment) or
within a day of receiving re-assessed bill of entry.
(iii) Refer section 30: import manifest: before arrival; import report:
within 12 hours of arrival of conveyance at customs station;
section 41: departure or export manifest / report: before departure
of conveyance.

17. Refer section 30

18. Refer section 77 read with Baggage Declaration Regulations 2013
19. Refer section 46
20. Refer section 18
21. Refer section 84
22. Refer para 3

23. (i) ‘Clear first-Pay later’ i.e., deferred duty payment is a mechanism
for delinking duty payment and customs clearance. The aim is to
have a seamless wharf to warehouse transit in order to facilitate
just-in-time manufacturing.

(ii) Central Government has permitted importers certified under

Authorized Economic Operator programme as AEO (Tier-Two) and
AEO (Tier-Three) to make deferred payment of import duty (eligible
importers). As a part of the ease of doing business focus of the
Government of India, the CBIC has rolled out the AEO (Authorized
Economic Operator) programme.

It is a trade facilitation move wherein bene ts are extended to the

entities who have demonstrated strong internal control systems
and willingness to comply with the laws administered by the CBIC.

(iii) The due dates for payment of deferred duty are –

S. No. Goods corresponding Due date of payment

to bill of entry of duty, inclusive of
returned for the period (excluding
payment from holidays) as
mentioned in
section 47(2)
1. 1 st day to 15th day 16th day of that
of any month month
2. 16th day till the last 1 st day of the
day of any month following month
other than March

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 CA Final May/Nov 24
Import & Export (Answers)

3. 16th day till the 31st 31st March

day of March

(iv) If there is default in payment of duty by due date more than

once in three consecutive months, the facility of deferred payment
will not be allowed unless the duty with interest has been paid in
full. The bene t of deferred payment of duty will not be available
in respect of the goods which have not been assessed or not
declared by the importer in the bill of entry

24. According to section 127B of the Customs Act 1962, the following
conditions are to be fulfilled for filing an application for settlement
of cases:
(i) the applicant has led a bill of entry, or a shipping bill, or a
bill of export, or made a baggage declaration, or a label or
declaration accompanying the goods imported or exported through
post or courier, as the case may be, and in relation to such
document or documents, a show cause notice has been issued to
him by the proper of cer.

(ii) the additional duty accepted is more than Rs. 3 lakhs.

(iii) the applicant has paid the additional amount of customs

duty accepted by him alongwith interest due under section 28AA.

(iv) the case is not pending with CESTAT or any Court.

(v) the application does not relate to goods to which section 123
applies or to goods in relation to which any offence under the
Narcotic Drugs and Psychotropic Substances Act, 1985 has been
committed.

25. The salient features of “Deferred duty payment facility” are as under:
- Under section 47 of the Customs Act, 1962, the Central
Government has permitted importers certi ed under Authorized
Economic Operator programme as Authorized Economic Operator –
AEO (Tier-Two) and AEO (Tier-Three) to make deferred payment of
import duty. AEO means Authorized Economic Operator certi ed by
the Directorate General of Performance Management under CBEC.

- An eligible importer intending to avail the benefit of deferred

payment shall Intimate to the
PrincipalCommissioner/Commissioner of Customs, having
jurisdiction over the port of clearance, his intention to avail the

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 CA Final May/Nov 24
Import & Export (Answers)

said benefit who on being satisfied with the eligibility of the

importer will allow him to pay the duty by due dates.
- Due dates for deferred payment of import duty-

S.N. Goods corresponding to Bill of Entry Due date of payment of

returned for payment duty (excluding
from holidays)
1. 1 st day to 15th day of any month 1 6th day of that
2. 1 6th day till the last day of any month other 1 stmonth
day of the following
3. than March
1 6th day till the 31st day of March month 31st March

The eligible importer shall pay the duty electronically except where
Assistant/Deputy Commissioner of Customs allow payment by any other
mode for reasons to be recorded in writing.

- If there is default in payment of duty in full by due date more

than once in 3 consecutive months, deferred duty payment facility
will not be allowed unless the duty with interest has been paid in
full.

- The bene t of deferred payment of duty will not be available

in respect of the goods which have not been assessed or not
declared by the importer in the Bill of Entry

Practical Theory

26. The facts of the case are similar to the case of Board of Trustees v.
UOI (2009) 241 ELT 513 (Bom HC DB), wherein the High Court held
that considering the language of section 45(3), the liability to pay
duty is of the person, in whose custody the goods remain as an
approved person under section 45 of the Act. Therefore, section 45(3)
applies only to the private custodians who are required to be
approved by Principal Commissioner/ Commissioner of Customs
under section 45(1). Accordingly, the major ports and airports
covered under Major Port Trust Act, 1963 who do not require any
approval under section 45(1), are not covered by section 45(3). Thus,
the Department cannot demand duty from Port Trust on the
pilferage under section 45(3) of the Customs Act, 1962.
Section 45(3) of the Customs Act, 1962 holds the custodian
responsible only in respect of the customs duty in respect of
pilfered goods. It does not extend to the value of goods lost.
However, the Port Trust, as bailee of the goods, is liable for value of
the goods to the importer.

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 CA Final May/Nov 24
Import & Export (Answers)

(vi) the application is not for the interpretation of the

classi cation of the goods under the Customs Tariff Act, 1975.
Further, application before Settlement Commission can be made
only when adjudication is pending.

27. As per rule 5 of the Baggage Rules, 2016, a passenger who has been
residing abroad for more than one year and returns to India shall be
allowed duty free clearance of jewelry in bona fide baggage as under:
• Jewelry upto a weight of 20 grams with a value cap of Rs.
50,000 for a gentlemen passenger

• Jewelry upto a weight of 40 grams with a value cap of Rs.

1,00,000 for a lady passenger

Thus, in the given case, Mr. Anil would be allowed duty free jewelry
upto a weight of 20 grams with a value cap of Rs. 50,000 and his
wife would be allowed duty free jewelry upto a weight of 40 grams
with a value cap of Rs.1,00,000.

Further, in addition to the jewelry allowance, Mr. Anil and his wife
would also be allowed duty free clearance of jewelry worth
Rs.1,00,000 (Rs.50,000 per person) as part of free baggage
allowance.

28. Yes, charges are payable for late filing of bill of entry if an importer
fails to present the bill of entry before the end of the next day
following the day (excluding holidays) on which the
aircraft/vessel/vehicle carrying the goods arrives at a customs
station at which such goods are to be cleared for home consumption
or warehousing, and the proper officer is satisfied that there was no
sufficient cause for such delay [Section 46(3) of the Customs Act,
1962].
Yes, a bill of entry can be led in advance. It can be presented
within 30 days of the expected arrival of the aircraft/vessel/vehicle
by which the goods have been shipped for importation into India
vide proviso to section 46(3) of the Customs Act, 1962.

In the given case also, the time period as described above will be
available - with reference to the date of arrival of vessel/aircraft -
for ling the bill of entry.

29. (1) Provisional assessment of duty is permitted in case where the

proper officer deems it necessary to subject any imported goods or
export goods to any chemical or other test [Section 18 of the
Customs Act, 1962]. Thus, Laxmi Company can pay the duty on
provisional basis.

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 CA Final May/Nov 24
Import & Export (Answers)

Before, the provisional assessment of duty, the importer must

furnish such security as the proper of cer deems t for the
payment of the de ciency, if any, between the duty nally
assessed/re-assessed and the duty provisionally assessed.

(2) Section 18 of the Customs Act, 1962 further stipulates that

the importer is liable to pay interest, on any amount payable
consequent to the nal assessment order @ 15% p.a. from the rst
day of the month in which the duty is provisionally assessed till
the date of payment thereof.

