Indirect Taxes and Customs duty payable

Module 4 – 6

Module-4 (8 hours)
Time, Place and Value of Supply: Time of Supply-Key concepts, Determination of time of
supply of goods and services (Simple problems including Change in Rate of Tax in respect of
Supply of Goods or Services),
Place of Supply – importance and types. Simple Problems on identification of Place of
supply. Value of Supply. (Simple problems on treatment of discount in transaction value,
Money exchange services, Air travel agent, based on Cost. Value of supply in case of lottery,
betting, gambling and Horse racing) Input tax credit-Meaning, Eligibility for availing ITC,
Conditions to be satisfied for availing ITC. Determination of ITC admissible on goods and
services (Simple problems)

4.1 Time, Place and Value of Supply

4.2 Time of Supply-Key concepts,
4.3. Determination of time of supply of goods and services
(Simple problems including Change in Rate of Tax in respect of Supply of Goods or
Services),
4.4. Place of Supply – importance and
4.5. types.
4.6. Simple Problems on identification of Place of supply.
4.7. Value of Supply. (Simple problems on treatment of discount in transaction value, Money
exchange services, Air travel agent, based on Cost. Value of supply in case of lottery, betting,
gambling and Horse racing)
4.8. Input tax credit-Meaning, Eligibility for availing ITC,
4.9. Conditions to be satisfied for availing ITC.
4.10 Determination of ITC admissible on goods and services (Simple problems)
1. Introduction to Supply under GST

1.1 Definition of Supply under GST

 Supply is the core concept of GST, as GST is levied on every supply of goods or
services.
 According to Section 7 of CGST Act, 2017, supply includes:
1. Sale, transfer, barter, exchange, license, rental, lease, or disposal of goods
or services.
2. Made for consideration (payment in money or kind), in the course or
furtherance of business.
3. Includes import of services for consideration.
4. Includes transactions specified in Schedule I even if made without
consideration (e.g., business gifts, internal transfer).
Example:
 A company sells laptops to a retailer for ₹50,000 → Supply is sale of goods.
 A business provides free samples of a product to promote sales → Supply without
consideration (covered under Schedule I).

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

1.2 Importance of Supply in GST

1. Basis for Taxability:
o GST is charged only on transactions that qualify as “supply.”
o Without supply, GST is not applicable.
2. Determines Type of GST:
o Intra-state supply → CGST + SGST
o Inter-state supply → IGST
3. Legal and Compliance Significance:
o Businesses must identify whether a transaction is a supply to comply with
GST laws.
o Incorrect classification may lead to penalties.
Example:
 Goods sent from Delhi to Mumbai → Inter-state supply → IGST applies.
 Goods sold within Karnataka → Intra-state supply → CGST + SGST apply.

1.3 Overview of Concepts: Time, Place, and Value of Supply

1. Time of Supply:
o Determines when the supply is considered to have occurred.
o Important for:
 Payment of tax
 Filing returns
o Example:
 Invoice issued on 5th Aug, goods received on 10th Aug → Tax
liability depends on earlier of invoice date or receipt date.
2. Place of Supply:
o Determines whether the supply is intra-state or inter-state.
o Important for deciding CGST, SGST, or IGST applicability.
o Example:
 Company in Bengaluru provides services to a client in Mumbai →
Inter-state → IGST applicable.
3. Value of Supply:
o Determines taxable value on which GST is calculated.
o Includes treatment of discounts, cost-based valuation, special cases (lottery,
betting).
o Example:
 Goods sold for ₹1,00,000 with ₹5,000 trade discount → Taxable value
= ₹95,000.

1.4 Relevance for Businesses and Compliance

1. Accurate GST Liability Calculation:
o Knowing the supply helps businesses calculate GST correctly.
2. Input Tax Credit (ITC) Eligibility:
o ITC can be claimed only on valid supplies of goods and services.

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

3. Audit and Documentation:

o Proper identification of supply ensures compliance during GST audits and
return filing.
4. Minimizing Litigation and Penalties:
o Correct classification of supply avoids tax disputes and penalties.
Example:
 A restaurant providing free meals to employees → Supply without consideration →
No GST charged.
 Goods returned by customer → Adjusted in GST returns to avoid excess tax liability.
2. Time of Supply
2.1 Key Concepts
1. Definition of Time of Supply
 According to Section 12 & 13 of CGST Act, 2017:
o Goods: Time of supply is the earlier of the date of invoice or the date of
receipt of goods.
o Services: Time of supply is the earlier of the date of invoice or the date of
payment, subject to certain exceptions.
2. Importance in Determining Liability
 GST liability arises at the time of supply.
 Helps businesses determine when to pay GST.
 Ensures timely filing of GST returns.
3. Distinction between Goods and Services
 Goods: Physical delivery or receipt determines time of supply.
 Services: Completion of service or invoice/payment date determines time of supply.
Example:
 A manufacturer delivers goods on 10th Aug but invoices on 15th Aug → Time of
supply = 10th Aug.
 A consultant completes services on 5th Aug but invoices on 7th Aug → Time of
supply = 5th Aug.
2.2 Determination of Time of Supply
A. For Goods
1. General Rule: Earlier of:
o Date of issue of invoice
o Date of receipt of goods
2. If invoice not issued within prescribed period:
o Date of delivery of goods becomes the time of supply.
Example: Goods dispatched on 3rd Aug, invoice raised on 5th Aug → Time of supply = 3rd
Aug.
B. For Services
1. General Rule: Earlier of:
o Date of invoice
o Date of payment received
2. If invoice issued after payment:

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

o Date of receipt of payment = Time of supply.

Example: Consultancy service completed on 1st Aug, payment received on 4th Aug, invoice
issued on 5th Aug → Time of supply = 4th Aug.
C. Special Cases
1. Advance Payments
o GST is payable on receipt of advance, even if invoice not issued.
o Example: Booking of a hotel room on 1st Aug, check-in on 10th Aug → Time
of supply = 1st Aug (advance received).
2. Continuous Supply
o Supply of goods/services in instalments over a period.
o Time of supply = earlier of invoice or receipt of each instalment.
o Example: Maintenance service billed quarterly → GST due each quarter.

2.3 Changes in Rate of Tax

 When GST rate changes between time of supply and invoice/payment, special rules
apply:
1. If invoice issued after rate change → Tax at new rate.
2. If advance received before rate change → Tax on old rate.
3. Adjustments may be needed if invoice/payment crosses the change date.
Example: GST on goods was 12% till 10th Aug; rate changed to 18% on 11th Aug.
 Goods delivered on 9th Aug, invoice issued on 12th Aug → Tax @ 12% (rate at time
of supply).
2.4 Illustrative Problems

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

Problem Solution
1. Goods delivered on 5th Aug, invoice issued on 7th Time of supply = 5th Aug → Taxable
Aug. GST rate 12% at delivery, 18% at invoice date. @ 12%.
2. Service completed on 3rd Aug, advance received Time of supply = 2nd Aug (advance)
2nd Aug, invoice issued 5th Aug. → Taxable @ rate on 2nd Aug.
3. Continuous service billed quarterly: 1st installment Time of supply = date of each
1st July, 2nd installment 1st Oct. installment → GST due quarterly.

Problem 2: Change in Rate –goods

Question1.: on 10th July 2025, Mr. X sold goods worth Rs. 1, 00,000 to Mr. Y. GST rate
at the time of supply was 12%. On 15th July 2025, GST rate for such goods increased to
18%. The invoice was issued on 12th July 2025. Calculate the tax liability.
Solution
Step Details Calculation
1 Identify the date of supply Invoice date = 12th July 2025
2 Determine GST rate applicable Rate on date of supply = 12% (rate on invoice date)
3 Calculate GST 1,00,000 × 12% = Rs. 12,000
4 Total amount payable 1,00,000 + 12,000 = Rs. 1,12,000
Answer: GST liability = Rs. 12,000 (at 12%)
Note: GST is charged at the rate in force on the date of invoice, not on the later increased
rate.

Problem 2: Change in Rate – Services

Question: A service provider provided consultancy services worth Rs. 50,000 on 28th June
2025. The GST rate was 18% on that day. On 1st July 2025, the GST rate was reduced to
12%. The invoice was issued on 5th July 2025. Compute GST payable.
Solution (Stepwise):
Step Details Calculation
Identify the date of For services, date of supply = earlier of completion or
1
supply invoice date = 28th June 2025
Determine GST rate
2 Rate on date of supply = 18% (as on 28th June)
applicable
3 Calculate GST 50,000 × 18% = Rs. 9,000
4 Total amount payable 50,000 + 9,000 = Rs. 59,000
Answer: GST liability = Rs. 9,000 (at 18%)
Note: GST rate on completion of service is considered, not the later reduced rate.

