CA Final · Indirect Tax Laws

Importation and Exportation of Goods: formula sheet

Full chapter guide

Key formulas

Power under Section 11: Central Government + notification in Official Gazette → prohibit or restrict import or export of specified goods, absolutely or conditionally; The power applies to goods of any specified description and can be limited to particular places. It can be used only for the purposes listed in the section.
Purposes (group them): Security and order | Morals, health and safety | Life, environment and resources | National treasures | Short supply | Preventing breach of other laws | Establishing industry | Interest of the country; Quote the purpose that fits the facts. Do not claim a purpose the facts do not support.
Prohibited goods: Goods whose import or export is prohibited under Section 11 or any other law in force; excludes goods permitted on conditions that have been complied with; Conditions complied with means the goods are not prohibited goods. Conditions not complied with means they are.
Restricted goods: Import or export allowed only with a licence, authorisation or other stated condition; A restriction becomes a prohibition in effect when the condition is breached.
Consequence of breach: Contravention of prohibition → liability to confiscation of goods + penalty on the person; State both consequences. Do not say duty payment cures a prohibition.
Order of the import chain: Entry inward → Bill of entry → Assessment → Payment of duty and examination (if ordered; either may come first) → Out of charge → Removal; Write this chain first in any descriptive answer. Examination happens only for bills selected on risk or by the officer. Where it is ordered, it may take place before or after payment of duty. The out of charge order follows both.
Who files what: Import manifest/report = person in charge of conveyance; Bill of entry = importer or customs broker; A common one-line question. The carrier never files the bill of entry.
Types of bill of entry: Home consumption (white) | Ex-bond (yellow) | Warehousing (green); The colours come from the traditional forms. Today filing is electronic, so lead with the purpose and mention colours as a memory aid. The ex-bond bill of entry is the bill of entry for home consumption that is filed to clear goods already held in a warehouse. It is not a third independent category in the Act, but it is useful to name it separately in answers.
Rate of duty: home consumption: Rate in force on the date the bill of entry is presented. Proviso: if the bill of entry is presented before the delivery of the import manifest, the rate in force on the date of delivery of the manifest applies; If you present the bill before the manifest is delivered, the rate on the date of delivery of the manifest applies, whether that rate is higher or lower than the rate on the date the bill is presented. The date that matters is the date of delivery of the manifest, not simply the vessel's arrival.
Rate of duty: goods from a warehouse: Rate in force on the date of actual removal of the goods from the warehouse; The rate on the date of warehousing does not apply. Nor does the date the ex-bond bill of entry (the home consumption bill filed to clear warehoused goods) is presented. Duty is deferred, not fixed.
Self-assessment: Importer self-assesses duty; proper officer may verify, examine or test; if self-assessment is incorrect, he reassesses; Mention the importer's duty to declare correct classification, value and exemption.
Clearance condition: Out of charge = duty and other dues paid + officer satisfied + goods not prohibited; Without the out of charge order, goods cannot be removed for home consumption.
Rule of Section 20: Re-imported goods = liable to duty + subject to conditions and restrictions applicable to goods of like kind and value on import; Exportation in the past does not give automatic relief. Relief comes only from an exemption notification.
Assessable value (sea or air import): Assessable value = CIF value (cost + insurance + freight) + landing charges at 1% of CIF, where actual figures are not given; Use the 1% addition only if the question does not give actual landing charges, and apply it only where the question's facts support it. Say your assumption.
Basic Customs Duty (BCD): BCD = Assessable value × BCD rate; Use the rate given in the question.
Social Welfare Surcharge (SWS): SWS = BCD × SWS rate (the question gives it, commonly 10% of BCD); It is levied on BCD, not on assessable value. Apply it only if the question treats it as applicable.
IGST on imports: IGST = (Assessable value + BCD + SWS) × IGST rate; IGST is charged on the value plus customs duties, so it is a cascading base.
Total duty payable: Total = BCD + SWS + IGST; Add compensation cess only if the question mentions it.
Entry of export goods: Exporter → shipping bill (vessel or aircraft) or bill of export (land) (electronic) + declaration of truth + supporting documents → proper officer; Section 50 of the Customs Act, 1962. Shipping bill for exports by vessel or aircraft; bill of export for exports by land. Exports by SEZ units are governed by the SEZ Act and Rules, so do not treat them as a section 50 position.
Clearance for exportation: Let export order by proper officer → goods may be loaded; Section 51. Given when the officer is satisfied the goods are not prohibited and the exporter has paid the duty, if any, assessed and any charges payable under the Act.
Sequence of events: Shipping bill → goods enter port → assessment/examination (if selected) → let export order → loading → export manifest; Use this order as the skeleton of every descriptive answer.
Categories of shipping bill: Duty-free | Dutiable | Drawback | Ex-bond; The category is decided by whether export duty applies, whether drawback is claimed, and whether goods come from a warehouse.
Who files what: Exporter: shipping bill. Person in charge of conveyance: entry outward and export manifest.; Do not mix the two roles.
Drawback under Section 74: Drawback = 98% × customs duty paid on the goods re-exported; Applies to unused goods that meet all conditions. For a part consignment, take only the duty attributable to the quantity re-exported.
Time limit: Entry for export ≤ 2 years from the date of payment of duty; Count from payment of duty, not from the date of arrival or the Bill of Entry. The Board may extend it for sufficient cause in a particular case.
Identification condition: Goods must be easily identifiable and identified to the satisfaction of the Assistant/Deputy Commissioner as the goods imported; Both the nature of the goods and actual identification at examination matter.
Used goods: Drawback is reduced for use after import, as per the rules; Do not apply a flat 98% if the question says the goods were used. Use the percentage given in the question.
Section 74 vs Section 75: Section 74: re-export of the same imported goods. Section 75: materials used in manufacture of exported goods; The distinction is the standard theory comparison.