Accordingly, amount of interest payable will be

= [Rs. 1,50,000 x 15% x 51/365] + [Rs. 50,000 x 15% x 62/365]

= Rs. 3,144 + Rs. 1,274

= Rs. 4,418

30. (1) As per the Baggage Rules, 2016, an Indian resident arriving from
a 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 speci ed articles] up to a value

of Rs. 50,000 carried as accompanied baggage [General duty free
baggage allowance].

(iii) Further, such general duty free baggage allowance of a

passenger cannot be pooled with the general duty free baggage
allowance of any other passenger.

(2) One laptop computer when imported into India by a

passenger of the age of 18 years or above (other than member of
crew) is exempt from whole of the customs duty [Noti cation No.
11/2004 Cus. dated 08.01.2004].

(3) (i) Accordingly, there will be no customs duty on used

personal effects(worth Rs. 1,40,000) of Mrs. and Mr. Iyer and laptop
computer brought by them will be exempt from duty.

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 CA Final May/Nov 24
Import & Export (Answers)

(ii) Duty payable on personal computer after exhausting the duty

free baggage allowance will be Rs.58,000 – Rs. 50,000 = Rs. 8,000.

(iii) Effective rate of duty for baggage =38.50% [including Social

Welfare Surcharge]

(iv) Therefore, total customs duty = Rs. 3,080.

31. Rate of duty will be 10%, because the bill of entry is deemed to
have been filed on the date of entry inward though it was actually
filed before the rate of duty increased.

32. As per rule 5 of the Baggage Rules, 2016, a passenger who has been
residing abroad for more than one year and returns to India shall
be allowed duty free clearance of jewellery in bona fide baggage as
under: • Jewellery upto a weight of 20 grams with a value cap of ₹
50,000 for a gentlemen passenger • Jewellery upto a weight of 40
grams with a value cap of ₹ 1,00,000 for a lady passenger Thus, in
the given case, Mr. Anil would be allowed duty free jewellery upto
a weight of 20 grams with a value cap of ₹ 50,000 and his wife
would be allowed duty free jewellery upto a weight of 40 grams
with a value cap of ₹1,00,000. Further, in addition to the jewellery
allowance, Mr. Anil and his wife would also be allowed duty free
clearance of jewellery worth ₹ 1,00,000 (₹ 50,000 per person) as
part of free baggage allowance.

33. As per rule 3 of Baggage Rules, 2016, tourist of foreign origin,

excluding infant, is allowed duty free clearance of (i) travel
souvenirs; and (ii) Articles up to the value of ₹ 15,000 (excluding
inter alia fire arms, cartridges of fire arms exceeding 50 and
cigarettes exceeding 100 sticks), if carried on in person.

Computation of customs duty payable ₹

Travel souvenir Nil
Articles carried on in person 1,50,000
Cigarettes [100 sticks can be accommodated in General Free 10,000
Allowance (GFA)]
Fire arms cartridge (50 cartridges can be accommodated in 25,000
GFA)
Baggage than can be accommodated in GFA 1,85,000
Less: GFA 15,000
Baggage on which duty is payable 1,70,000
Duty payable @ 38.50% (including 10% Social welfare 65,450
surcharge)

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 CA Final May/Nov 24
Import & Export (Answers)

Note: Fire arms, cartridges of rearms exceeding 50 and cigarettes

exceeding 100 sticks are not chargeable to rate applicable to baggage
[Noti cation No. 26/2016 Cus. dated 31.03.2016]. These items are charged
@ 100% applicable to baggage under Heading 9803 of the Customs Tariff.

34. Yes, charges are payable for late filing of bill of entry if an
importer fails to present the bill of entry before the end of the day
(including holidays) preceding the day on which the
aircraft/vessel/vehicle carrying the goods arrives at a customs
station at which such goods are to be cleared for home
consumption or warehousing, and the proper officer is satisfied
that there was no sufficient cause for such delay [Section 46(3) of
the Customs Act, 1962]. However, the Board may, in such cases as
it may deem fit, prescribe different time limits for presentation of
the bill of entry, which shall not be later than the end of the day of
such arrival. Yes, a bill of entry can be filed in advance. It can be
presented within 30 days of the expected arrival of the
aircraft/vessel/vehicle by which the goods have been shipped for
importation into India vide proviso to section 46(3) of the Customs
Act, 1962.

35. (1) Provisional assessment of duty is permitted in case where the

proper officer deems it necessary to subject any imported goods or
export goods to any chemical or other test [Section 18 of the
Customs Act, 1962]. Thus, Laxmi Company can pay the duty on
provisional basis. Before, the provisional assessment of duty, the
importer must furnish such security as the proper officer deems fit
for the payment of the deficiency, if any, between the duty finally
assessed/re-assessed and the duty provisionally assessed.

(2) Section 18 of the Customs Act, 1962 further stipulates that the
importer is liable to pay interest, on any amount payable
consequent to the final assessment order @ 15% p.a. from the first
day of the month in which the duty is provisionally assessed till
the date of payment thereof. Accordingly, amount of interest
payable will be = [₹ 1,50,000 x 15% x 51/365] + [₹ 50,000 x 15% x
62/365] = ₹ 3,144 + ₹ 1,274 = ₹ 4,418

36. (1) As per the Baggage Rules, 2016, an Indian resident arriving from
a country other than Nepal, Bhutan, or Myanmar,is allowed duty
free clearance of-
(i) Used personal effects and travel souvenirs without any value
limit.

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 CA Final May/Nov 24
Import & Export (Answers)

(ii) Articles [other than certain specified articles] up to a value

of ₹ 50,000 carried as accompanied baggage [General duty
free baggage allowance].
(iii) Further, such general duty free baggage allowance of a
passenger cannot be pooled with the general duty free
baggage allowance of any other passenger.

(2) One laptop computer when imported into India by a passenger

of the age of 18 years or above (other than member of crew) is
exempt from whole of the customs duty [Noti cation No. 11/2004
Cus. dated 08.01.2004].

(3) (i) Accordingly, there will be no customs duty on used personal

effects(worth ₹ 1,40,000) of Mrs. and Mr. Iyer and laptop computer
brought by them will be exempt from duty.

(ii) Duty payable on personal computer after exhausting the duty

free baggage allowance will be ₹58,000 – ₹ 50,000 = ₹ 8,000.

(iv) Effective rate of duty for baggage =38.50% [including Social

Welfare Surcharge]
(v) Therefore, total customs duty = ₹ 3,080.

37. Computation of customs duty payable by Mrs. X

Particulars ₹
Personal effects [Duty free clearance is allowed] Nil
Laptop computer [One laptop computer is exempt Nil
when imported into India by a passenger ≥ 18 years of
age]
Jewellery [Duty free jewellery allowance is not 75,000
available to Mrs. X since she did not reside abroad for
more than 1 year]
Music system 50,000
Total value 1,25,000
Less: General duty free baggage allowance of ₹ 50,000 50,000
Value of baggage liable to customs duty 75,000
Rate of Duty 38.50%
Customs duty @ 38.50% (including social welfare 28,875
surcharge)

38.

(1) As per the Baggage Rules, 2016, an Indian resident

arriving from a country other than Nepal, Bhutan,
or Myanmar, is allowed duty free clearance of-
(i) Used personal effects and travel souvenirs

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 CA Final May/Nov 24
Import & Export (Answers)

without any value limit.

