Customs and Excise — Explained

This document covers

1. Customs
2. Central Excise

1. Customs

• The word "customs" is derived from the word "custom" which means a habitual practice or repeated course of action.
• Customs is a form of Indirect tax
• Customs Act 1962 and Customs Tariff Act 175 covers the provisions related to customs
• The Customs Act 1962 is applicable to whole of India.
• Custom duty is levied on goods imported into or exported from India. The customs duty is charged on the goods but not on the person who is importing them.
• Primarily customs duty is levied on imports. Customs on Exports is levied on export of certain goods like iron ore, raw hides, and specific petroleum products etc
• Types of Customs duty: There are various types of customs duty and each duty is levied on the various factors like nature of goods, country of origin, international trade agreements and Government factors
  
  
  • Basic Customs Duty (BCD) — It is levied on imported goods under the Customs Tariff Act, 1975. The rate varies based on the classification of goods. Normal rate of customs duty on imports of non-agricultural goods is 10%
  • Integrated Goods and Services Tax (IGST) — It is charged on imported goods under the GST to ensure parity with domestic goods. The IGST rate depends on the applicable GST rate for the goods.
  • Anti-Dumping Duty — It is imposed when goods are imported at a price lower than their normal value, harming the domestic industry. The duty rate is determined by investigation.
  • Safeguard Duty — Applied to prevent serious injury to domestic industries caused by a sudden surge in imports. The government imposes this for a specified period.
  • Social Welfare Surcharge (SWS) — A surcharge levied on BCD to fund welfare programs. The rate is usually a percentage of the BCD.
  • Protective Duty — Imposed to protect specific domestic industries from foreign competition, based on recommendations from the Tariff Commission.
  • Export Duty — Levied on certain goods exported from India to control the supply of essential commodities.
• Registration for Customs duty: Importers or Exporters are required to register for an Import Export Code (IEC) with DGFT and GST to claim ITC for IGST paid at the time of customs clearance.
  ReferImporter Exporter Code - Explained for more information
• Payment of Customs duty: Customs duty on imports needs to paid before the goods are cleared by customs authorities i.e., after Bill of entry is passed and customs duty on exports needs to be paid before shipment of goods i.e., after filing of shipping bill. Customs duty, Bill of entry, shipping bills etc can be done online
• Returns: There are no periodic returns in Customs. However, the importers or exporters are required to maintain all records.
• Useful links:
  
  
  • https://www.icegate.gov.in/ — For payments, Bill of entry, shipping bills, refund claims etc
  • https://dgft.gov.in/ — IEC Registration
  • https://www.gst.gov.in/ — Claiming of ITC on IGST paid

2. Central Excise

• Central Excise duty is a form of Indirect tax
• Central Excise Act, 1944, Central Excise Tariff Act, 1985 covers the provisions related to Central Excise duty and Central Board of Indirect Taxes and Customs (CBIC)administers the Central Excise.
• Central Excise Act, 1944 applies to whole of India
• Central Excise duty is levied by the Central Government on the production or manufacture of certain goods in India
• GST has subsumed most of the excise duty frameworks from 01^st July 2017 and Central Excise duty still applies to certain non-GST items like petroleum products (e.g., petrol, diesel, aviation turbine fuel), tobacco products, and certain alcoholic beverages.
• Registration: Manufacturers who are manufacturing or producing excisable goods should register with Central Excise department (CBIC). The registration is known as Excise Control Code (ECC)
• Payment of Excise duty: The due date for payment for excise duty is 05^th of the following month (06^th of following month if payment is done through internet banking) for all months except march and for march, the due date is 31^st march itself irrespective of payment.
• Returns: The taxpayers registered under Central Excise are required to file monthly/quarterly returns as per their specific registration type
  
  
  • Non small scale units — 10^th of following month in ER-1 form (Monthly)
  • Small scale units — 10^th of following quarter in ER-3 form (Quarterly)
• Useful links:
  
  
  • https://cbic-gst.gov.in/
  • https://cbic-gst.gov.in/cbec-portal-ui/ (For registration, payments and returns)
  • https://www.gst.gov.in/