Quick revision

Sec 11 lets the Central Government prohibit imports or exports of specified goods, for the purposes listed in that section.
Prohibition and restriction are different: a restriction allows movement only if conditions are met.
Every import consignment needs a Bill of Entry before clearance for home consumption or warehousing.
Know the three main kinds of Bill of Entry: for home consumption, for warehousing and for ex-bond clearance.
Goods are cleared only after duty and other dues are paid and the proper officer permits clearance.
Under Sec 20, re-imported goods are liable to duty as if imported for the first time, subject to exemptions.
Relief on re-import is conditional and comes from exemption notifications, not from Sec 20 itself. Check the notification's conditions, such as identity of the goods and the original export, before concluding.
Exports need a Shipping Bill, and goods are shipped only after the proper officer gives the let export order.
Exporters must comply with Foreign Trade Policy requirements where a licence or authorisation applies.
Sec 74 drawback applies to duty-paid imported goods that are re-exported, and it needs the goods to be identifiable.
Under Sec 74, where the goods have been used, the Board fixes the drawback rate by reference to the period of use. The rate for used goods is lower than for unused goods, so it is not a full refund. Do not memorise a single percentage for used goods. Check the current notification for the exact rates.
Under Sec 74, the goods must be identified as the goods that were imported. They must be exported within two years from the date of the order permitting clearance for home consumption. The Board can extend this period by notification.
In every answer, write provision, facts and conclusion in that order.

Common mistakes

Treating all restricted goods as prohibited goods. Fix: Remember that goods imported or exported with the conditions complied with are outside the definition of prohibited goods. Only breach of the condition makes them prohibited.
Saying that paying customs duty makes a prohibited import lawful. Fix: State that duty and prohibition are separate. A prohibited item stays liable to confiscation even if duty is offered.
Saying the importer files the import manifest. Fix: Remember: manifest is the carrier's document about the cargo on board. Bill of entry is the importer's document about the goods being cleared.
Using the date of arrival or manifest delivery as the rate date even when the bill of entry is filed after it. Fix: The rate date is the date the bill of entry is presented. Only if it is presented before the delivery of the import manifest does the date of delivery of the manifest apply.
Writing that re-imported goods are always exempt from duty because they were Indian goods. Fix: Start with the rule: duty is payable. Exemption comes only from a notification, and only if its conditions are met.
Ignoring conditions and restrictions on the goods. Fix: Add one line on prohibitions, licences and restrictions applicable to like goods on import.
Treating the shipping bill as the same as the bill of entry. Fix: Bill of entry is for imports. Shipping bill is for exports. Write the direction of goods in the first line of your answer.
Saying goods may be loaded once the shipping bill is filed. Fix: Loading needs the let export order. Filing only starts the process.
Counting the two years from the date of import or arrival of the goods. Fix: The section counts from the date of payment of duty on importation. Always find that date in the question.
Giving 100% of duty back. Fix: Section 74 repays 98% of the duty. The balance 2% is not repaid.

Exam tips

Write the definition of prohibited goods together with its exclusion for conditions complied with. Examiners reward the exception.
In case scenarios, first ask whether a condition existed and whether it was met. That one check decides most questions.
Group the purposes into themes so you can write four or five relevant ones quickly.
Always end with the consequence: confiscation and penalty. Add that duty payment does not cure a prohibition.
In MCQs, watch for options that say duty payment legalises the import. That option is wrong.
For a theory question, draw the chain from entry inward to out of charge in the first two lines, then explain each stage briefly. This secures the structure marks.
In case-scenario MCQs, list the dates first and decide the rate date before reading the options. The options are built to trap the wrong date. For warehoused goods, the date of actual removal is the one that counts.
Always name the bill of entry type by purpose: home consumption, warehousing, or ex-bond. Mention colours only as a bonus.