(ii) Articles [other than certain specified
articles] up to a value of ₹ 50,000
carried as accompanied baggage
[General duty free baggage
allowance].
(iii) Further, such general duty free
baggage allowance of a passenger
cannot be pooled with the general
duty free baggage allowance of any
other passenger.
(2) One laptop computer when imported into India by a
passenger of the age of 18 years or above (other than
member of crew) is exempt from whole of the
customs duty [Noti cation No. 11/2004 Cus. dated
08.01.2004].
(3) (i) Accordingly, there will be no customs duty on
used personal effects (worth ₹ 1,40,000) of Mrs.
and Mr. Iyer and laptop computer brought by
them will be exempt from duty.
(ii) Duty payable on personal computer after exhausting
the duty free baggage allowance will be
₹58,000 – ₹ 50,000 = ₹ 8,000.
(iii) Effective rate of duty for baggage =38.50% [including
Social Welfare Surcharge]
(iv) Therefore, total customs duty = ₹ 3,080.

39. Yes, charges are payable for late filing of bill of entry if an
importer fails to present the bill of entry before the end of the day
(including holidays) preceding the day on which the
aircraft/vessel/vehicle carrying the goods arrives at a customs
station at which such goods are to be cleared for home
consumption or warehousing, and the proper officer is satisfied
that there was no sufficient cause for such delay [Section 46(3) of
the Customs Act, 1962]. However, the Board may, in such cases as
it may deem fit, prescribe different time limits for presentation of
the bill of entry, which shall not be later than the end of the day of
such arrival.

Yes, a bill of entry can be led in advance. It can be presented

within 30 days of the expected arrival of the aircraft/vessel/vehicle
by which the goods have been shipped for importation into India
vide proviso to section 46(3) of the Customs Act, 1962.

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 CA Final May/Nov 24
Import & Export (Answers)

In the given case also, the time period as described above will be
available - with reference to the date of arrival of vessel/aircraft -
for ling the bill of entry.

40. As per rule 3 of the Baggage Rules, 2016, an Indian resident

arriving from any country other than Nepal, Bhutan or
Myanmar, shall be allowed clearance free of duty articles
in h is bona fide baggage, that is to say, used personal
effects and travel souvenirs; and articles [other than
certain specified articles], upto the value of ₹ 50,000 if
these are carried on the person or in the accompanied
baggage of the passenger.
Thus, there is no customs duty on used personal effects and
travel souvenirs and general duty - free baggage allowance
is ₹ 50,000 per passenger. Thus, duty liability of Mr.
Bandhopadhya and his wife is nil for the used personal
effects worth ₹ 80,000 and 2 music systems each worth ₹
50,000.

As per rule 5 of the Baggage Rules, 2016, the jewellery allowance is

as follows:

Jewellery brought Duty free allowance

Gentleman Jewellery upto a weight of 20 grams with
Passenger a value cap of ₹ 50,000
Lady Passenger Jewellery upto a weight of 40 grams
with a value cap of ₹ 1,00,000

However, the jewellery allowance is applicable only to a passenger

residing abroad for more than 1 year.
Consequently, there is no duty liability on the jewellery
brought by Mr. Bandhopadhya as he had stayed abroad
for period exceeding 1 year and weight of the jewellery
brought by him is 20 grams with a value less than ₹50,000.
However, his wife is not eligible for this additional
jewellery allowance as she had stayed abroad for a period
of less than a year. Thus, she has to pay customs duty on
the entire amount of jewellery brought by her as she has
already exhausted the general duty free baggage
allowance of ₹50,000 allowed under rule 3.

41. As per Baggage Rules, 2016, an Indian resident arriving

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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 ₹50,000 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 ₹ 90,000) of Mrs. and Mr. X
and laptop computer brought by them will be exempt
from duty.
Duty payable on personal computer after exhausting
the duty free baggage allowance will be ₹ 52,000 –
₹50,000 = ₹2,000.
Effective rate of duty for baggage =38.5% [including
social welfare surcharge @ 10%] Therefore, total
customs duty = ₹770

42. Before, the provisional assessment of duty, the importer shall

execute a bond for the purpose of undertaking to pay on demand
the deficiency between the duty as may finally assessed and the
duty provisionally assessed and shall furnish prescribed amount of
security for the payment of the duty deficiency.

The importer is liable to pay interest, on any amount payable

consequent to the nal assessment order @ 15% p.a. from the
rst day of the month in which the duty is provisionally
assessed till the date of payment thereof.

Accordingly, amount of interest payable will be

= ₹ 1,40,000 x 15% x 62/365

= ₹ 3,567 (rounded off )

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Import & Export (Answers)

43. Where the baggage of a passenger contains any prohibited article

which has been declared by him under section 77, the proper
officer may, at the request of the passenger, detain such article for
the purpose of being returned to him on his leaving India.

In the given case, proper of cer has detained the prohibited article
declared and brought by Mr. Cliff Paul. Such articles shall be
returned to him on his leaving India.

Further, if for any reason, he is not able to collect it at the time of

his leaving India, the said article may be returned to him through
any other passenger authorized by him and leaving India or as
cargo consigned in his name.

Number Based Questions

44. Computation of customs duty payable by Mrs. X

Particulars Rs.

Personal effects Nil

[Duty free clearance is allowed]

Laptop computer Nil

[One laptop computer is exempt when imported

into India by a passenger ≥ 18 years of age]

Jewellery 75,000

[Duty free jewellery allowance is not available to

Mrs. X since she did not reside abroad for more than
1 year]

Music system 50,000

Total value 1,25,000

Less: General duty free baggage allowance of Rs. 50,000

50,000

Value of baggage liable to customs duty 75,000

Rate of Duty 38.50%

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Customs duty @ 38.50% (including social welfare 28,875

surcharge)

45.
Computation of customs duty payable
Travel souvenir Nil
Articles carried on in person 1,50,00
Cigarettes (Since the number of cigarettes does not 08,000
exceed 100,the same will be covered within the scope of
rule 3 of Baggage Rules, 2016 and thus, be eligible for
general free allowance (GFA) or concessional rate of duty
applicable to baggage vide Notification No. 26/2016 Cus.
Fire arms cartridge [Since the number of fire arms 1
cartridge doesnot exceed 50,the same will be covered 5,000
within the scope of rule 3 of Baggage Rules, 2016 and thus,
be eligible for GFA or concessional rate of duty applicable to
baggage vide Notification No.26/ 2016 Cus. dated 31.03.201
6,as the case may be.]
One litre of wine [Since the quantity of wine does not 1
exceed 2 litres, the san1e will be covered within the scope 5,000
of rule 3 of Baggage Rules,2016 and thus, be eligible for GFA
or concessional rate of duty applicable to baggage vide
Notification No. 26/ 2016 Cus. dated 31.03.2016,as the case
may be.]
Baggage within the scope of rule 3 of Baggage Rules,2016 1,
88,000
Less:GFA 1
5,000
Baggage on which duty is payable 1,73,00
Customs duty payable @ 38.5% 066,60
5

46. The proper officer can finalize the provisional assessment within 2
months of receipt of a chemical or other test report, where the
provisional assessment is ordered for that reason. The Commissioner
of Customs may allow a further time period of 3 months in case the
proper officer is not able to finalize the provisional assessment
within the period of 2 months.

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Thus, in the given case, provisional assessment will be nalized by

05.07.2021 [within 2 months of receipt of test report (05.05.2021)].
However, if the proper of cer is not able to nalize the provisional
assessment by 5.07.2021, the Commissioner may allow a further
period of 3 months, i.e., till 05.10.2021 to the proper of cer to
nalize the provisional assessment.

47. As per rule 3 of Baggage Rules, 2016, tourist of foreign origin,

excluding infant, is allowed duty free clearance of
(i) travel souvenirs; and
(ii)Articles up to the value of Rs. 15,000 (excluding inter alia fire arms,
cartridges of fire arms exceeding 50 and cigarettes exceeding 100
sticks), if carried on in person.

Computation of customs duty payable Rs.