Problem 3: Advance Payment & Change in Rate

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

Question: Mr. A received an advance of Rs. 20,000 on 20th June 2025 for goods to be
supplied on 5th July 2025. GST at the time of advance was 12%, and on the supply date (5th
July), the rate increased to 18%. Calculate GST on advance and final supply.
Solution (Stepwise):
Step Details Calculation
1 GST on advance 20,000 × 12% = Rs. 2,400
2 Date of actual supply 5th July 2025
3 GST on balance amount (Assume goods value = 80,000) 80,000 × 18% = Rs. 14,400
4 Total GST payable 2,400 + 14,400 = Rs. 16,800
Answer: Total GST = Rs. 16,800
Note: GST on advance is charged at the rate prevailing on advance date. Remaining supply
taxed at rate on supply date.

Place of Supply – Concept, Importance, and Types

1. Concept of Place of Supply
 Definition: Place of Supply determines the location where a supply of goods or
services is considered to have occurred under GST.
 Purpose: It is important for deciding:
1. Whether a supply is intra-state or inter-state.
2. The applicable GST rate – CGST + SGST (intra-state) or IGST (inter-state).
 Reference: Sections 10-13 of the CGST Act, 2017 provide rules for determining the
place of supply.
 Key Idea: Correct identification of place of supply ensures proper tax collection by
the right state.

2. Importance of Place of Supply

1. Tax Jurisdiction: Determines which state or union territory gets the GST revenue.
o Example: If goods are supplied from Karnataka to Maharashtra, IGST goes to
the Central Government, later shared between states.
2. Type of GST Applicable:
o Intra-state supply: CGST + SGST/UTGST
o Inter-state supply: IGST
3. Compliance: Accurate invoicing, reporting in GST returns, and avoidance of
disputes.
4. Input Tax Credit (ITC): Place of supply helps determine eligibility and flow of
ITC.

3. Place of Supply
1. Importance of Place of Supply
 Definition: Place of supply determines the location where a supply is deemed to
have occurred.
 Role in Tax Applicability:

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

1. Inter-state supply: Supplies between two different states → IGST

applicable.
 Example: Supplier in Delhi delivers goods to customer in Maharashtra
→ IGST charged.
2. Intra-state supply: Supplies within the same state → CGST + SGST
applicable.
 Example: Supplier in Karnataka delivers goods to customer in
Bangalore → CGST + SGST charged.
 Significance:
o Determines tax jurisdiction and ensures proper revenue allocation.
o Impacts compliance, invoicing, and Input Tax Credit (ITC) flow.

2. Types of Place of Supply

A. Supply of Goods
1. General Rule: Place of supply = location where goods are delivered or made
available.
o Example: Supplier in Gujarat delivers goods to customer in Rajasthan →
Place of supply = Rajasthan → IGST.
2. Special Cases:
o Goods on consignment/approval: Place of supply = where goods are finally
accepted or sold.
o Goods installed or assembled: Place of supply = location of
installation/assembly.
o Goods on board a conveyance (ship, aircraft): Place of supply = location
where goods are taken on board.
o Import/Export:
 Import → Place of supply = India → IGST applicable
 Export → Place of supply = Outside India → IGST @ 0%
B. Supply of Services
1. General Rule: Place of supply = location of recipient of service.
o Example: Mumbai consultant provides service to client in Pune → Place of
supply = Pune → CGST + SGST applicable.
2. Special/Specific Rules:
o Restaurant services: Place of supply = location where service is provided.
 Example: Dine-in in Bangalore → CGST + SGST.
o Online/telecommunication services: Place of supply = location of recipient.
 Example: Online tutoring Mumbai → Student in Karnataka → IGST.
o Transport of goods: Place of supply = destination of goods.
o Passenger transport: Place of supply = place where journey ends.
o Services related to immovable property: Place of supply = location of
property.
3. Problem Solving – Simple Identification

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

Place of GST
[Link] Type Scenario
Supply Applicable
Goods – intra- Supplier in Delhi → Customer in
1 Delhi CGST + SGST
state Delhi
Goods – inter- Supplier in Delhi → Customer in
2 Mumbai IGST
state Mumbai
Mumbai consultant → Client in
3 Service – B2B Pune CGST + SGST
Pune
Service – B2C Online course Mumbai → Student in
4l Karnataka IGST
online Karnataka
Restaurant
5 Dine-in in Bangalore Bangalore CGST + SGST
service

Problem 1: Intra-state Supply of Goods

Question: A supplier in Bangalore sells goods worth Rs. 1,00,000 to a customer in Mysore.
Identify the Place of Supply and GST applicable.
Solution (Stepwise):
Step Details Explanation
1 Type of supply Goods
2 Location of supplier Bangalore, Karnataka
3 Location of recipient Mysore, Karnataka
4 Determine place of supply Place of supply = Mysore (where goods are delivered)
5 GST applicable Intra-state supply → CGST + SGST
Answer: Place of Supply = Mysore; GST = CGST + SGST

Problem 2: Inter-state Supply of Goods

Question: A supplier in Delhi delivers goods worth Rs. 50,000 to a customer in Mumbai.
Determine Place of Supply and type of GST.
Solution (Stepwise):
Step Details Explanation
1 Type of supply Goods
2 Location of supplier Delhi
3 Location of recipient Mumbai
4 Determine place of supply Place of supply = Mumbai (where goods are delivered)
5 GST applicable Inter-state supply → IGST
Answer: Place of Supply = Mumbai; GST = IGST

Problem 3: Supply of Service (Online B2C Service)

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

Question: An online tutoring service is provided by a company in Mumbai to a student in

Karnataka. Identify the Place of Supply and GST applicable.
Solution (Stepwise):
Step Details Explanation
1 Type of supply Service
2 Location of supplier Mumbai
3 Location of recipient Karnataka
4 Determine place of supply Place of supply = Location of recipient → Karnataka
5 GST applicable Inter-state supply → IGST
Answer: Place of Supply = Karnataka; GST = IGST

Notes:
1. Goods: Place of supply = where goods are delivered.
2. Services: Place of supply = generally location of recipient.
3. Intra-state: CGST + SGST; Inter-state: IGST.
4. For special cases (restaurant, immovable property, transport, online), refer to specific
GST rules.
4. Value of Supply
1. General Rules for Valuation
A. Transaction Value
 Definition: Value of supply of goods or services = price actually paid or payable
for the supply, where the supplier and recipient are not related and price is freely
determined.
 Reference: Section 15 of the CGST Act, 2017.
 Example: A company sells goods for Rs. 1, 00,000 to a customer. GST will be
calculated on Rs. 1, 00,000 (transaction value).
B. Inclusions in Transaction Value
 GST is calculated on the total consideration including:
1. Taxes, duties, cesses, fees (excluding GST itself)
 Example: Excise duty included in the price.
2. Packing charges charged to the customer.
3. Transportation, insurance, loading/unloading charges if included in price.
4. Incidental expenses related to supply borne by the recipient.
C. Exclusions from Transaction Value
 Certain amounts not included in taxable value:
1. GST itself
2. Discounts given before or at the time of supply, if recorded in the invoice.

2. Special Cases
A. Discounts in Transaction Value
 Pre-supply discount: Discount allowed before or at the time of supply, recorded in
invoice → deductible from value of supply.
Dr Uma K, Associate Professor, GSSSIETW, Mysore
 Indirect Taxes and Customs duty payable
Module 4 – 6

o Example: Price = Rs. 50,000, discount = Rs. 5,000 → Taxable value = Rs.
45,000.
 Post-supply discount: Allowed after supply → adjustment in GST return possible.
B. Money Exchange Services
 GST on currency conversion or money exchange = service charge/commission,
not the total amount of money exchanged.
o Example: Exchange Rs. 1,00,000 USD to INR, commission = Rs. 2,000 →
Taxable value = Rs. 2,000.
C. Air Travel Agents
 GST calculated on commission/markup, not on total ticket fare.
o Example: Ticket cost = Rs. 50,000, agent commission = Rs. 2,500 → Taxable
value = Rs. 2,500.
D. Lottery, Betting, Gambling, Horse Racing
 GST is levied on face value of lottery tickets or gross amount collected for
gambling/betting activities.
o Example: Lottery ticket sold for Rs. 100 → Taxable value = Rs. 100.

3. Examples Table for Quick Understanding

Taxable Value (for
[Link] Type of Supply Transaction/Details
GST)
1 Goods Price Rs. 1,00,000, Excise Rs. 5,000 Rs. 1,05,000
Price Rs. 50,000, Pre-supply discount Rs.
2 Discount Rs. 45,000
5,000
Money
3 Commission Rs. 2,000 Rs. 2,000
exchange
Ticket Rs. 50,000, Agent commission Rs.
4 Air ticket Rs. 2,500
2,500
5 Lottery Ticket sold Rs. 100 Rs. 100
Key Points to Remember
1. Transaction value = primary basis of GST calculation.
2. Additions include taxes (other than GST), transport, insurance, incidental charges.
3. Exclusions include GST itself and discounts recorded in invoice.
4. Special cases have specific rules to avoid confusion (agent commission, money
exchange, lottery).
5. Correct valuation ensures accurate GST compliance and avoids penalties.

Problem 1: Discount in Transaction Value

Question: A supplier sells goods worth Rs. 60,000 and allows a pre-supply discount of Rs.
5,000, recorded in the invoice. Calculate the taxable value for GST.
Solution:
Step Details Calculation

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

Step Details Calculation

1 Transaction value Rs. 60,000
2 Discount allowed Rs. 5,000 (pre-supply, recorded in invoice)
3 Taxable value 60,000 − 5,000 = Rs. 55,000
Answer: Taxable value = Rs. 55,000
Note: Pre-supply discount reduces the taxable value; post-supply discount adjustments are
done in GST returns.

Problem 2: Money Exchange Services

Question: A money exchange service charges Rs. 1,00,000 for USD to INR conversion and
earns a service charge of Rs. 2,500. Determine the taxable value for GST.
Solution:
Step Details Calculation
1 Amount exchanged Rs. 1,00,000 (not taxable)
2 Service charge Rs. 2,500
3 Taxable value Rs. 2,500
Answer: Taxable value = Rs. 2,500
Note: GST is charged only on the service/commission, not on total money exchanged.

Problem 3: Air Travel Agent

Question: An air travel agent issues tickets costing Rs. 50,000 and charges commission Rs.
3,000. Calculate the taxable value for GST.
Solution (Stepwise):
Step Details Calculation
1 Ticket cost Rs. 50,000 (not taxable for agent)
2 Commission/markup Rs. 3,000
3 Taxable value Rs. 3,000
Answer: Taxable value = Rs. 3,000
Note: GST is levied only on the agent’s commission, not the total ticket fare.

Problem 4: Lottery, Betting, Gambling, Horse Racing

Question: A lottery ticket is sold for Rs. 100. Determine the taxable value for GST.
Solution (Stepwise):
Step Details Calculation
1 Price of lottery ticket Rs. 100
2 Taxable value Rs. 100
Answer: Taxable value = Rs. 100
Note: GST is charged on face value of ticket or gross amount collected for
betting/gambling/horse racing.

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

Table for Quick Reference

Case Price / Charges Taxable Value for GST
Discount in transaction value 60,000 − 5,000 55,000
Money exchange service Commission 2,500 2,500
Air travel agent Commission 3,000 3,000
Lottery / Betting Ticket 100 100

5. Input Tax Credit (ITC)

1. Meaning and Importance of ITC
A. Definition of ITC
 Input Tax Credit (ITC) is the credit of GST paid on purchases (inputs or input
services) that a registered person can use to set off GST liability on output supplies.
 Reference: Section 16 of the CGST Act, 2017.
 Example:
o A manufacturer buys raw materials for Rs. 1,00,000 and pays GST @ 18% =
Rs. 18,000.
o While selling finished goods, GST liability = Rs. 30,000.
o ITC of Rs. 18,000 can be deducted, so net GST payable = Rs. 30,000 −
18,000 = Rs. 12,000.
B. Importance of ITC
1. Avoids cascading effect of taxes (tax on tax).
2. Reduces the cost of goods and services, improving competitiveness.
3. Encourages proper invoicing and compliance under GST.
4. Ensures credit flow across supply chain.

2. Eligibility for Availing ITC

A. Who Can Claim ITC
 Registered person under GST who makes taxable supplies, including zero-rated
supplies.
 Exclusions:
o Composition scheme dealers cannot claim ITC.
o Personal purchases, exempt supplies, motor vehicles (with exceptions) are
ineligible.
B. Conditions to be Satisfied
1. Possession of a tax invoice or debit note.
o Example: Supplier issues invoice showing GST charged.
2. Receipt of goods or services.
o Example: Goods must be physically received.
3. Tax paid to Government by the supplier.
o Supplier should have deposited GST in GST portal.
4. Filing of GST returns (GSTR-3B & GSTR-2B/2A).

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

5. Utilization of credit only for business purposes.

3. Determination of ITC Admissible

A. Calculation of ITC
 ITC can be claimed on GST paid on inputs, input services, and capital goods,
subject to restrictions.
 Formula:
ITC Admissible=GST paid on purchases−Ineligible credits (personal/exempt/blocked items)
B. Simple Examples
Example 1 – Goods:
 Purchase of raw materials = Rs. 50,000
 GST paid @ 18% = Rs. 9,000
 ITC claimed = Rs. 9,000
Example 2 – Services:
 Office rent for business = Rs. 20,000
 GST paid @ 18% = Rs. 3,600
 ITC claimed = Rs. 3,600
Example 3 – Mixed Purchase:
GST Eligible
Item Value Notes
Paid ITC
Raw
40,000 7,200 7,200 Fully taxable
material
Motor Blocked for personal/business use except
10,00,000 1,80,000 0
vehicle special cases
IT services 20,000 3,600 3,600 Eligible

Total ITC admissible = 7,200 + 3,600 = 10,800

******

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

Module-5 (4 hours)
Export-Import Procedure for Customs Customs Act-important definitions, Types of
goods, import Export Route, Types of Cess under Customs, Introduction to Baggage
and General Free Allowance. Provisional Assessment of Duty, Due Dates for Payment of
Duty, Penalties under Customs, Seizure of Goods, Confiscation of Goods. (Theory).
5.1. Export-Import Procedure for Customs
5.2. Customs Act-important definitions,
[Link] of goods, import Export Route,
5.4. Types of Cesses under Customs,
5.5. Introduction to Baggage and General Free Allowance.
5.6. Provisional Assessment of Duty,
5.7. Due Dates for Payment of Duty,
5.8. Penalties under Customs,
5.9. Seizure of Goods,
5.10. Confiscation of Goods. (Theory).

5.1 Export-Import Procedure for Customs

1. Steps in Export Procedure
A. Filing Shipping Bill / Bill of Export
1. Definition: A shipping bill is a legal document filed by the exporter to Customs
before goods leave India.
2. Purpose:
o Declaration of goods being exported.
o Basis for assessment of duty and claim of refunds (if any).
3. Information included:
o Details of exporter and consignee.
o Description, quantity, and value of goods.
o Port of export, mode of transport.
4. Filing Process:
o Electronic filing through ICEGATE portal.
o Shipping bill is verified and approved by Customs.
B. Customs Clearance and Documentation
1. Inspection: Customs may inspect goods for compliance.
2. Documentation Required:
o Commercial invoice
o Packing list
o Shipping bill
o Export license (if required)
3. Customs Seal & Permission: Goods cleared after verification for export.
Example – Export:
 A company in Mumbai exports electronics worth Rs. 10,00,000 to the USA.
 Steps followed:
1. Prepare invoice, packing list, and shipping bill.

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

2. File shipping bill on ICEGATE.

3. Customs verifies documents and inspects goods.
4. Goods are allowed to be exported.

2. Steps in Import Procedure

A. Bill of Entry and Customs Declaration
1. Definition: A Bill of Entry (BoE) is a legal document filed by the importer
declaring imported goods to Customs.
2. Purpose:
o Declaration of goods, their value, and duty payable.
o Basis for assessment of duty.
3. Information included:
o Importer details, description, quantity, value of goods.
o Customs classification (HS Code)
o Port of import, mode of transport
B. Payment of Duty and Clearance of Goods
1. Duty Assessment: Customs determines basic customs duty, IGST, and cess.
2. Payment of Duty: Importer pays duty via electronic portal (ICEGATE / bank).
3. Goods Clearance:
o After duty payment and inspection (if required), goods are cleared for
delivery.
o Importer can collect goods from the port/warehouse.
Example – Import:
 A company in Delhi imports machinery worth Rs. 50,00,000 from Germany.
 Steps followed:
1. File Bill of Entry with details of goods and value.
2. Customs classifies goods and calculates duty + IGST.
3. Pay Rs. 9,00,000 duty + IGST.
4. Goods released for delivery after clearance.

3. Stepwise Flow of Export/Import Process

A. Export Process Flowchart:
1. Prepare invoice & packing list →
2. File Shipping Bill (ICEGATE) →
3. Customs verification & inspection →
4. Customs clearance →
5. Goods shipped
B. Import Process Flowchart:
1. Goods arrive at port →
2. File Bill of Entry (ICEGATE) →
3. Customs classification & duty assessment →
4. Pay duty & IGST →
5. Customs clearance →

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

6. Goods delivered to importer

5.2 Customs Act – Important Definitions

1. Goods – Definition and Scope
 Definition:
o As per Section 2(22) of the Customs Act, 1962, goods include all movable
property except currency, actionable claims, and stocks/marketable securities.
 Scope:
1. Goods can be tangible items (machinery, textiles, electronics).
2. Includes imported and exported items.
3. Can also cover materials, parts, consumables used in business.
 Example:
o A company imports 100 laptops → Laptops are goods under Customs Act.
o Export of garments to the USA → Garments are goods.