Travel souvenir Nil
Articles carried on in person 1,50,000
Cigarettes [100 sticks can be accommodated in 10,000
General Free
Allowance (GFA)]
Fire arms cartridge (50 cartridges can be 25,000
accommodated in
GFA)
Baggage than can be accommodated in GFA 1,85,000
Less: GFA 15,000
Baggage on which duty is payable 1,70,000
Duty payable @ 38.50 (includi 10% Socia welfar 65,450
surcharge) % ng l e
Note: Fire arms, cartridges of firearms exceeding 50 and cigarettes
exceeding 100 sticks are not chargeable to rate applicable to
baggage [Notification No. 26/2016 Cus. dated 31.03.2016]. These
items are charged @ 100% applicable to baggage under Heading
9803 of the Customs Tariff.

48. Rate of duty will be 10%, because the bill of entry is deemed to
have been filed on the date of entry inward though it was actually
filed before the rate of duty increased.

49. Yes, Mr. Krishna Bhansali can apply for provisional assessment
under section 18 of the Customs Act, [Link] 18(1) provides
that provisional assessment can be resorted to, inter alia, where
the importer or exporter is unable to make self-assessment under

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Import & Export (Answers)

sub-section (1) of section 17 and makes a request in writing to the

proper officer for assessment. While ‘unable’ is not about
willingness but deficiency of information to make an accurate
determination of the liability, in this case Mr. Bhansali satisfies the
criterion because he lacks the information necessary to classify
the goods pending technical testing.

50. As per section 18(3) of the Customs Act, 1962, an importer is liable
to pay interest at the rate of 15% p.a. (Notification No. 33/2016-
Cus. (NT) dated 01.03.2016), on any amount payable consequent to
the re-assessment order from the first day of the month in which
the duty is provisionally assessed till the date of payment.

Therefore, in the given case, Moris Lal is liable to pay following

interest in respect of 1st consignment:
= Rs. 1,80,000 × 15% × 67/365
= Rs. 4,956 (rounded off)

If any amount refundable consequent to the re-assessment order

is not refunded within 3 months from date of re-assessment of
duty, interest is payable to importer on unrefunded amount at the
specified rate till the date of refund of such amount in terms of
section 18(4) of the Customs Act, 1962.

Since in the given case, refund has been made (28.04.2020) within
3 months from the date of re- assessment of duty (02.02.2020),
interest is not payable to Moris Lal on duty refunded in respect of
2nd consignment.

51. As per rule 3 of the Baggage Rules, 2016, an Indian resident arriving
from any country other than Nepal, Bhutan or Myanmar, shall be
allowed clearance free of duty articles in his bona fide baggage,
that is to say, used personal effects and travel souvenirs; and
articles [other than certain specified articles], upto the value of
Rs.50,000 if these are carried on the person or in the accompanied
baggage of the passenger.

Thus, there is no customs duty on used personal effects and travel

souvenirs and general duty free baggage allowance is Rs.50,000 per
passenger. Thus, duty liability of Mr. Sujoy and his wife is nil for
the used personal effects worth Rs.80,000 and 2 music systems
each worth Rs.50,000.

As per rule 5 of the Baggage Rules, 2016, the jewellery allowance is as

follows:

Jewelry brought by Duty free allowance

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 CA Final May/Nov 24
Import & Export (Answers)

Gentleman Jewelry upto a weight of 20 grams with a value cap of

Passenger Rs. 50,000
Lady Passenger Jewelry upto a weight of 40 grams with a value cap of
Rs. 1,00,000

However, the jewellery allowance is applicable only to a passenger

residing abroad for more than 1 year. Consequently, there is no
duty liability on the jewellery brought by Mr. Sujoy as he had stayed
abroad for period exceeding 1 year and weight of the jewellery
brought by him is 20 grams with a value less than Rs.50,000.

However, his wife is not eligible for this additional jewellery

allowance as she had stayed abroad for a period of less than a year.
Thus, she has to pay customs duty on the entire amount of
jewellery brought by her as she has already exhausted the general
duty free baggage allowance of Rs.50,000 allowed under rule 3.

52. As per section 61(2) of the Customs Act, 1962, if goods (not meant
for being used in an 100% EOU, STP unit, EHTP unit) remain in a
warehouse beyond a period of 90 days from the date on which the
order permitting deposit in a warehouse is made, interest is
payable @ 15% p.a., on the amount of duty payable at the time of
clearance of the goods, for the period from the expiry of the said
90 days till the date of payment of duty on the warehoused goods.

Therefore, in the given case, interest payable will be computed as

under:-

(i) Period of 90 days commencing from the date of order

permitting deposit in a warehouse expires on - 19.08.2018.

(ii) No. of days for which interest shall be

payable = 56 days [12 days of August + 30 days of
September + 14 days of October]

53. Product ‘A’ is imported goods because its ultimate destination is in

India.
Products ‘A & B’ are called as Transhipment goods, since these goods
are transshipped to another vessel, Product ‘A’ transhipped to
Chennai attracts import duty whereas product ‘B’ is destined to
Srilanka without payment of duty.

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Products C & D are transit goods since these goods remains in the
same vessel Bhishma chartered to Australia.

54. Computation of customs duty payable by Padmavati

Particulars ₹
Personal effects Nil
[Duty free clearance is allowed]
Laptop computer Nil
[One laptop computer is exempt when imported into India by
a passenger ≥ 18
years of age]
Jewellery 75,000
[Duty free jewellery allowance is not available to
Padmavati since she did not reside abroad for more
Music system 50,000
Total value 1,25,000

Less: General duty free baggage allowance of ₹ 50,000 50,000

Value of baggage liable to customs duty 75,000
Rate of Duty 38.50%
Customs duty @ 38.50% (including social welfare 28,875
surcharge)

55. As per rule 3 of the Baggage Rules, 2016, tourist of

foreign origin, excluding infant, is allowed duty free
clearance of:
i. used personal effects and travel souvenirs; and
ii. Articles up to the value of 7 15,000 (excluding,
inter alia, firearms, tobacco exceeding 125
gms and cigars exceeding 25), if carried on in
person or in the accompanied baggage of the
passenger.
In view of the said provisions, customs duty shall be
computed as follows
Particulars Rs.
Used personal effects Nil
Travel souvenirs Nil
Laptop Nil
[One laptop computer is exempt when
imported into India by a passenger * 18 years

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Import & Export (Answers)

Tobacco [Rs. 5 X125 gm] 625

[125 gms tobacco can be accommodated in
General Free Allowance (GFA)]
Cigars [7 100 X 25] 2,500
[25 cigars can be accommodated in GFA]
Total value 3,125
Less: GFA 15,000
Baggage on which duty is payable Nil
Duty payable on baggage Nil

Note: Firearms, cigars exceeding 25 and tobacco

exceeding 125 gms are not chargeable to rate
applicable to baggage. These items are charged @
100% applicable to baggage under Heading 9803 of
the Customs Tariff.

56. Calculation of taxable value of baggage

Used personal effects [Duty free clearance is allowed.] Nil

Music system 1,20,000
Jewellery [Duty free jewellery allowance is not available to 1,30,000
Mr. X since he did not reside abroad for more than 1 year.]
Laptop6 [One laptop computer is exempt when imported into Nil
India by a passenger
1 litre wine [Can be accommodated in general free 6,000
allowance]
Mobile phone 50,000
Total value 3,06,000
Less: General duty free baggage allowance of ` 50,000 50,000
Taxable value of baggage 2,56,000
6 It has been most logically assumed that Mr. X ≥ 18 years of age.

57.