2. Customs Duty – Types and Basis

 Definition: Duty levied on imported and exported goods under the Customs Act.
 Types of Customs Duty:
1. Basic Customs Duty (BCD): Primary duty on goods imported.
2. Additional Duties:
 CVD (Countervailing Duty) – On imported goods to match excise duty
on local goods.
 SAD (Special Additional Duty) – On imported goods to
counterbalance local sales tax.
3. IGST on imports: Charged under GST framework on imported goods.
4. Cess/Other Levies: Education Cess, HE Cess, Anti-dumping duty (if
applicable).
 Basis for Duty:
o Assessable value: Usually transaction value of goods (invoice value +
packing + freight + insurance).
 Example:
o Import of machinery worth Rs. 10,00,000:
 BCD @10% = Rs. 1,00,000
 IGST @18% on (10,00,000 + 1,00,000) = Rs. 1,98,000

3. Exporter / Importer – Legal Definitions

 Exporter:
o Person or entity who sends goods out of India for trade or business purposes.
 Importer:
o Person or entity who brings goods into India from another country for trade
or business purposes.
 Responsibilities:
o Must file shipping bill (exporter) or Bill of Entry (importer).

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

o Ensure compliance with Customs law.

 Example:
o Tata Motors exports car parts to Germany → Tata Motors = Exporter
o Flipkart imports electronics from China → Flipkart = Importer

4. Appraisement, Bill of Entry, Shipping Bill

A. Appraisement
 Definition: Assessment of value, classification, and duty liability of
imported/exported goods by Customs.
 Purpose:
o To determine correct duty and compliance with law.
 Example: Customs appraises imported machinery and calculates total duty including
IGST and cess.
B. Bill of Entry (BoE)
 Definition: Legal document filed by the importer declaring details of goods to
Customs.
 Purpose:
o Declaration of description, quantity, value, and duty of imported goods.
 Example: Importer of machinery files BoE on ICEGATE to get clearance.
C. Shipping Bill
 Definition: Legal document filed by the exporter declaring goods for export.
 Purpose:
o Declaration of exported goods, their value, and port of export.
 Example: Export of textiles worth Rs. 20,00,000 → Shipping bill filed electronically
before shipment.
Key Points to Remember
1. Goods = movable property; excludes currency and stocks.
2. Customs duty can include BCD, IGST, Cess, and special duties.
3. Exporter/Importer = persons legally responsible for customs compliance.
4. Appraisement = valuation and duty determination; Bill of Entry (import) and
Shipping Bill (export) = essential documents.
5. Correct classification and documentation avoid penalties and delays.

5.3 Types of Goods and Import-Export Routes

1. Types of Goods
Goods under Customs can be classified into four main categories:
A. Dutiable Goods
 Definition: Goods on which customs duty is levied under the Customs Act.
 Example: Electronics, machinery, textiles, and vehicles imported into India.
 Notes: Duty rates depend on classification and HS Code.
B. Exempted Goods
 Definition: Goods not subject to customs duty, usually for government, charitable,
or essential purposes.

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

 Example:
o Medicines and vaccines under certain conditions
o Items imported for charitable purposes with government permission
C. Restricted Goods
 Definition: Goods that require permission or license from government authorities
for import/export.
 Example:
o Arms, defense equipment, chemicals under hazardous category
o Certain agricultural products (like pulses) requiring import license
D. Prohibited Goods
 Definition: Goods banned for import/export due to security, environmental, or legal
reasons.
 Example:
o Narcotic drugs, counterfeit currency, endangered species
o Items violating Indian law or international agreements

2. Import-Export Routes
Goods can be imported or exported via different transportation modes, depending on type,
urgency, and cost:
A. Land Route
 Definition: Movement of goods by road or rail to/from neighboring countries.
 Example:
o Import of raw materials from Nepal or Bangladesh via road checkpoints
B. Sea Route
 Definition: Goods transported via sea ports using ships.
 Example:
o Export of textiles from Mumbai port to USA or Europe
C. Air Route
 Definition: Goods transported via airports using cargo planes.
 Example:
o Export of perishable goods like flowers or seafood from India to Gulf
countries
D. Courier and Postal Services
 Definition: Small parcels and documents sent via courier companies or postal
service.
 Example:
o E-commerce exports like handmade crafts sent via DHL, FedEx
o Import of small electronic gadgets via postal service

3. Example – Classification and Route Selection

Suggested
Goods Type Notes
Route
Electronics from China Dutiable Sea / Air Air for urgent delivery; Sea for bulk

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

Suggested
Goods Type Notes
Route
imports
Medicines for charitable Requires documentation for
Exempted Air / Courier
trust exemption
Defence equipment Restricted Sea / Air Requires government license
Narcotics Prohibited N/A Cannot be imported
Key Points to Remember
1. Proper classification of goods determines duty, licensing, and clearance
requirements.
2. Restricted goods require prior permission or license from relevant authorities.
3. Prohibited goods are completely banned and cannot be imported/exported.
4. Choice of import/export route depends on:
o Type and volume of goods
o Urgency of delivery
o Cost and safety considerations
5. Always comply with Customs Act and trade regulations to avoid penalties or
confiscation.

5.4 Types of Cesses under Customs

1. Education Cess / Secondary & Higher Education Cess
 Definition: Additional levies imposed on customs duty for funding education
initiatives.
 Types:
1. Education Cess (EC) – Typically 2% of basic customs duty.
2. Secondary & Higher Education Cess (SHEC) – Usually 1% of basic
customs duty.
 Purpose: To support primary and higher education programs in India.
 Example:
o Basic Customs Duty (BCD) on imported machinery = Rs. 1,00,000
o Education Cess (2%) = 2% of 1,00,000 = Rs. 2,000
o Secondary & Higher Education Cess (1%) = 1% of 1,00,000 = Rs. 1,000

2. Other Cesses (if applicable)

 Definition: Additional levies under Customs besides BCD, EC, SHEC.
 Examples:
1. Anti-dumping duty – To protect domestic industry from cheap imports.
2. Safeguard duty – Temporary levy to protect domestic manufacturers.
3. Social welfare cess or other sector-specific cesses – As notified by
government.
 Note: These are over and above basic customs duty and IGST.

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

3. Calculation of Customs Duty Including Cess

Calculation:
Example: Import of machinery valued at Rs. 10,00,000
 Basic Customs Duty (BCD) @10% = 10,00,000 × 10% = Rs. 1,00,000
 Education Cess (2% of BCD) = 1,00,000 × 2% = Rs. 2,000
 Secondary & Higher Education Cess (1% of BCD) = 1,00,000 × 1% = Rs. 1,000
 IGST @18% on (Value + BCD + Cess) = 18% × (10,00,000 + 1,00,000 + 3,000) =
Rs. 1,98,540
Amount
Particulars Calculation
(Rs.)
Assessable Value (CIF) — 10,00,000
Basic Customs Duty (BCD) @10% 10,00,000 × 10% 1,00,000
Education Cess (EC) @2% of BCD 1,00,000 × 2% 2,000
Secondary & Higher Education Cess (SHEC)
1,00,000 × 1% 1,000
@1% of BCD
10,00,000 + 1,00,000 + 2,000
Sub-Total (Value + BCD + EC + SHEC) 11,03,000
+ 1,000
IGST @18% 18% of 11,03,000 1,98,540
1,00,000 + 2,000 + 1,000 +
Total Customs Duty Payable 3,01,540
1,98,540
Total Customs Duty Payable:
 BCD + EC + SHEC + IGST = 1,00,000 + 2,000 + 1,000 + 1,98,540 = Rs. 3,01,540
Key Points to Remember
1. Cess is charged on the basic customs duty, not on the value of goods.
2. Education Cess and Secondary & Higher Education Cess are standard for most
imports.
3. Other cesses may apply depending on the nature of goods and notifications by
CBIC.
4. Stepwise calculation:
o Calculate BCD → Apply cess on BCD → Add IGST → Sum total duty
payable.
5. Proper calculation ensures compliance and avoids penalties.

5.5 Introduction to Baggage and General Free Allowance

1. Definition of Baggage and Types
 Baggage: Personal goods carried by a passenger or crew while arriving in or
departing from India.
 Types of Baggage:
1. Accompanied Baggage:
 Carried along by the passenger on the same flight or vessel.
 Example: Suitcases, handbags, personal electronics.

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

2. Unaccompanied Baggage:
 Sent separately by passenger, usually via courier or shipping.
 Example: Household goods shipped after relocation.

2. Free Allowance Limits for Passengers Arriving from Abroad

 General Rule: Passengers are allowed a duty-free allowance for goods brought into
India.
 Limits (as per CBIC norms):
1. Adults (≥18 years):
 Goods: Rs. 50,000 worth of baggage.
 Alcohol & Tobacco: Specific quantity limits (e.g., 2 liters of alcohol,
100 cigarettes).
2. Children (<18 years):
 Goods: Rs. 15,000 worth of baggage.
 Purpose: To allow personal items without paying customs duty.

3. Conditions and Restrictions for Exemptions

 Conditions for exemption:
1. Goods must be for personal use or gift, not for commercial purposes.
2. Passenger must declare items exceeding free allowance in the customs
declaration form.
3. Certain goods like prohibited/restricted items are not eligible for
exemption.
 Restrictions:
o Baggage exceeding allowable quantity/value attracts customs duty.
o Duty is calculated based on excess value above free allowance.

4. Example – Duty Calculation When Baggage Exceeds Free Allowance

Scenario:
 Passenger arrives from USA with personal goods worth Rs. 65,000 (Rs. 50,000 free
allowance).
 Excess value = 65,000 − 50,000 = Rs. 15,000
 Customs duty = 18% of excess value (IGST applicable)
Calculation: Duty = 15,000 × 18% = Rs. 2,700
Answer: Duty payable = Rs. 2,700
Key Points to Remember
1. Accompanied vs Unaccompanied baggage determines clearance procedure.
2. Free allowance is limited to value of goods and certain quantities of alcohol/tobacco.
3. Duty is applicable only on excess baggage above allowance.
4. Declaration of goods exceeding limits is mandatory to avoid fines or seizure.
5. Personal items for commercial use are never exempt.

5.6 Provisional Assessment of Duty

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

1. Meaning and Purpose of Provisional Assessment

 Definition:
o Provisional assessment is a facility under Section 18 of the Customs Act,
1962, allowing importers or exporters to get goods cleared before the final
determination of customs duty.
 Purpose:
1. Facilitates quick clearance of goods when value or classification is uncertain.
2. Avoids delays at port, especially for perishable or urgent goods.
3. Ensures duty is adjusted once final assessment is done.
2. Procedure for Provisional Clearance
1. Importer/Exporter Request:
o Submit an application for provisional assessment to Customs.
o Specify reason for provisional assessment (e.g., incomplete documents,
valuation issues).
2. Security/Guarantee:
o Customs may require a bond or bank guarantee for provisional duty.
3. Provisional Clearance:
o Goods are allowed to move from port/airport pending final assessment.
4. Temporary Documentation:
o Customs issues a provisional assessment certificate.
3. Adjustment / Final Assessment
1. Time Limit:
o Final assessment should be completed within 6 months from provisional
clearance (as per Customs Act).
2. Final Duty Determination:
o Customs re-examines documents, invoices, classification, and value.
o Duty payable is adjusted:
 If provisional duty < final duty → Importer pays additional duty.
 If provisional duty > final duty → Refund is given.
3. Documentation:
o Final Bill of Entry or shipping bill is updated for accounting.
4. Example – Simple Scenario
Scenario:
 Importer brings machinery valued at Rs. 12,00,000 but invoice details are
incomplete.
 Customs allows provisional clearance with 10% provisional duty.
o Provisional Duty = 10% × 12,00,000 = Rs. 1,20,000
Final Assessment (after 2 weeks):
 Actual duty determined = 12% of 12,00,000 = Rs. 1,44,000
Adjustment:
 Additional duty to be paid = 1,44,000 − 1,20,000 = Rs. 24,000
Answer: Duty paid after final assessment = Rs. 1,44,000
Key Points to Remember

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

1. Provisional assessment speeds up import/export clearance.

2. Requires security/bond to protect government revenue.
3. Final assessment must be done within prescribed time (usually 6 months).
4. Adjustment ensures correct duty is collected and prevents revenue loss.
5. Commonly used for perishable goods, machinery, or goods with disputed
classification/value.

5.7 Due Dates for Payment of Duty

1. Payment for Imports
 Definition: Duty payable on goods brought into India must be paid within a
specified time for clearance.
 Due Dates:
1. At the time of clearance:
 Customs duty, IGST, and applicable cesses must be paid before the
release of goods.
2. Through electronic payment (ICEGATE):
 Importers can pay via e-payment or authorized bank channels.
3. Provisional Assessment Cases:
 Provisional duty must be paid at the time of provisional clearance,
adjusted later during final assessment.
 Example:
o Import of machinery valued at Rs. 10,00,000 with duty Rs. 1,50,000.
o Payment must be made before Customs releases goods from port.
2. Payment for Exports (if applicable)
 Exports are generally zero-rated:
o Duty is not charged on exported goods, so payment is usually not required.
 Exceptions:
o If exports involve dutiable goods under bond or license, provisional or
advance duty may apply.
 Example:
o Export of textiles worth Rs. 20,00,000 → No customs duty payable.

3. Consequences of Delayed Payment

 Interest on delayed duty:
o As per Section 28 of Customs Act, interest is charged on duty not paid by
due date.
o Rate typically aligned with RBI base rate or notified by CBIC.
 Penalties and fines:
o Non-payment or late payment can attract penalties under Section 112/114.
 Seizure of goods:
o Goods may be held at port or bonded warehouse until duty is paid.
 Example:
o Importer delayed payment of Rs. 1,00,000 duty by 10 days.

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

o Interest = 10 days × applicable rate on Rs. 1,00,000

o Goods may be detained until clearance.
Key Points to Remember
1. Duty must be paid before goods are released from port/airport.
2. Provisional duty is payable at the time of provisional clearance.
3. Exports are mostly zero-rated, except under special provisions.
4. Delayed payment leads to interest, penalties, or seizure.
5. Timely payment ensures smooth clearance and avoids unnecessary costs.

Duty
Type of Mode of
Payment Consequences of Delay Example
Transaction Payment
Timeline
Electronic Import machinery
Before - Interest on delayed
payment via worth Rs.
clearance of duty- Penalties under
Import ICEGATE or 10,00,000; duty Rs.
goods at Customs Act- Seizure of
authorized 1,50,000 must be
port/airport goods
bank paid before release
- Additional duty Provisional duty
Electronic
Provisional At time of payable if final Rs. 1,20,000; final
payment /
Assessment provisional assessment > provisional assessment Rs.
Bank
(Import) clearance duty- Refund if 1,44,000 → Pay
Guarantee
provisional duty > final extra Rs. 24,000
Generally, - Only applicable if Export textiles
zero-rated → exports involve worth Rs.
Export N/A
no duty bonded/dutiable goods 20,00,000 → No
payment under license duty payable
Importer delays Rs.
- Interest charged- 1,00,000 duty by
Delayed
After due date N/A Goods may be detained- 10 days → Interest
Payment
Penalties applicable + possible
detention of goods
5.8 Penalties under Customs
1. Types of Penalties (Monetary Fines)
 Definition: Penalty is a monetary or legal punishment imposed for violating
Customs Act provisions.
Types:
1. Monetary Penalty: Fixed or proportionate to the value of goods or duty evaded.
 Section 114: Penalty up to customs duty + interest.
2. Confiscation: Goods may be seized or confiscated in addition to monetary penalty.
3. Imprisonment: In severe cases (smuggling, fraud), criminal action may be taken.
2. Conditions Attracting Penalties

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

Penalties are imposed when there is:

1. Non-declaration or mis-declaration of goods or value.
o Example: Declaring goods worth Rs. 50,000 as Rs. 20,000.
2. Evasion of customs duty intentionally.
o Example: Smuggling prohibited items.
3. Late filing of Bill of Entry or Shipping Bill.
4. Non-compliance with Customs Act provisions like improper packaging, labeling, or
documentation.
5. Violation of restricted/prohibited goods regulations.

3. Procedures and Appeal Mechanism

1. Detection of Violation:
o Customs officer identifies non-compliance during inspection or documentation
verification.
2. Show Cause Notice (SCN):
o Issued to the importer/exporter stating violation and proposed penalty.
3. Response & Hearing:
o Assessee can submit explanation or documents to justify the action.
4. Order of Penalty:
o Customs officer imposes penalty based on merits and provisions of Customs
Act.
5. Appeal:
o Assessee can appeal to Commissioner (Appeals) → Customs Appellate
Tribunal → High Court → Supreme Court.

4. Example – Simple Case of Penalty for Late Declaration

Scenario:
 Importer files Bill of Entry 5 days late for imported goods worth Rs. 1,00,000.
 Customs imposes:
o Interest on duty for 5 days: Rs. 900 (assume 18% IGST on duty)
o Monetary penalty = Rs. 1,000 (for late filing)
Answer: Total penalty payable = Rs. 1,900
Key Points to Remember
1. Penalty can be monetary, confiscation, or imprisonment depending on severity.
2. Late filing, mis-declaration, or duty evasion are common causes of penalty.
3. Procedures include SCN, hearing, and final order, with appeal rights available.
4. Compliance ensures smooth clearance, avoids fines, and protects business
reputation.
summary of penalties under Customs
Amount /
Type of Penalty Conditions / Cause Example
Consequence
Monetary Late filing, mis- Fixed or proportionate Importer files Bill of
Penalty declaration, duty evasion to duty evaded Entry 5 days late →