Particulars ₹
Personal effects Nil
Used personal effects of infant Nil
New camera 45,000
Mobile phone 12,500
Cigarette sticks 70 1,000
Wine -2 litres 18,000
Travel souvenirs Nil
Laptop Nil

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Import & Export (Answers)

Total 76,500
Less: General Free Allowance 50,000
Baggage on which duty is payable 26,500
Duty payable on baggage @ 38.50% 10,203
(including 10% Social welfare surcharge)

Note: In the above solution, it has been assumed that Kiara is

returning from a country other than Nepal, Bhutan and Myanmar.
However, in case it is assumed that Kiara is returning from Nepal,
Bhutan or Myanmar, General Free Allowance is ₹ 15,000 instead of ₹
50,000. In that case, duty payable on baggage @ 38.50% will be ₹
23,678.

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Chapter 6 – Warehousing
Multiple Choice Questions

1. What is the relevant date for determining rate of duty in

case of warehoused goods cleared for home consumption?

(a) Date of presentation of into-bond bill of entry

(b) Date of presentation of ex-bond bill of entry i.e. bill of entry
for home consumption
(c) Date of payment of duty
(d) Date of import of goods into India (1 Mark March 22)

Theory
2. Elaborate the provisions relating to the owner’s right to deal
with warehoused goods under section 64 of the Customs Act,
1962. (5 Marks Sep 22)

3. Interest free period of ninety (90) days under section 61(2) in

respect of warehoused goods commences from the date on
which an into-bond bill of entry in respect of such goods is
presented. Comment on the validity of the statement.

4. “If manufacturing operations are carried out on warehoused

goods and nished products are cleared for home
consumption, then appropriate duty of customs should be
levied on the quantity of the warehoused goods contained in
the waste or refuse arising out of such manufacturing
process.” Examine the validity of the said statement in the
context of section 65 of the Customs Act, 1962 dealing with
manufacture and other operations in relation to warehoused
goods.

5. Enumerate the circumstances under which goods are

considered to have been removed improperly from a
warehouse under the Customs Act.

Practical Theory

6. BL Ltd. imported Super Kerosene Oil (SKO) and stored it in a

warehouse. An ex-bond bill of entry for home consumption was led
and duty was paid as per the rate prevalent on the date of
presentation of such bill of entry; and the order for clearance for
home consumption was passed.

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On account of highly combustible nature of SKO, the importer made

an application to permit the storage of such kerosene oil in the same
warehouse until actual clearance for sale/use. The application was
allowed. However, the rate of duty increased when the goods were
actually removed from the warehouse.
The Department demanded the differential duty. The company
challenged the demand. Whether it will succeed? Discuss brie y
taking support of decided case(s), if any.

Number Based Questions

7. Vipul imported certain goods in May. An ‘into bond’ bill of entry was
presented on 14th May 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 4 months was
issued on 21st May. 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 21st September.
A notice was issued under section 72 of the Customs Act, 1962,
demanding duty and interest. Vipul cleared the goods on 14th October.
Compute the amount of duty and interest payable by Vipul while
removing the goods on the basis of the following information:

Particulars 14th May 21st September 14th October

Rate of ` 65.20 ` 65.40 ` 65.50

exchange per
US $ (as
noti ed by
Central Board of
Indirect taxes &
Customs)
Basic customs 15% 10% 12%
duty

Integrated Tax leviable under section 3(7) of the Customs Tariff Act is
exempt.
Ignore agriculture and infrastructure development cess.

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Chapter 6 – Warehousing (Answers)

Multiple Choice Questions

1. (b)

Theory

2. When the imported goods are warehoused, the temporary

possession and the custody of the goods are passed on to
the warehouse keeper. However, the remaining titular
rights of the goods vest with the owner.
Thus, the owner has every access to the goods. In the course of his
dealings with the goods, he may:
(a) inspect the goods;
(b) ensure that the goods do not deteriorate or get
damaged during storage in the warehouse;
(c) sort the goods; or
(d) show the goods for sale.

3. Invalid. As per section 61, if goods remain in a warehouse beyond a

period of 90 days from the date on which the order permitting deposit
of goods in a warehouse under section 60(1) is made, interest is payable
@ 15% on the amount of duty payable at the time of clearance of the
goods, for the period from the expiry of the said 90 days till the date of
payment of duty on the warehoused goods. In other words, the relevant
date for determining the commencement of the period of 90 days is the
date of order made under section 60 permitting removal of goods from
the customs station for deposit in a warehouse, and not the date on
which into-bond bill of entry in respect of such goods is presented.
4. The said statement is valid. Section 65 lays down that if the finished
products arising as a result of operations carried out in the warehouse
are cleared for home consumption, import duty would be charged on
the quantity of the warehoused goods contained in the waste or refuse
arising from such operations.
5. Section 72 provides that in any of the following circumstances the
goods shall be considered to have been removed improperly from a
warehouse– (a) where any warehoused goods are removed from a
warehouse in contravention of section 71 of the Customs Act; (b) where
any warehoused goods have not been removed from a warehouse at
the expiration of the period during which such goods are permitted
under section 61 to remain in a warehouse; (c) where any goods in
respect of which a bond has been executed under section 59 and which

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Warehouse (Answers)

have not been cleared for home consumption or export are not duly
accounted for to the satisfaction of the proper officer.

Practical Theory

6. Yes, the company will succeed. The facts of the given situation are
similar to the case of CCus vs. Biecco Lawrie Ltd. 2008 (223) ELT 3 (SC)
wherein the Supreme Court has held that where duty on the
warehoused goods is paid and out of charge order for home
consumption is made by the proper of cer in compliance of the
provisions of section 68, the goods allowed to be retained for storage
in the warehouse as permitted under section 49 of the Customs Act
are not treated as warehoused goods and importer would not be
required to pay anything more.

Section 49 of the Customs Act, 1962 inter alia also provides that
imported goods entered for home consumption if stored in a public
warehouse, or in a private warehouse on the application of the
importer and if the same cannot be cleared within a reasonable time,
shall not be deemed to be warehoused goods for the purposes of this
Act, and accordingly the provisions of Chapter IX shall not apply to
such goods.

Number Based Questions

7. Computation of import duty payable by Vipul

Particulars Amount (US $)

Assessable value 1,00,000
Amount (₹)
Value in Indian currency (US $ 1,00,000 x ₹ 65.20) 65,20,000
[Note 1]
Customs duty @ 10% [Note 2] 6,52,000
Add: Social welfare surcharge @ 10% on ₹ 6,52,000 65,200
Total customs duty payable 7,17,200

Notes:
1. As per third proviso to section 14(1) of the Customs Act, 1962,
assessable value has to be calculated with reference to the rate of
exchange prevalent on the date on which the into bond bill of entry is
presented for warehousing under section 46 of the Customs Act, 1962.

2. Goods which are not removed within the permissible period are
deemed to be improperly removed in terms of section 72 of the
Customs Act, 1962 on the day they should have been removed
[Kesoram Rayon v. CC 1996 (86) ELT 464 (SC)]. The applicable rate of

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Warehouse (Answers)

duty in such a case is the rate of duty prevalent on the last date on
which the goods should have been removed.

As per section 61 of the Customs Act, 1962, if goods remain in a

warehouse beyond a period of 90 days from the date on which the
order permitting deposit of goods in warehouse under section 60 is
made, interest is payable @ 15% p.a., on the amount of duty payable
at the time of clearance of the goods, for the period from the expiry
of the said 90 days till the date of payment of duty on the
warehoused goods.
Therefore, interest payable will be computed as under:

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Chapter 7 – Refunds
Theory

1. Explain the relevant dates as provided in section 26A(2) of the

Customs Act, 1962 for purpose of refund of duty under speci ed
circumstances, namely:
(i) goods exported out of India
(ii) relinquishment of title to goods
(iii) goods destroyed or rendered valueless. (5 Marks March ‘23)

2. (i) Explain the provisions of Customs Act, 1962 relating to

computation of limitation for submission of refund application.
(2 Marks Jan 21)

(ii) Would the period of limitation for claiming refund applicable to

refund of amount paid on account of duty paid twice under mistake?
Brie y discuss with reference to legal provisions and case law.

(3 Marks Jan 21 )

3. Explain the provisions of Customs Act, 1962 relating to computation

of limitation for submission of refund application.

4. Section 26A of Customs Act, 1962 provides for refund of import duty
paid if goods are found defective or not as per speci cations. Discuss
the conditions governing such refund in brief.

5. What is the minimum monetary limit prescribed in the Customs law

below which no refund shall be granted?

6. Explain the doctrine of unjust enrichment with respect to refund of

duty.

7. Explain the relevant dates as provided in section 26A(2) of the

Customs Act, 1962 for purpose of refund of duty under speci ed
circumstances, namely: (i) goods exported out of India (ii)
relinquishment of title to goods (iii) goods destroyed or rendered
valueless.

8. Explain whether refund of import duty is allowed in case of perishable

goods?

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9. Brie y explain whether interest is paid to the applicant in case of

delayed refund by Customs Authorities? If yes, also explain the period
for computation of interest?

Practical Theory

10. M/s. HIL imports copper concentrate from different suppliers. At the
time of import, the seller issues a provisional invoice and the goods
are provisionally assessed under section 18 of the Customs Act, 1962
based on the invoice. When the nal invoice is raised, based on the
price prevalent in the London Metal Exchange on a predetermined
date as agreed in the contract between the buyer and seller, the
assessments are nalized on the basis of the price in such invoices.
M/s HIL has led a refund claim arising out of the nalization of the
bill of entry by the authorities. The Department, however, has rejected
the refund claim on the grounds of unjust enrichment. Discuss
whether the action of the department is correct in law?

11. XYZ Ltd imported capital goods and used them in its factory to
produce goods for sale. Upon discovery of an error by which excess
import duty had been paid on the said capital goods, it led a claim
for refund. As regards unjust enrichment, it contended -• that the
capital goods were not sold and hence the principle of unjust
enrichment will not apply to the refund of import duty paid on capital
goods; and • that in any case the price of the nished goods
manufactured in the factory remained the same before and after the
import and installation of the capital goods, which is suf cient proof
to establish that duty burden has not been passed on. Examine the
merits of these contentions, with the support of case law, if any.

12. Acme Sales’ imports were being provisionally assessed pending a

veri cation that the department was carrying out. Upon completion
of the veri cation, the assessments were nalized, and Acme Sales
was asked to pay ` 12 lakh, which it paid. After six months, upon
detailed scrutiny of the veri cation report and taking legal opinion on
it, Acme Sales led a claim for refund of ` 8 lakh on the ground that
the differential amount should be ` 4 lakh only and that there were
factual errors in the veri cation report. Was this the correct mode of
redressal for Acme Sales? What will be likely outcome of the claim?
Discuss on the basis of case law on the subject.

13. Mr. N has, over three consignments of 200, 400 and 400 units,
imported a total of 1000 units of an article "ZEP", which has been
valued at ` 1,150 per unit. The customs duty on this article has been
assessed ` 250 per unit. He adds his pro t margin ` 350 per unit and

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sells the article for ` 1,750 per unit. After one month of selling the
entire consignment of article "ZEP", Mr. N found that there had been
an error in payment of amount of duty, in which duty for the
consignment of 200 units was paid as if it was 400 units, resulting in
excess payment of duty. Mr. N les an application for refund for `
50,000 (200 X 250). Is the bar of unjust enrichment attracted?

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Chapter 7 - Refunds
Theory

1. The relevant dates provided under explanation to section

26A(2) of the Customs Act, 1962 for purpose of refund of
duty under specified circumstances are as follows:-

Case Relevant date

(i) Goods exported out of Date on which the proper officer
India makes an order permitting
clearance and loading of goods
(ii) Relinquishment of Date of such relinquishment
title to the goods
(iii) Goods being Date of such destruction or
destroyed or rendering of goods
rendered valueless commercially valueless

2. (i) The period of limitation for submission of refund application is one

year and it is computed in the following manner:

In case where the time limit of one year should

be calculated from
refund claim is filed by the date of payment of duty/interest
importer/exporter
refund claim is filed by another the date of purchase of goods
person, from whom duty was
collected
goods are exempt from duty by date of issue of such exemption
a special order order
duty is paid provisionally the date of adjustment of duty
after the final assessment
thereof or in case of re-
assessment, from the date of
such re- assessment

refund arises as a result of any date of such judgement/

judgement/decree/order/direction decree/ order/ direction
of the
AppellateAuthority/Appellate
Tribunal/Court

The limitation of one year is not applicable if duty is paid under

protest.

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Refunds (Answers)

(ii) The High Court, in Parimal Ray v. CCus. 2015 (318) ELT 379 (Cal.),
has ruled that the law of limitation under Customs Act is applicable
to duty or interest paid under that Act.

However, any sum paid to the exchequer by mistake is not the duty or
excess duty but is simply money paid to the account of Government.

Hence, limitation of one year applicable to refunds of customs duty

will not apply to refunds of amount paid to the Government by
mistake. In view of the same, the limitation period of one year will
not apply to the duty paid twice by mistake.

3. According to section 27(1) of the Customs Act, 1962, a refund claim

should be lodged before the expiry of one year from the date of
payment of such duty or interest. The period of limitation of one year
should be computed in the following manner:

(a) If the refund claim is lodged by the importer, the time limit
should be calculated from the date of payment of duty.
(b) If the refund claim is lodged by the buyer of imported goods, the
time limit should be calculated from the date of purchase of
goods.
(c) In case of goods which are exempt from payment of duty by an
ad-hoc exemption, the limitation of one year should be
computed from the date of issue of such exemption order.
(d) Where any duty is paid provisionally, the time limit should be
computed from the date of adjustment of duty after the nal
assessment thereof or in case of re-assessment, from the date
of such re-assessment.
(e) Where the refund arises as a result of any judgement/ decree/
order/ direction of the Appellate Authority/ Appellate
Tribunal/Court, the time limit should be calculated from the
date of such judgement/decree/order/direction.

The time limit of one year is not applicable if duty is paid under
protest. Finally, it is worth mentioning that above provisions
regarding time limit are mandatory and customs authorities cannot
grant a refund which is led beyond the maximum permissible period.

4. Often, goods imported are found to be defective or not according to

speci cations. In such cases, earlier, the refund of customs duty paid
at the time of import could be obtained only if the imported goods were
physically returned to foreign supplier. Generally, cost of return of the
rejected goods is heavy and it is economical to dispose of the goods in
India itself. Realising this practical dif culty, section 26A of Customs

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Refunds (Answers)

Act makes provision for refund of import duty paid if goods are found
defective or not as per speci cations.
The refund is admissible if goods are re-exported or relinquished and
abandoned to the customs authorities or destroyed. Thus, refund is
possible even if goods are destroyed or relinquished in India without re-
exporting the same.
The section stipulates the following conditions for the refund:
(i) the goods are found to be defective or otherwise not in
conformity with the speci cation agreed upon between the
importer and the supplier of goods;
(ii) the goods have not been worked, repaired or used after
importation except where such use was indispensable to discover
the defects or non-conformity with the speci cations;
(iii) the goods are identi ed to the satisfaction of Assistant/Deputy
Commissioner of Customs as the goods which were imported;
(iv) the importer does not claim drawback under any other provision
of this Act; and
(v) the goods are exported or the importer relinquishes his title to
the goods and abandons them to customs or such goods are
destroyed/rendered commercially valueless in the presence of
proper of cer in prescribed manner within 30 days from the date
on which the order of clearance of imported goods for home
consumption is made by the proper of cer. This period of 30 days
can be extended up to 3 months.
(vi) An application for refund of duty shall be made before the expiry
of 6 months from the relevant date in prescribed form and
manner.
(vii) Imported goods should not be such regarding which an offence
appears to have been committed under this Act or any other law.
(viii) Imported goods should not be perishable goods and goods which
have exceeded their shelf life or their recommended storage
before use period.