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

Amount /
Type of Penalty Conditions / Cause Example
Consequence
Penalty Rs. 1,000 +
interest Rs. 900
Importer attempts to
Smuggling, Goods seized by
Confiscation of bring prohibited
prohibited/restricted Customs; may be
Goods narcotics → goods
goods, non-compliance auctioned or destroyed
confiscated
Jail term as per Smuggling high-value
Imprisonment / Intentional smuggling,
Customs Act electronics →
Criminal Action fraud, evasion of duty
provisions imprisonment and fine
Duty Rs. 50,000
Interest on Interest charged on
Duty not paid on time delayed by 10 days →
Delayed Duty unpaid duty
interest applicable
Appeal to Importer disputes
Commissioner penalty for mis-
Appeal Penalty imposed by
(Appeals) → Tribunal declaration → files
Mechanism Customs officer
→ High Court → appeal to Commissioner
Supreme Court (Appeals)
5.9 Seizure of Goods
1. Grounds for Seizure
Goods can be seized by Customs authorities in the following cases:
1. Smuggling:
o Goods brought into India without proper declaration or through illegal
channels.
o Example: Import of electronics or narcotics without Bill of Entry.
2. Prohibited Goods:
o Items banned under Indian law or international agreements.
o Example: Narcotic drugs, counterfeit currency, endangered species.
3. Incorrect Declaration:
o Misstatement of value, quantity, classification, or description in Bill of
Entry or Shipping Bill.
o Example: Declaring goods worth Rs. 50,000 as Rs. 20,000 to evade duty.
4. Non-compliance with Customs Act provisions:
o Improper packaging, labeling, missing documents, or restricted goods without
license.
2. Procedure of Seizure and Issuance of Notice
1. Detection:
o Customs officer identifies violation during inspection, documentation check,
or risk-based assessment.
2. Seizure of Goods:
o Officer takes physical possession of goods.

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

oGoods are marked and recorded to prevent misuse or tampering.

3. Issuance of Notice:
o Show Cause Notice (SCN) is issued to the importer/exporter.
o Notice specifies:
 Reason for seizure
 Relevant sections of Customs Act violated
 Potential penalties and consequences
4. Response and Hearing:
o Assessee can submit explanation, documents, or claims to Customs.
3. Temporary Custody and Storage
1. Custody:
o Seized goods are kept in Customs bonded warehouse, port area, or
approved godown.
o Guarded to prevent loss, damage, or tampering.
2. Storage Charges:
o Importer/exporter may be required to pay storage charges during temporary
custody.
3. Duration:
o Goods remain in custody until penalty is imposed, appeal is filed, or
disposal order is given.
4. Example – Simple Scenario
Scenario:
 Passenger imports electronics worth Rs. 1,00,000 but declares Rs. 50,000.
 Customs detects mis-declaration → seizes goods.
 SCN issued specifying mis-declaration and possible penalty.
 Goods kept in bonded warehouse until penalty paid or appeal resolved.
Key Points to Remember
1. Seizure occurs for smuggling, prohibited goods, or mis-declaration.
2. SCN is mandatory before imposing penalties or confiscation.
3. Goods remain in temporary custody until final order.
4. Proper documentation and accurate declaration can prevent seizure.
5. Seizure is a precursor to penalty or confiscation, not always final.

5.10 Confiscation of Goods

1. Difference between Seizure and Confiscation
Aspect Seizure Confiscation
Temporary taking of goods into custody Permanent forfeiture of goods to the
Definition
by Customs government
Prevents unauthorized removal or Punishment for violation of Customs
Purpose
tampering law
Until violation is resolved or penalty Goods are permanently retained by
Duration
imposed government

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

Aspect Seizure Confiscation

Goods misdeclared temporarily held in Smuggled narcotics permanently
Example
bonded warehouse taken by Customs
2. Circumstances Leading to Confiscation
Goods may be confiscated under Customs Act in the following cases:
1. Smuggling of prohibited goods
o Example: Import of narcotics, counterfeit currency, endangered species.
2. Import/Export of restricted goods without license
o Example: Arms, defense equipment, certain chemicals.
3. Fraudulent declaration or undervaluation to evade duty
o Example: Declaring goods worth Rs. 1,00,000 as Rs. 20,000.
4. Non-payment of duty even after notice or provisional assessment
o Example: Importer fails to pay additional duty after provisional assessment.
5. Violation of other Customs Act provisions
o Example: Tampering with goods, mislabeling, or false documents.

3. Appeal and Redemption Provisions

1. Appeal Process:
o Assessee can appeal against confiscation under Section 129 and 130 of
Customs Act:
 First appeal: Commissioner (Appeals)
 Second appeal: Customs Appellate Tribunal
 Further: High Court → Supreme Court
2. Redemption of Goods:
o In certain cases, goods may be redeemed before final confiscation by:
 Payment of full duty, interest, and penalty
 Submission of necessary documents or compliance requirements
3. Conditions:
o Redemption is generally allowed before final adjudication.
o Some prohibited goods (e.g., narcotics) cannot be redeemed.
4. Example – Simple Scenario
Scenario:
 Importer smuggles electronics worth Rs. 2,00,000 without declaration.
 Customs detects violation → Goods seized initially.
 After inquiry, duty evasion and mis-declaration confirmed → goods confiscated
permanently.
 Importer can appeal and, if allowed, may redeem goods by paying duty + penalty.
Key Points to Remember
1. Seizure is temporary, confiscation is permanent forfeiture.
2. Confiscation occurs for smuggling, prohibited/restricted goods, and duty evasion.
3. Appeal and redemption mechanisms exist but are subject to legal conditions.
4. Certain prohibited goods cannot be redeemed under any circumstances.
5. Compliance with Customs law ensures goods are not at risk of confiscation.

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

*****

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

Module-6 (8 hours)
Valuation of Customs Duty: Concept, Meaning of Customs Duty, Circumstances of Levy
of Customs Duties and Types of Duties and Exemption from Customs Duty. Valuation
under customs: Valuation of Imported Goods and Valuation of Export Goods..
(Problems on Valuation of Imported Goods- calculation of FOB, CIF, AV, BCD, SWS,
GST Concession Cess, and IGST) (Theory and Problems)

6.1. Valuation of Customs Duty: Concept, Meaning of Customs Duty,

6.3. Circumstances of Levy of Customs Duties
6.4. Types of Duties and Exemption from Customs Duty
6.5. Valuation under customs:
6.6. Valuation of Imported Goods and Valuation of Export Goods
6.7. (Problems on Valuation of Imported Goods- calculation of FOB, CIF, AV, BCD,
SWS, GST Concession Cess, and IGST) (Theory and Problems)

6.1 Concept and Meaning of Customs Duty

1. Definition of Customs Duty
 Customs Duty is a tax levied by the government on goods imported into or
exported from India.
 It is governed by the Customs Act, 1962.
 Purpose:
1. Protect domestic industry from foreign competition.
2. Regulate the flow of goods across borders.
3. Generate revenue for the government.
Example:
 Import of mobile phones into India is subject to customs duty to protect local
manufacturers like Micromax or Lava from cheap imports.
2. Purpose of Customs Duty
1. Revenue Generation:
o Customs duty is a major source of income for the government, especially
from imports.
o Example: Duty collected on imported machinery, electronics, and raw
materials contributes to the exchequer.
2. Protection of Domestic Industry:
o High duty on imported goods prevents dumping of cheap goods in domestic
markets.
o Example: Textiles imported at lower cost may be charged high customs duty
to support Indian textile industry.
3. Regulation of Trade:
o Customs duty helps regulate import/export volume, quality standards, and
restrict prohibited goods.
o Example: Alcohol, tobacco, and hazardous chemicals are regulated using
customs duty.

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

4. Control of Foreign Exchange:

o By imposing duty on imports, the government controls foreign exchange
outflow.
o Example: Duty on luxury imported cars discourages unnecessary foreign
exchange expenditure.
5. Compliance with International Agreements:
o Customs duty ensures India meets international trade obligations, such as
WTO rules.
3. Importance for Government Revenue and Trade Regulation
Importance Explanation Example
Major contributor to government Duty on imported electronics worth
Revenue Source
income from imports Rs. 50,00,000 = Rs. 7,50,000
Protection of Shields domestic manufacturers Duty on imported textile fabrics to
Industry from cheap imports protect Indian weavers
Controls import/export of Restrict import of hazardous
Trade Regulation
sensitive or prohibited goods chemicals or arms
Foreign Exchange Reduces unnecessary outflow of Duty on luxury cars imported from
Control foreign currency Germany
Policy Supports government trade Differential duty rates under Free
Implementation policies Trade Agreements (FTA)
4. Examples of Customs Duty Application
1. Electronics:
o Import of smartphones attracts 10% basic customs duty + IGST + SWS.
2. Textiles:
o Imported fabrics may have 5–10% duty to protect domestic weaving industry.
3. Machinery:
o Industrial machinery imports may attract 7–15% duty, depending on the
category and FTA concessions.
Key Points to Remember
1. Customs duty is mandatory for all imports/exports, unless specifically exempted.
2. It serves multiple purposes: revenue, protection, trade regulation, and foreign
exchange control.
3. Duty rates vary based on type of goods, country of origin, and government
notifications.
4. Compliance ensures smooth customs clearance and avoids penalties.
6.2 Circumstances of Levy of Customs Duties
1. Levy on Import of Goods
 Customs duty is primarily levied on goods brought into India from outside the
country.
 Applicable on:
1. Commercial imports (raw materials, machinery, consumer goods)
2. Personal imports exceeding free baggage allowance
Dr Uma K, Associate Professor, GSSSIETW, Mysore
 Indirect Taxes and Customs duty payable
Module 4 – 6