5. As per third proviso to section 27(1) of the Customs Act, 1962, the
minimum monetary limit below which refund cannot be granted is `
100.

6. Customs duty is a levy under Indirect taxation, which implies that the
incidence of the customs duty paid is generally passed on to the buyer
of the goods. When an importer imports goods, he has to pay the
customs duty on such goods. Similarly, an exporter in case of export
goods, if the same are subject to export duty, the exporter pays the
export duty. This duty is recovered from the buyer when the goods are

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Refunds (Answers)

sold by the importer or exporter, as the case may be. In other words,
the incidence or burden of duty is passed on to the buyer, from whom
the importer or exporter collects the customs duty paid. Subsequently,
if the importer or exporter makes a claim for refund of duty paid (due
to excess payment) and receives the refund from the Government, he
would be called to have enriched himself as he collected the duty from
his customer also and also as refund from the Government. Such
enrichment is referred to as ‘unjust enrichment’. Accordingly, the
doctrine of ‘unjust enrichment’ implies that no person should enrich
himself at the cost of others. Therefore, wherever there is excess
payment of duty, the refund is to be given only to the person who has
borne the burden of such duty along with interest, if any. When the
person who applies for refund is not the person who has borne the
burden of duty, the refund is paid into a fund called 'Consumer Welfare
Fund'. Section 28D provides that every person who has paid duty under
the Customs Act, unless the contrary is proved by him, shall be deemed
to have passed the full incidence of such duty to the buyer; hence the
applicant for refund has to refute the presumption of passing on the
incidence of duty.

7. The relevant dates provided under Explanation to section 26A(2) of the

Customs Act, 1962 for purpose of refund of duty under speci ed
circumstances are as follows:-

Case Relevant date

(i) Goods exported out of India Date on which the proper of cer
makes an order permitting
clearance and loading of goods for
exportation
(ii) Relinquishment of title to the Date of such relinquishment
goods
(iii) Goods being destroyed or Date of such destruction or
rendered valueless rendering of goods commercially
valueless

8. Refund is not allowed in case of perishable goods and goods which have
exceeded their shelf life or their recommended storage-before-use
period in terms of section 26A(3) of the Customs Act, 1962. However,
the Board may, by noti cation in the Of cial Gazette, specify any other

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condition subject to which the refund may be allowed under section

26A(4) of the Customs Act, 1962

9. Yes, interest is to be paid to the applicant in case any duty ordered to

be refunded to an applicant is not refunded within 3 months from the
date of receipt of application for refund. The government is permitted
to x such interest between 5% and 30%. Currently, the rate of interest
is 6% vide Noti cation No. 75/2003-Cus (NT) dated 12.09.2003. The
interest is to be paid for the period beginning from the date
immediately after the expiry of 3 months from the date of receipt of
such application, till the date of refund of such duty. For the purpose
of payment of interest, the application is deemed to have been received
on the date on which a complete application, as acknowledged by the
proper of cer of Customs, has been made

Practical Theory

10. Section 18 (dealing with provisional assessment) incorporates the

principle of unjust enrichment in case of refund arising out of
nalization of provisional assessment. Sub-section (5) of section 18 of
Customs Act, 1962 provides that if any amount is found to be
refundable after nalisation of provisional assessment, such refund
will be subject to doctrine of unjust enrichment. Further, section 28D
places the onus on the person who has paid duty to prove that he has
not passed on the incidence of such duty. In the absence of any proof
from such person, section 28D deems that the burden of duty has
been passed on to the buyer. Therefore, in the given case, the
Department’s action will be correct if M/s HIL does not produce any
evidence of bearing the burden of duty.

11. The incidence of duty can be passed directly or indirectly. Where the
capital goods are used for manufacture, the duty paid on their import
will go into the costing of the goods manufactured and sold, and can
thus be passed on to the buyers. The Large Bench of the Tribunal in
the case of SRF Ltd. v. CCus. Chennai 2006 (193) ELT 186 (Tri. - LB) has
held that the doctrine of unjust enrichment would be applicable in
case of imported capital goods used captively for manufacture of
excisable goods. As regards the relevance of the fact that price
remained the same before and after the capital goods were imported,
the Larger Bench also clari ed that uniformity in price before and
after assessment does not lead to inevitable conclusion that duty
burden has not been passed, as such uniformity may be due to various
reasons. In view of this, the contentions of XYZ Ltd are liable to be
rejected.

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Refunds (Answers)

12. Acme Sales received an order nalizing provisional assessment on the

basis of a veri cation report, and requiring payment of ` 12 lakh. They
did not contest this order, but made the payment, and allowed the
appeal period of sixty days to lapse. After appeal became time-barred
they led a claim for refund in which they challenged the order. This
was a backdoor method of seeking relief against the order; it also
asked an of cer of the same rank to review the order passed; and it
sought to bypass the time limitation for appeal by presenting the
appeal as a claim for refund. The Supreme Court has held, in the case
of Priya Blue Industries Limited, 2004 (172) ELT 145 (SC), that sucha
refund claim is not permissible for all these reasons. A person who is
aggrieved with an assessment order cannot seek refund without ling
an appeal against the assessment order.

13. Mr. N’s invoices show that he collected duty of ` 250 per unit on 1,000
items. However, he paid duty on 200 items more. This payment, in the
normal course, was made before the order permitting the clearance of
the goods. It would be evident from the bill of entry that the amount
paid was more than the amount of duty assessed. Thus Mr. N’s case
falls within the exception to unjust enrichment listed at clause (g) of
the rst proviso to section 27(2). He will be able to refute the charge
of unjust enrichment. Furthermore, clause (a) of the same sub-section
provides that the doctrine of unjust enrichment will not apply to the
refund of duty and interest, if any, paid on such duty if such amount
is relatable to the duty and interest paid by the importer/exporter, if
he had not passed on the incidence of such duty and interest to any
other person. Mr. N’s invoices will show how much duty he collected
from his customers, hence he may be covered by this clause also to
escape the bar of unjust enrichment.

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Chapter 8 – Foreign Trade Policy

Theory

1. Discuss the key similarities and differences between Advance

Authorization and DFIA (Duty Free Import Authorization) schemes.

2. Discuss the privileges granted under FTP to Status Holders.

3. With reference to the provisions of FTP, discuss giving reasons

whether the following statements are true or false: (i) If any doubt
arises in respect of interpretation of any provision of FTP, the said
doubt should be forwarded to CBIC, whose decision thereon would be
nal and binding. (ii) IEC is a unique 12 digit PAN based alphanumeric
code allotted to a person for undertaking any export/ import
activities

Practical Theory

4. Mr. Ayush Bhandari wants to import samples from US. State in brief
policy for import of samples.

5. State salient aspects of Advance authorisation for annual requirements

to exporters.

6. Mr. X is desirous to know the bene ts of deemed exports under FTP. You
are required to discuss the same with reference to FTP.

7. Two exporters namely, Red Sky Pvt. Ltd. and Black Night Pvt. Ltd. have
achieved the status of Status Holders (One Star Export House) in the
current nancial year. Both the exporters have been regularly exporting
goods (other than Gems and Jewellery) every year. What would have
been the minimum export performance of the two exporters to achieve
such status? Both the exporters want to establish export warehouses
in accordance with the applicable guidelines. What should be their
export turnover to enable them to establish export warehouses?

8. FIintex Manufacturers manufactures goods by using imported inputs

and supplies the same under Aid Programme of the United Nations. The
payment for such supply is received in free foreign exchange. Can
FIintex Manufacturers seek Advance Authorization with reference to
the provisions of Foreign Trade Policy for the supplies made by it?