 Example:
o Import of machinery worth Rs. 10,00,000 → duty applicable
o Passenger bringing personal electronics worth Rs. 60,000 (free allowance Rs.
50,000) → duty on Rs. 10,000
2. Levy on Export of Goods
 Generally, exports are zero-rated → no customs duty payable.
 Exceptions:
1. Goods under bond or license requiring provisional duty payment
2. Export of restricted or controlled items under Customs regulations
 Example:
o Export of textiles → zero duty
o Export of industrial chemicals without license → duty applicable
3. Levy on Transit of Goods
 Customs duty may be levied on goods passing through India from one foreign
country to another if they violate regulations or are misdeclared.
 Example:
o Goods transiting via Indian ports under improper documentation → liable for
provisional duty
4. Levy under Different Trade Scenarios
Scenario Duty Applicability Example
Commercial Import Duty applicable on full value Machinery, electronics, raw materials
Duty applicable only if Passenger brings goods worth Rs.
Personal Baggage value exceeds free 60,000; free allowance Rs. 50,000 →
allowance duty on Rs. 10,000
Usually zero-rated; duty
Export may apply under special Export of chemicals without license
conditions
Duty may apply if goods Goods misdeclared while passing
Transit/Transshipment
violate customs regulations through India
5. Examples
1. Imported Machinery:
o FOB value = Rs. 10,00,000
o BCD = 10% → Rs. 1,00,000
o IGST = 18% of (10,00,000 + 1,00,000) = Rs. 1,98,000
o Total duty = Rs. 2,98,000
2. Personal Baggage:
o Passenger brings electronics worth Rs. 60,000
o Free allowance = Rs. 50,000
o Duty = 18% of Rs. 10,000 = Rs. 1,800
Key Points to Remember
Key Point Explanation Example

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

Key Point Explanation Example

Duty applicable on full value of Machinery, raw materials,
Commercial Imports
goods imported for business electronics
Duty only if value exceeds free Passenger baggage Rs. 60,000
Personal Baggage
allowance → duty on Rs. 10,000
Mostly zero-rated; exceptions under Export of chemicals without
Exports
bond/license license
Duty may apply if goods violate Misdeclared goods passing
Transit/Transshipment
regulations through Indian port
Accurate declaration prevents Proper Bill of Entry and invoice
Compliance
unnecessary duty/penalty submission
6.3 Types of Customs Duties
1. Basic Customs Duty (BCD)
 Definition:
o Primary customs duty levied on imported goods based on assessable value.
 Purpose:
o Protects domestic industries, generates revenue.
 Rate:
o Varies by type of goods; notified by CBIC in Customs Tariff Schedule.
 Example:
o Import of machinery worth Rs. 10,00,000
o BCD @ 10% → Rs. 1,00,000
2. Social Welfare Surcharge (SWS)
 Definition:
o Additional duty levied on imported goods to fund social welfare schemes.
 Rate:
o Currently 10% on BCD amount (not on total value).
 Example:
o BCD on machinery = Rs. 1,00,000
o SWS = 10% of 1,00,000 = Rs. 10,000
3. IGST on Imported Goods
 Definition:
o Integrated Goods and Services Tax levied on imported goods in lieu of
domestic GST.
 Purpose:
o Ensures imported goods are taxed at same rate as domestic goods.
 Example:
o Assessable value + BCD + SWS = Rs. 11,10,000
o IGST @ 18% → Rs. 1,99,800
4. Other Cesses
1. Education Cess / Higher Education Cess
o Levied for funding educational programs.

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

2. Anti-Dumping Duty
o Protects domestic industry from cheap imports sold below cost abroad.
3. Safeguard Duty
o Temporarily imposed to protect domestic industry from sudden import surge.
 Example:
o Anti-dumping duty on steel imports = Rs. 5,000 per ton
5. Exemptions from Customs Duty
 Definition: Certain goods are exempt from customs duty under specific conditions:
1. Restricted goods: Exempted for essential sectors (e.g., medicines, food
grains).
2. Free Trade Agreements (FTA): Duty-free imports from partner countries.
 Example:
o Essential medicines imported from a country under FTA → BCD = 0%
6. Example – Stepwise Calculation of Customs Duty
Scenario: Import of machinery worth Rs. 10,00,000
Component Calculation Amount (Rs.)
BCD @ 10% 10% of 10,00,000 1,00,000
SWS @ 10% on BCD 10% of 1,00,000 10,000
Assessable Value for IGST 10,00,000 + 1,00,000 + 10,000 11,10,000
IGST @ 18% 18% of 11,10,000 1,99,800
Total Customs Duty Payable BCD + SWS + IGST 3,09,800
Key Points to Remember
Type of Duty Purpose Example
Basic Customs Duty Protect industry, revenue Machinery import Rs. 10,00,000 →
(BCD) generation BCD Rs. 1,00,000
Social Welfare
Fund social welfare schemes 10% of BCD = Rs. 10,000
Surcharge (SWS)
IGST on Imported Equalize tax with domestic
IGST 18% on AV = Rs. 1,99,800
Goods GST
Education, anti-dumping, Anti-dumping duty on steel = Rs.
Other Cesses
safeguard 5,000/ton
FTAs, essential/restricted Medicines imported under FTA →
Exemptions
goods duty-free
6.4 Valuation under Customs
Template for Calculation of AV and Customs Duty Payable
Amount
Step Particulars Rate / Calculation
(Rs.)
FOB Value (Cost of goods at export
1 - ________
port)

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

Amount
Step Particulars Rate / Calculation
(Rs.)
2 Freight - ________
3 Insurance - ________
4 CIF Value FOB + Freight + Insurance ________
5 Landing / Handling Charges (if any) - ________
6 Assessable Value (AV) CIF + Landing Charges ________
7 Basic Customs Duty (BCD) AV × ______% ________
8 Social Welfare Surcharge (SWS) BCD × 10% ________
(AV + BCD + SWS) ×
9 IGST on Imported Goods ________
______%
10 Total Customs Duty Payable BCD + SWS + IGST ________
1. Fill in FOB value, freight, and insurance from the import invoice.
2. Add any landing or handling charges to get the AV.
3. Calculate BCD using the applicable rate.
4. Compute SWS as 10% of BCD.
5. Calculate IGST on the sum of AV + BCD + SWS.
6. Sum up BCD + SWS + IGST to get the Total Customs Duty Payable.
6.4.1 Valuation of Imported Goods
1. Methods of Valuation
Method Explanation Example
Cost of goods at the port of Electronics exported from USA
FOB (Free on
shipment, excluding shipping, worth $50,000 FOB → Rs.
Board) Value
insurance, and freight 37,50,000
CIF (Cost,
FOB value + freight charges + Freight = $2,000, Insurance =
Insurance, Freight)
insurance to India $500 → CIF = $52,500
Value
CIF Rs. 39,37,500 + landing
Assessable Value CIF + adjustments (landing charges,
charges Rs. 62,500 → AV = Rs.
(AV) commission, packing)
40,00,000
2. Components for Duty Calculation
1. Basic Customs Duty (BCD) – Levied on AV
2. Social Welfare Surcharge (SWS) – 10% on BCD
3. IGST – On (AV + BCD + SWS)
4. Concessional Duties / Exemptions – Under Free Trade Agreements or GST
concessions
3. Example Problem – Import of Electronics
Scenario: Import of electronics worth USD 50,000

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

Amount
Component Calculation
(Rs.)
FOB Value $50,000 → Rs. 37,50,000 37,50,000
Freight + Insurance $2,500 → Rs. 1,87,500 1,87,500
CIF Value FOB + Freight + Insurance 39,37,500
Landing Charges Rs. 62,500 62,500
Assessable Value (AV) CIF + Landing Charges 40,00,000
BCD @ 10% 10% of AV 4,00,000
SWS @ 10% on BCD 10% of 4,00,000 40,000
18% of (AV + BCD + SWS) = 18% of
IGST @ 18% 7,99,200
44,40,000
Total Customs Duty
BCD + SWS + IGST 12,39,200
Payable
6.4.2 Valuation of Exported Goods
1. Assessable Value for Export Purposes
o Typically FOB value is used as AV for calculating duty drawbacks or rebates.
o Exports are generally zero-rated, meaning no BCD or IGST is charged.
2. Duty Drawbacks and Exemptions
o Exporters may claim refund of duties paid on imported inputs used for
exports.
o Example: Export of textiles → duty paid on imported yarn may be refunded
under duty drawback scheme.
3. Example – Export of Textiles
Component Details Amount (Rs.)
FOB Value Export of textile garments 10,00,000
BCD / IGST Zero-rated 0
Duty Drawback Refund of duty paid on imported yarn 50,000
Net Payable / Refundable Duty payable = 0, Refund = 50,000 -
Key Points to Remember (Table Format)
Aspect Imported Goods Exported Goods
Basis of
CIF + landing charges FOB value
Valuation
Duty Usually zero-rated, may include duty
BCD, SWS, IGST
Components drawback
Free Trade Agreements / GST
Concessions Duty drawback on inputs
exemptions
Purpose Calculate customs duty payable Determine refund / zero-rating