9. XYZ Ltd. has imported inputs without payment of duty under Advance
Authorization. The CIF value of such inputs is ` 10,00,000. The inputs are
processed and the nal product is exported. The exports made by XYZ

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Ltd. are subject to general rate of value addition prescribed under

Advance Authorization Scheme. No other input is being used by XYZ
Ltd. in the processing. What should be the minimum FOB value of the
exports made by the XYZ Ltd. as per the provisions of Advance
Authorization under FTP?

10. ‘A’ has used some duty paid inputs in its export products. However, for
the rest of the inputs, he wants to apply for the Advance Authorization.
Can he do so? Explain with reference to the provisions of Foreign Trade
Policy

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Chapter 8 – Foreign Trade Policy (Answers)

Theory

1. In both DFIA and Advance Authorization schemes, import of inputs, oil

and catalyst which are consumed/ utilised in the process of production
of export product are permitted without payment of customs duty.
Validity period for both the schemes is 12 months from the date of
issue.
Key differences between DFIA and Advance Authorisation schemes are
as follows –
(i) ‘Advance Authorisation’ is not transferable. DFIA is transferable
after export obligation is ful lled.
(ii) Advance Authorisation scheme requires 15% value addition, while
in case of DFIA, minimum 20% value addition is required.
(iii) Advance Authorisation and / or material imported under Advance
Authorisation is subject to ‘Actual User’ condition. No DFIA shall
be issued for an input which is subject to pre-import condition
or where SION prescribes ‘Actual User’ condition or certain other
speci ed inputs with pre import condition.
(iv) DFIA cannot be issued where SION (Standard Input Output Norms)
prescribes actual user condition [as the material is transferable
after ful lment of export obligation]. Advance Authorisation can
be issued even if SION for that product is not xed. DFIA can be
issued only if SION has been xed for that product to be exported.
(v) Duty Free Import Authorisation shall be exempted only from
payment of Basic Customs Duty (BCD). Drawback as per rate
determined and xed by Customs authority shall be available for
duty paid inputs, whether imported or indigenous, used in the
export product. Imports under Advance Authorisation are
exempted from payment of Basic Customs duty, Additional
Customs duty, Education cess, Anti- dumping duty,
Countervailing duty, Safeguard duty and Transition Product
Speci c Safeguard duty, wherever applicable.

However, speci ed deemed exports are not exempted from payment of

applicable anti-dumping duty, countervailing duty, safeguard duty and
transition product speci c safeguard duty, if any. Imports under
Advance Authorisation for physical as well as deemed exports are also
exempt from whole of the Integrated Tax and Compensation Cess.

2. Status holders are eligible for privileges as under:

(a) Authorisation and custom clearances for both imports and
exports on self-declaration basis.

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(b) Fixation of Input Output Norms on priority i.e. within 60 days

by Norms Committee.
(c) Exemption from compulsory negotiation of documents through
banks. Exception are remittance/ receipts.
(d) Exemption from furnishing of Bank Guarantee in Schemes under
FTP unless otherwise speci ed.
(e) Two Star Export Houses and above are permitted to establish
export warehouses.
(f) Manufacturers who are also status holders (Three Star/Four
Star/Five Star) will be enabled to self-certify their
manufactured goods (as per their Industrial Entrepreneurs
Memorandum (IEM) / Industrial License (IL) /Letter of Intent
(LOI)) as originating from India with a view to qualify for
preferential treatment under speci ed agreements.
(g) Status holders shall be entitled to export freely exportable
items on free of cost basis for export promotion subject to a
speci ed annual limit.
(h) The status holders would be entitled to preferential treatment
and priority in handling of their consignments by the concerned
agencies.

3. (i) False. If any question or doubt arises in respect of interpretation of

any provision of the FTP, said question or doubt ought to be referred
to DGFT whose decision thereon would be nal and binding.

(ii) False. IEC is a unique 10-digit alphanumeric number allotted to a

person for undertaking export/ import activities.

Practical Theory

4. Import of samples of even ‘restricted’ items, is allowed without import

authorisation. Exceptions are defence / security items, seeds, bees, and
new drugs; these need authorisation. Duty free import of samples upto
` 3,00,000 for all exporters shall be allowed subject to terms and
conditions of customs noti cation as amended.

5. Annual Advance authorisation would be issued to exporters having past

export performance in at least preceding two nancial years, to enable
them to import the inputs required by them on annual basis. Advance
authorization for annual requirement shall only be issued for items,
noti ed in SION and not on basis of ad hoc norms under self-declared
authorisations where SION does not exist. Annual Advance
Authorisation in terms of CIF value of imports will be granted upto
300% of FOB value of physical exports in preceding nancial year and/or

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FOR value of deemed exports in preceding year or ` 1 crore, whichever

is higher.

6. Deemed exports shall be eligible for any/ all of following bene ts in

respect of manufacture and supply of goods, qualifying as deemed
exports, subject to speci ed terms and conditions:
a. Advance Authorisation/ Advance Authorisation for Annual
requirement/ DFIA
b. Deemed Export Drawback Refund of drawback on the inputs used in
manufacture and supply under the deemed exports category can be
claimed on 'All Industry Rate' of Duty Drawback Schedule provided
no CENVAT credit has been availed by supplier of goods on excisable
inputs or on ‘Brand rate basis’ upon submission of documents
evidencing actual payment of basic custom duties.
c. Refund of terminal excise duty for speci ed excisable goods Supply
of goods will be eligible for refund of terminal excise duty provided
recipient of goods does not avail CENVAT credit/rebate on such goods
and supply is eligible under that category of deemed exports.

7. Status Holders are exporter rms recognised as business leaders who

have excelled in international trade and have successfully contributed
to country’s foreign trade. All exporters of goods, services and
technology having an import-export code (IEC) number shall be eligible
for recognition as a status holder. Status recognition depends upon
export performance
In order to be categorized as One Star Export House, an exporter needs
to achieve the export performance of 3 million US $ [FOB/ FOR (as
converted)] during current and all the three preceding nancial years.
Thus, export performance of Red Sky Pvt. Ltd. and Black Night Pvt. Ltd.
would have been at least 3 million US $ [FOB/ FOR (as converted)] during
current and all the three preceding FYs.
Further, Two Star Export Houses and above are permitted to establish
export warehouses. Therefore, Red Sky Pvt. Ltd. and Black Night Pvt.
Ltd. can establish export warehouses in India only if they achieve the
status of Two Star Export House and above. In order to achieve said
status, export performance of the exporters during current and
previous three nancial years should be as indicated below:

Status category Export Performance Threshold In

USD Million

One Star Export House 3

Two Star Export House 15

Three Star Export House 50

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Four Star Export House 200

Five Star Export House 800

8. Supply to goods to UN or international organisations for their of cial

use or supplied to projects nanced by them are ‘deemed exports’.
Advance Authorization can be issued for supplies made to such ‘deemed
exports’. Therefore, Flintex Manufacturers can seek an Advance
Authorization for the supplies made by it.

9. Advance Authorization necessitates exports with a minimum of 15%

value addition (VA). VA = [(A – B)/B x 100] A = FOB value of export
realized, B = CIF value of inputs covered by authorization. Therefore, the
minimum FOB value of the exports made by XYZ Ltd. should be `
11,50,000 to attain 15% VA.

10. Yes, ‘A’ can do so. In case of part duty free and part duty paid imports,
both Advance Authorization and drawback will be available. Drawback
can be obtained for any duty paid material, whether imported or
indigenous, used in goods exported, as per drawback rate xed by DoR,
Ministry of Finance (Directorate of Drawback). Advance Authorization
can be used for importing duty free material. Details about duty paid
material must be mentioned in the application for Advance
Authorization

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