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

Aspect Imported Goods Exported Goods

Electronics import Rs. 40,00,000 → Textile export Rs. 10,00,000 → Duty
Example
Duty Rs. 12,39,200 refund Rs. 50,000
6.5 Problems on Valuation of Imported Goods
Problem 1 – Import of Machinery
 Import of machinery from the USA: USD 50,000
 Freight: USD 2,000
 Insurance: USD 500
 Exchange rate: 1 USD = Rs. 75
 BCD: 10%
 SWS: 10% on BCD
 IGST: 18%
 GST Concession / FTA: None
Solution:
COMPUTATION OF CUSTOMS DUTY PAYABLE
Amount
Step Particulars Calculation
(Rs.)
1 FOB Value 50,000 × 75 37,50,000
2 Freight 2,000 × 75 1,50,000
Insurance 500 × 75 37,500
CIF Value 37,50,000 + 1,50,000 + 37,500 39,37,500
3 Landing Charges Given 62,500
Assessable Value (AV) 39,37,500 + 62,500 40,00,000
Basic Customs Duty (BCD)
4 10% of 40,00,000 4,00,000
@10%
Social Welfare Surcharge
5 10% of 4,00,000 40,000
(SWS) @10% of BCD
IGST @18% of (AV + BCD + 18% of (40,00,000 + 4,00,000 +
6 7,99,200
SWS) 40,000) = 18% of 44,40,000
7 Total Customs Duty Payable 4,00,000 + 40,000 + 7,99,200 12,39,200

Problem 2 – Import Under Free Trade Agreement (FTA)

 Import of industrial equipment worth USD 60,000 from a country under FTA
 Freight: USD 3,000
 Insurance: USD 500
 Exchange rate: 1 USD = Rs. 75
 BCD: 10% (FTA reduces BCD to 5%)
 SWS: 10% on BCD
 IGST: 18%
Solution

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

Here’s your solution rewritten in a clear table format:

Amount
Step Particulars Calculation
(Rs.)
1 FOB Value 60,000 × 75 45,00,000
2 Freight 3,000 × 75 2,25,000
Insurance 500 × 75 37,500
CIF Value 45,00,000 + 2,25,000 + 37,500 47,62,500
3 Landing Charges / Adjustments Given = 87,500 87,500
Assessable Value (AV) 47,62,500 + 87,500 48,50,000
Basic Customs Duty (BCD)
4 5% of 48,50,000 2,42,500
@5% (FTA benefit)
Social Welfare Surcharge
5 10% of 2,42,500 24,250
(SWS) @10% of BCD
IGST @18% of (AV + BCD + 18% of (48,50,000 + 2,42,500 +
6 9,17,415
SWS) 24,250) = 18% of 50,96,750
7 Total Customs Duty Payable 2,42,500 + 24,250 + 9,17,415 11,84,165
Key Points to Remember
Step Calculation Purpose
FOB Value Cost at export port Base price of goods
CIF Value FOB + Freight + Insurance Value landed in India
Assessable
CIF + Landing Charges Basis for duty calculation
Value
BCD % of AV Basic import duty
SWS 10% of BCD Social welfare surcharge
IGST % of (AV + BCD + SWS) GST on imported goods
Total Duty BCD + SWS + IGST Total payable to government
Reduced BCD for partner Concessional import under trade
FTA Adjustment
countries agreement
6.6 Problems on Valuation of Export Goods
Problem 1 – Export of Textiles (Zero-Rated Duty)
 Export of textile garments FOB value = Rs. 10,00,000
 Duty paid on imported yarn = Rs. 50,000
 Export is under zero-rated GST scheme
Solution:
Step Particulars Calculation Amount (Rs.)
Assessable Value (AV) for
1 FOB Value 10,00,000
Export

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

Step Particulars Calculation Amount (Rs.)

Exports are zero-rated → BCD = 0, SWS
2 Duty Payable 0
= 0, IGST = 0
3 Duty Drawback Refund of duty paid on imported yarn 50,000
Net Duty Payable / Refund =
4 Net Duty = 0, Refund = 50,000
Refundable 50,000
Problem 2 – Export of Leather Goods (Export Duty Applicable)
 Export of leather goods, FOB value = Rs. 12,00,000
 Export duty @10% (as per tariff for this item)
 GST on exports: zero-rated
 Duty paid on imported inputs eligible for duty drawback = Rs. 20,000
Step Particulars Calculation Amount (Rs.)
Assessable Value (AV)
1 FOB Value 12,00,000
for Export
2 Export Duty @10% 10% × 12,00,000 1,20,000
3 GST on Exports Zero-rated → IGST = 0 0
4 Duty Drawback (inputs) Refund of duty on inputs 20,000
Net Duty Payable / Net Duty = Export Duty − Drawback = Net Payable =
5
Refundable 1,20,000 − 20,000 1,00,000
Problem 2 – Export under Exemption Scheme
 Export of pharmaceuticals FOB value = Rs. 5,00,000
 Goods qualify under exemption scheme for essential medicines
 No duty paid on imported inputs
Solution:
Amount
Step Particulars Calculation / Explanation
(Rs.)
Assessable Value (AV) for
1 FOB Value 5,00,000
Export
Exemption scheme → No customs
2 Duty Calculation 0
duty
3 Duty Drawback / Refund No duty paid on inputs → No refund 0
4 Net Duty Payable Net Duty = 0 0
Problem 3 – Duty Drawback Calculation
 Export of electronics FOB value = Rs. 12,00,000
 Duty paid on imported components = Rs. 1,20,000
 Export qualifies for duty drawback at 90% of duty paid on inputs
Solution:
Amount
Step Particulars Calculation / Explanation
(Rs.)

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

Amount
Step Particulars Calculation / Explanation
(Rs.)
Assessable Value (AV) for
1 FOB Value 12,00,000
Export
2 Duty Drawback Calculation 90% × 1,20,000 1,08,000
Exports are zero-rated → No duty
3 Net Duty Payable 0
payable
4 Refund (Duty Drawback) Refund of 90% of duty paid on inputs 1,08,000

Key Points to Remember

Step / Concept Explanation Example
Assessable Value Usually FOB value of exported
Textile export Rs. 10,00,000
(AV) goods
Duty Payable Exports are mostly zero-rated BCD/IGST = 0
Refund of duty paid on imported
Duty Drawback Rs. 50,000 refund on yarn
inputs
Certain essential goods exempted Pharmaceuticals export Rs. 5,00,000
Exemption Scheme
from duty → duty = 0
Electronics export → refund Rs.
Net Duty / Refund Duty payable – refund
1,08,000

Problem – Import and ITC Claim

XYZ Ltd. imports raw materials from Japan with the following details:

 FOB Value: JPY 20,00,000

 Freight (Air): JPY 2,00,000
 Insurance: JPY 50,000
 Exchange Rate (CBIC notified): 1 JPY = Rs. 0.60
 Landing Charges: 1% of CIF value
 BCD: 10%
 SWS: 10% of BCD
 IGST: 18%
 Usage of Goods: Entirely for manufacturing taxable goods in India (hence ITC
eligible).

Required:

1. Calculate the Assessable Value (AV) for customs purposes.

2. Compute the total customs duty payable.
3. Determine the ITC available under GST for XYZ Ltd.

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

Solution:
Amount
Step Particulars Calculation
(Rs.)

1 FOB Value (in INR) 20,00,000 × 0.60 12,00,000

2 Freight (in INR) 2,00,000 × 0.60 1,20,000

Insurance (in INR) 50,000 × 0.60 30,000

CIF Value 12,00,000 + 1,20,000 + 30,000 13,50,000

3 Landing Charges 1% of CIF = 1% × 13,50,000 13,500

CIF + Landing Charges = 13,50,000 +

Assessable Value (AV) 13,63,500
13,500

Basic Customs Duty

4 10% × 13,63,500 1,36,350
(BCD) @10%

5 SWS @10% of BCD 10% × 1,36,350 13,635

18% × (13,63,500 + 1,36,350 + 13,635) =

6 IGST @18% 2,72,427
18% × 15,13,485

Total Customs Duty BCD + SWS + IGST = 1,36,350 + 13,635 +

7 4,22,412
Payable 2,72,427

8 ITC Available Entire IGST paid on imports = 2,72,427 2,72,427

Final Answer:

1. Assessable Value (AV) = Rs. 13,63,500

2. Total Customs Duty Payable = Rs. 4,22,412
3. ITC Available = Rs. 2,72,427

****

Dr Uma K, Associate Professor, GSSSIETW, Mysore

 Indirect Taxes and Customs duty payable
Module 4 – 6

Dr Uma K, Associate Professor, GSSSIETW, Mysore